International Economics (ECON 411) Midterm 2

Which of the following are examples of goods that have been subject to voluntary export restraints? A) Japanese cars and Chinese solar panels B) Belgian chocolates and French wines C) French wines and cheeses D) Japanese sushi and German cars E) Taiwanese electronics and Canadian barley

A) Japanese cars and Chinese solar panels

An export subsidy is A) a payment to a firm or individual that ships a good abroad. B) a fee that is charged to a country that ships goods to the U.S. C) a payment made to a foreign government in return for preferential trade treatment. D) illegal in the U.S. but is fairly common in the rest of the world. E) a limit on the quantity of a good or service that can be sold abroad.

A) a payment to a firm or individual that ships a good abroad.

International trade based on external scale economies in both countries is likely to be carried out by A) a relatively large number of price competing firms. B) a relatively small number of price competing firms. C) a relatively small number of imperfect competitors. D) monopolists in each country. E) a large number of oligopolists in each country.

A) a relatively large number of price competing firms.

We often observe "pseudo-intra-industry trade" between the United States and Mexico. Actually, such trade is consistent with A) comparative advantage associated with Heckscher-Ohlin model. B) oligopolistic markets. C) optimal tariff issues. D) the Ricardian model of trade. E) the specific factors model of trade.

A) comparative advantage associated with Heckscher-Ohlin model.

An industry is characterized by scale economies, and exists in two countries. Should these two countries engage in trade such that the combined market is supplied by one country's industry, then A) consumers in both countries would have more varieties and lower prices. B) consumers in both countries would have higher prices and fewer varieties. 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.

A) consumers in both countries would have more varieties and lower prices.

If an import-competing firm is the only domestic producer of a good, then a transition from autarky to free trade will ________ domestic price, ________ producer surplus, ________ consumer surplus, and ________ overall domestic national welfare. A) decrease; decrease; increase; increase B) increase; increase; increase; increase C) decrease; decrease; decrease; decrease D) increase; increase; decrease; decrease E) increase; increase; decrease; increase

A) decrease; decrease; increase; increase

In the model of monopolistic competition, trade costs between countries will cause domestic and foreign markets to have ________ prices, ________ quantities sold, and ________ profit levels. A) different; different; different B) identical; different; different C) different; different; identical D) identical; different; identical E) identical; identical; different

A) different; different; different

In the model of monopolistic competition, if firms have ________ average cost curves, then opening trade will cause ________ firms to ________ the industry. A) different; less efficient; exit B) different; more efficient; enter C) symmetric; less efficient; exit D) symmetric; more efficient; enter E) symmetric; less efficient; enter

A) different; less efficient; exit

Firms that produce ________ products must be ________ competitive. A) differentiated; imperfectly B) differentiated; perfectly C) standardized; imperfectly D) standardized; perfectly E) exported; imperfectly

A) differentiated; imperfectly

In the model of monopolistic competition, if firms have ________ average cost curves, then opening trade will ________ the total number of firms and ________ the average price. A) downward sloping; decrease; decrease B) downward sloping; decrease; increase C) downward sloping; increase; decrease D) upward sloping; decrease; increase E) upward sloping; increase; decrease

A) downward sloping; decrease; decrease

The most common form of price discrimination in international trade is A) dumping. B) non-tariff barriers. C) Voluntary Export Restraints. D) preferential trade arrangements. E) product boycotts.

A) dumping.

A product is produced in a monopolistically competitive industry with scale economies. If this industry exists in two countries, and these two countries engage in trade with each other, then we would expect A) each country will export different varieties of the product to the other. B) the country in which the price of the product is lower will export the product. C) the country with a relative abundance of the factor of production in which production of the product is intensive will export this product. D) neither country will export this product since there is no comparative advantage. E) the countries will trade only with other nations they are not in competition with.

A) each country will export different varieties of the product to the other

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

A) efficiency loss - terms of trade gain.

A monopoly firm engaged in international trade will A) equate marginal costs with marginal revenues in both domestic and foreign markets. B) equate average to local costs. C) equate marginal costs with foreign marginal revenues. D) equate marginal costs with the highest price the market will bear. E) equate marginal costs with the relative world prices.

