International Econ Final Socrative Q's

A tax of 20 cents per unit of imported garlic is an example of a(n) A) specific tariff. B) ad valorem tariff. C) nominal tariff. D) effective protection tariff. E) a disadvantageous tariff.

A

If there are a large number of firms in a monopolistically competitive industry A) long-run profit will be equal to zero B) there will be barriers to entry that prevent addition firms from entering the industry. C) the firms will converge production on a standardized product. D) there will be a small number of firms that are very large and the rest will be very small

A

It is possible for an equilibrium that is consistent with purely competitive conditions (zero profits) to arise in an industry with positive scale economies. A) True B) False

A

The change in the economic welfare of a country associated with an increase in a tariff equals A) terms of trade gain - efficiency loss B) efficiency gain - terms of trade loss. C) efficiency loss + tax revenue gain. D) tax revenue gain + terms of trade gain - efficiency loss E) efficiency loss - tax revenue gain.

A

A lower tariff on imported steel would most likely benefit A) foreign producers at the expense of domestic consumers. B) domestic consumers of steel. C) domestic manufacturers of steel. D) workers in the steel industry. E) foreign consumers of steel.

B

An imperfectly competitive firm has the following total cost curve: C = 100 + 4Q. What is marginal cost equal to when Q = 10? A) MC=110 B) MC=4 C) MC=6 D) MC=100

B

An important difference between tariffs and quotas is that tariffs A) raise the price of the good. B) generate tax revenue for the government. C) stimulate international trade. D) help domestic producers. E) are paid by foreign producers.

B

An industry is characterized by scale economies, and exists in two countries. Should these two countries engage in trade, then A) consumers in both countries would have higher prices and fewer varieties. B) consumers in both countries would have more varieties and lower prices. C) consumers in the importing country only would have higher prices and fewer varieties. D) consumers in the exporting country only would have higher prices and fewer varieties E) consumers in both countries would have fewer varieties at lower prices.

B

If a firm increases its output and average costs ________, then the firm is experiencing ________ of scale. A) decrease; diseconomies B) decrease; increasing economies C) increase; increasing economies D) stay the same; increasing economies

B

If the size of the market for products produced by firms in a monopolistically competitive industry becomes LARGER, then there will be ________ firms at home and each firm will produce ________ output and charge a ________ price. A) more; less; lower B) more; more; lower C) fewer; more; higher D) more; more; higher E) more; less; higher

B

Imperfectly competitive firms (such as a monopolist) have a demand curve that ________ and a marginal revenue curve that ________ and is ________ the demand curve. A) is horizontal; is horizontal; the same as B) slopes downward; slopes downward; below C) slopes downward; slopes downward; above D) is horizontal; slopes downward; below E) slopes downward; slopes downward; the same as

B

Monopolistic competition is associated with A) price-taking behavior. B) product differentiation. C) explicit consideration, at the firm level, of the strategic impact of own firms' pricing decisions on competitors' pricing decisions D) high profit margins in the long run. E) Constant returns to scale

B

Once the two countries decide to trade, we can find the world equilibrium price by setting (if the world is composed of these two countries only) A) the import demand curve (derived from the foreign market) equal the export supply curve(derived from the home market) B) the import demand curve (derived from the home market) equal the export supply curve (derived from the foreign market) C) the demand curve (from the home market) equal the supply curve (from the foreign market) D) the demand curve (from the foreign market) equal the supply curve (from the home market) E) the demand and supply curve from the home market

B

The existence of external economies of scale A) cannot be associated with a perfectly competitive industry. B) may be associated with a perfectly competitive industry. C) tends to result in one huge monopoly. D) tends to result in large profits for each firm. E) focuses more on individual firms than the industry as a whole.

B

The imposition of tariffs will help a nation attain which of the following goals? A) decreased domestic consumer prices B) gains for domestic producers C) increased domestic employment D) increased amount and variety of goods available for consumers E) increased competition between domestic and foreign producers

B

Ad valorem tariffs are A) import taxes stated in ads in industry publications. B) import taxes calculated as a fixed charge for each unit of imported goods. C) import taxes calculated as a fraction of the value of the imported goods. D) import taxes calculated solely on the origin country.

C

An imperfectly competitive firm has the following total cost curve: C = 100 + 4Q. What is the average total cost equal to when Q = 10? A) 10 B) 5 C) 14 D) 12

C

If a firm that uses a production process that yields economies of scale charges (for example, a monopolist), a price equal to ________, then profit will be ________. A) marginal revenue; maximized B) marginal cost; maximized C) marginal cost; negative D) marginal cost; positive

C

If some industries exhibit internal increasing returns to scale in each country, we should not expect to see A) intra-industry trade between countries. B) inter-industry trade between countries. C) perfect competition in these industries. D) high levels of specialization in both countries. E) increased productivity in both countries.

C

Internal economies of scale will ________ average cost when output is ________ by________. A) increase; increased; a firm B) reduce; increased; the industry C) reduce; increased; a firm D) increase; increased; the industry E) reduce; reduce; the industry

C

The difficulty of ascertaining the right second-best trade policy to follow A) reinforces support for the third-best policy approach B) reinforces support for a trade policy as an option C) reinforces support for free-trade options D) reinforced support for the domestic market failure argument.

C

The efficiency case made for free trade is that as trade distortions such as tariffs are dismantled and removed A) government tariff revenue will decrease, and therefore national economic welfare will decrease. B) government tariff revenue will decrease, and therefore national economic welfare will increase C) efficiency losses for producers and consumers will decrease, hence increasing national economic welfare. D) efficiency losses for producers and consumers will decrease, hence decreasing national economic welfare E) government tariff revenue will increase, hence increasing national economic welfare.

C

Under the model of monopolistic competition, an increase in the number of firms in the industry will cause ________ to ________ (assuming nothing else changes just n). A) average price; increase B) average cost; decrease C) average price; decrease D) marginal cost; decrease

C CONFUSED

A voluntary export restraint will ________ producer surplus, ________ consumer surplus and ________ government revenue (from the perspective of the importing country). A) increase; decrease; increase B) increase; decrease; decrease C) increase; increase; have no effect on D) increase; decrease; have no effect on E) increase; increase; decrease

D

If a firm's output doubles when all inputs are doubled, production is said to occur under A) imperfect competition B) intra-industry equilibrium. C) increasing returns to scale D) constant returns to scale E) decreasing returns to scale.

D

The optimum tax is A) the best tariff a country can obtain via a WTO negotiated round of comprises. B) the tariff, which maximizes the difference between terms of trade gains and terms of trades loses. C) not practical for a small country due to the likelihood of retaliation. D) not practical for a large country due to the likelihood of retaliation.

D

What is a TRUE statement concerning the imposition in the US of a tariff on cheese? A) It lowers the price of cheese domestically B) It raises the price of cheese internationally C) It will always result in retaliation from abroad D) It raises revenue for the government E) It leads to higher domestic demand for cheese

D

If a good is imported into (large) country H from country F (small), then the imposition of a tariff in country H A) raises the price of the good in both countries (the "Law of One Price"). B) raises the price in country H and cannot affect its price in country F. C) raises the price of the good in both countries. D) lowers the price of the good in H and could raise it in F. E) raises the price of the good in H and lowers it in F.

E

The opportunity to exploit economies of scale is one of the gains to be derived by removing tariffs and other trade distortions. These gains will be the result of a decrease in A) world prices of imports. B) the consumption distortion loss triangle. C) the production distortion loss triangle. D) international labor mobility. E) excessive entry and inefficient business practices.

E