A) equate marginal costs with marginal revenues in both domestic and foreign markets.

In the model of monopolistic competition, an increase in industry output will cause individual firms' demand curves to become ________, which will ________ demand for higher-priced goods and ________ demand for lower-priced goods. A) flatter; reduce; increase B) steeper; reduce; increase C) flatter; increase; reduce D) steeper; increase; reduce E) horizontal; reduce; reduce

A) flatter; reduce; increase

In the model of monopolistic competition, an increase in industry output will ________ producers of ________ higher-priced goods and ________ producers of lower-priced goods. A) harm; benefit B) benefit; harm C) harm; harm D) benefit; benefit E) benefit; have no effect on

A) harm; benefit

Tariff rates on products imported into the U.S. A) have dropped substantially over the past 50 years. B) were prohibited by the Constitution. C) reached an all time high in 2002. D) have risen steadily since 1920. E) were the government's main source of income in 2006.

A) have dropped substantially over the past 50 years.

In the model of monopolistic competition, compared to a firm with a lower marginal cost, a firm with a higher marginal cost will set a ________ price, produce ________ output, and earn ________ profits. A) higher; less; less B) lower; more; more C) higher; more; more D) lower; less; less E) higher; less; more

A) higher; less; less

Tariffs are NOT defended on the grounds that they A) improve the terms of trade of foreign nations. B) protect jobs and reduce unemployment. C) promote growth and development of young industries. D) prevent over-dependence of a country on only a few industries. E) protect domestic producers from foreign low prices.

A) improve the terms of trade of foreign nations.

Trade without serious income distribution effects is most likely to happen A) in sophisticated manufactures trade between rich countries. B) in simple manufactures trade between developing countries. C) in sophisticated manufactures trade between rich and poor countries. D) in agricultural trade between rich countries. E) in labor-intensive industries like clothing.

A) in sophisticated manufactures trade between rich countries.

If the tariff on computers is not changed, but domestic computer producers shift from domestically produced semiconductors to imported components, then the effective rate of protection in the computer industry will A) increase. B) decrease C) remain the same. D) depend on whether computers are PCs or "Supercomputers." E) no longer apply.

A) increase

Under the model of monopolistic competition, a(an) ________ in the number of firms in the industry will cause ________ to ________. A) increase; average price; decrease B) increase; average price; increase C) increase; average cost; decrease D) decrease; markup; decrease E) increase; marginal cost; decrease

A) increase; average price; decrease

An export tariff will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

A) increase; decrease; increase; have an ambiguous effect on

If an import-competing firm is imperfectly competitive, then under free trade an export tariff will ________ domestic market price, ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; have no effect on; decrease; increase; decrease B) decrease; decrease; increase; decrease; have no effect on C) increase; have no effect on; increase; decrease; increase D) decrease; increase; decrease; increase; decrease E) have no effect on; have no effect on; decrease; increase; decrease

A) increase; have no effect on; decrease; increase; decrease

Suppose an import-competing firm is imperfectly competitive. Replacement of an export tariff with an import quota that yields the same level of imports will ________ market price, ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; increase; decrease; decrease; decrease B) have no effect on; have no effect on; have no effect on; decrease; decrease C) increase; have no effect on; decrease; decrease; increase D) increase; increase; increase; decrease; have an ambiguous effect on E) decrease; decrease; increase; decrease; increase

A) increase; increase; decrease; decrease; decrease

If an import-competing firm is imperfectly competitive, than under free trade an import quota will ________ domestic market price, ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; increase; decrease; have no effect on; decrease B) decrease; decrease; increase; decrease; have no effect on C) increase; have no effect on; decrease; increase; decrease D) decrease; increase; decrease; increase; decrease E) have no effect on; have no effect on; decrease; increase; decrease

A) increase; increase; decrease; have no effect on; decrease

Under the model of monopolistic competition, a(an) ________ in the number of firms in the industry will cause ________ to ________. A) increase; markup; decrease B) increase; average price; increase C) increase; average cost; decrease D) decrease; markup; decrease E) increase; marginal cost; decrease

A) increase; markup; decrease

Two countries engaged in trade in products with no scale economies, produced under conditions of perfect competition, are likely to be engaged in A) inter-industry trade. B) monopolistic competition. C) intra-industry trade. D) Heckscher-Ohlin trade. E) oligopolistic competition

A) inter-industry trade.

Under oligopoly, firms' pricing policies are ________ and, under monopolistic competition, they are ________. A) interdependent; independent B) independent; interdependent C) cooperative; uncooperative D) uncooperative; cooperative E) profit maximizing; revenue maximizing

A) interdependent; independent

The simultaneous export and import of widgets by the United States is an example of A) intra-industry trade. B) increasing returns to scale. C) imperfect competition. D) inter-industry trade. E) the effect of a monopoly on international trade.

A) intra-industry trade.

Two countries engaged in trade in products with scale economies, produced under conditions of monopolistic competition, are likely to be engaged in A) intra-industry trade. B) price competition. C) inter-industry trade. D) Heckscher-Ohlinean trade. E) immiserizing trade.

A) intra-industry trade.

When a country both exports and imports a type of commodity, the country is engaged in A) intra-industry trade. B) increasing returns to scale. C) imperfect competition. D) inter-industry trade. E) an attempt to monopolize the relevant industry.

A) intra-industry trade.

The deadweight loss of a tariff A) is a social loss because it promotes inefficient use of national resources. B) is a social loss because it reduces the revenue of the government. C) is not a social loss because it merely redistributes revenue from one sector to another. D) is not a social loss because it is paid for by rich corporations. E) is not a social loss because it aids domestic consumers.

A) is a social loss because it promotes inefficient use of national resources.

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

A) larger; more; more; lower

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

A) long-run profit will be equal to zero.

If a firm increases its output in the ________ and unit costs ________, then the firm is experiencing ________ of scale. A) long-run; decrease; economies B) short-run; decrease; economies C) long-run; decrease; diseconomies D) short-run; decrease; diseconomies E) long-run; increase; economies

A) long-run; decrease; economies

If a firm increases its output in the ________ and unit costs ________, then the firm is experiencing ________ of scale. A) long-run; increase; diseconomies B) short-run; decrease; economies C) long-run; decrease; diseconomies D) short-run; decrease; diseconomies E) long-run; increase; economies

A) long-run; increase; diseconomies

In the model of monopolistic competition, compared to a firm with a higher marginal cost, a firm with a lower marginal cost will set a ________ price, produce ________ output, and earn ________ profits. A) lower; more; more B) higher; more; more C) lower; less; less D) higher; less; less E) higher; less; more

A) lower; more; more

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

A) marginal cost; negative

In the model of monopolistic competition, trade costs between countries cause A) marginal costs of exported goods to exceed the marginal costs of goods sold domestically. B) marginal costs of goods sold domestically to exceed the marginal costs of exported goods. C) all firms that can earn a profit on domestic sales to export their goods at lower prices. D) all firms that can earn a profit on domestic sales to export their goods at higher prices. E) countries to negotiate the elimination of trade costs by mutual subsidization of trade.

A) marginal costs of exported goods to exceed the marginal costs of goods sold domestically.

A monopoly firm will maximize profits by producing where A) marginal revenue is the same in domestic and foreign markets. B) prices are the same in domestic and foreign markets. C) marginal revenue is higher in foreign markets. D) marginal revenue is higher in the domestic market. E) total revenue from domestic and foreign sales is maximized.

A) marginal revenue is the same in domestic and foreign markets.

International trade based solely on internal scale economies in both countries is likely to be carried out by A) monopolists in each country. B) a relatively large number of price competing firms. C) a relatively small number of price competing firms. D) a relatively small number of imperfect competitors. E) a large number of oligopolists in each country.

A) monopolists in each country.

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

A) product differentiation.

In the model of monopolistic competition, an increase in industry output will ________ market shares and ________ profits of producers of higher-priced goods and will ________ market shares and ________ profits of producers of lower-priced goods. A) reduce; reduce; increase; increase B) increase; increase; reduce; reduce C) increase; reduce; increase; reduce D) reduce; increase; reduce; increase E) reduce; increase; increase; reduce

A) reduce; reduce; increase; increase

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

A) slopes downward; slopes downward; below

Intra-industry trade will tend to dominate trade flows when which of the following exists? A) small differences between relative country factor availabilities B) large differences between relative country factor availabilities C) homogeneous products that cannot be differentiated D) constant cost industries E) uneven distribution of abundant resources between two countries

A) small differences between relative country factor availabilities

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

A) smaller; fewer; less; higher

In the model of monopolistic competition, trade costs between countries cause A) some firms that can earn a profit on domestic sales to refrain from exporting their goods. B) prices of goods sold domestically to exceed the prices of exported goods. C) marginal costs of goods sold domestically to exceed the marginal costs of exported goods. D) all firms that can earn a profit on domestic sales to export their goods at higher prices. E) countries to negotiate the elimination of trade costs by mutual subsidization of trade.

A) some firms that can earn a profit on domestic sales to refrain from exporting their goods.

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) specific tariff.

An import quota is similar to a ________ in its effect on imports, except that an import quota ________. A) tariff; does not generate revenue B) tariff; generates revenue C) subsidy; does not generate revenue D) subsidy; generates revenue E) tariff; does not result in an efficiency loss.

A) tariff; does not generate revenue

A specific tariff provides home producers more protection when A) the home market buys cheaper products rather than expensive products. B) it is applied to a commodity with many grade variations. C) the home demand for a good is elastic with respect to price changes. D) it is levied on manufactured goods rather than primary products. E) the home supply outnumbers the foreign imports.

A) the home market buys cheaper products rather than expensive products

Intra-industry trade is most common in the trade patterns of A) the industrial countries of Western Europe. B) the developing countries of Asia and Africa. C) raw material producers. D) China with the rest of the world. E) labor-intensive products.

A) the industrial countries of Western Europe.

In an industry where firms experience internal scale economies, the long-run cost of production will depend on A) the size of the market. B) the size of the labor force. C) whether the country engages in intra-industry trade. D) individual firms' fixed costs. E) whether the country engages in inter-industry trade.

A) the size of the market.

An industry is characterized by scale economies and exists in two countries. In order for consumers of its products to enjoy both lower prices and more variety of choice A) the two countries must engage in international trade with each other. B) each country's marginal cost must equal that of the other country. C) the marginal cost of this industry must equal marginal revenue in the other. D) the monopoly must lower prices in order to sell more. E) they must combine to become a multinational corporation.

A) the two countries must engage in international trade with each other.

Modeling trade in imperfectly competitive industries is problematic because A) there is no single generally accepted model of behavior by imperfectly competitive firms. B) there are no models of imperfectly competitive behavior. C) it is difficult to find an imperfectly competitive firm in the real world. D) collusion among imperfectly competitive firms makes usable data rare. E) there is only a single model of imperfect competition (monopoly) but imperfect competition can take many forms in the real world.

A) there is no single generally accepted model of behavior by imperfectly competitive firms.

A monopolistic firm A) will never sell a product whose demand is inelastic at the quantity sold. B) can sell as much as it wants for any price it determines in the market. C) cannot determine the price, which is determined by consumer demand. D) cannot sell additional quantity unless it raises the price on each unit. E) will always earn a profit in the long run.

A) will never sell a product whose demand is inelastic at the quantity sold.

A firm in long-run equilibrium under monopolistic competition will earn A) zero economic profits because of free entry. B) positive monopoly profits because each sells a differentiated product. C) positive oligopoly profits because each firm sells a differentiated product. D) negative economic profits because it has economies of scale. E) positive economic profit if it engages in international trade.

A) zero economic profits because of free entry.

An imperfectly competitive firm has the following demand curve: Q = 100 - 2P. What is marginal revenue equal to when P = 30?

An imperfectly competitive firm has the following demand curve: Q = 100 - 2P. What is marginal revenue equal to when P = 30?

Which of the following is a fixed percentage of the value of an imported product? A) specific tariff B) ad valorem tariff C) nominal tariff D) effective protection tariff E) infant industry tariff

B) ad valorem tariff

A tax of 20 percent 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

B) ad valorem tariff.

As globalization tends to increase the proportion of imported inputs relative to domestically supplied components A) the nominal tariff automatically increases. B) the rate of (effective) protection automatically decreases. C) the nominal tariff automatically decreases. D) the rate of (effective) protection automatically increases. E) the amount of tariffs levied increases.

B) an ad valorem tariff will tend to raise more revenue than a specific tariff.

If the tariff on computers is not changed, but the government then adds hitherto nonexistent tariffs on imported semi-conductor components, then the effective rate of protection in the computer industry will A) increase. B) decrease. C) remain the same. D) depend on whether computers are PCs or "Supercomputers." E) no longer apply.

B) decrease.

Throughout the post-World War II era, the importance of tariffs as a trade barrier has A) increased. B) decreased. C) remained the same. D) fluctuated wildly. E) demonstrated a classic random walk with a mean-reversion tendency.

B) decreased.

The main redistribution effect of a tariff is the transfer of income from A) domestic producers to domestic buyers. B) domestic buyers to domestic producers. C) domestic producers to domestic government. D) domestic government to domestic consumers. E) foreign producers to domestic consumers.

B) domestic buyers to domestic producers.

Which type of tariff is forbidden in the United States on Constitutional grounds? A) import tariff B) export tariff C) specific tariff D) prohibitive tariff E) import quota

B) export tariff

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) generate tax revenue for the government

Specific tariffs are A) import taxes stated in specific legal statutes. 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) the same as import quotas. E) import taxes calculated based solely on the origin country.

B) import taxes calculated as a fixed charge for each unit of imported goods

A policy of tariff reduction in the computer industry is A) in the interest of the United States as a whole and in the interest of computer producing regions of the country. B) in the interest of United States as a whole but not in the interest of computer producing regions of the country. C) not in the interest of the United States as a whole but in the interests of computer producing regions of the country. D) not in the interest of the United States as a whole and not in the interests of computer consumers. E) not in the interest of the United States as a whole but in the interests of foreign computer producers.

B) in the interest of United States as a whole but not in the interest of computer producing regions of the country.

An export subsidy will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

B) increase; decrease; decrease; decrease

Of the many arguments in favor of tariffs, the one that has enjoyed significant economic justification has been the A) cheap foreign labor argument. B) infant industry argument. C) even playing field argument. D) balance of payments argument. E) domestic living standard argument.

B) infant industry argument.

When a government allows raw materials and other intermediate products to enter a country duty free, this generally results in a(an) A) effective tariff rate less than the nominal tariff rate. B) nominal tariff rate less than the effective tariff rate. C) rise in both nominal and effective tariff rates. D) fall in both nominal and effective tariff rates. E) rise in only the effective tariff rate.

B) nominal tariff rate less than the effective tariff rate.

If a good is imported into (small) country H from country F, 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 does not affect its price in country F. C) lowers 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.

B) raises the price in country H and does not affect its price in country F.

If a small country imposes a tariff, then A) the producers must suffer a loss. B) the consumers must suffer a loss. C) the government revenue must suffer a loss. D) the demand curve must shift to the left. E) the world price on that item will shift.

B) the consumers must suffer a loss.

A problem encountered when implementing an "infant industry" tariff is that A) domestic consumers will purchase the foreign good regardless of the tariff. B) the industry may never "mature." C) most industries require tariff protection when they are mature. D) the tariff may hurt the industry's domestic sales. E) the tariffs fail to protect the domestic producers.

B) the industry may never "mature."

An imperfectly competitive firm has the following total cost curve: C = 100 + 4Q. What is total cost equal to when Q = 10?

C = 100 + (4)(10) = 140

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

C) It raises revenue for the government.

The European Union's Common Agricultural Policy (CAP) is, in effect A) a tariff imposed on agricultural exports. B) a tariff imposed on agricultural imports. C) a subsidy that reduces the cost of agricultural exports. D) a subsidy that increases the cost of agricultural exports. E) a quota that limits production of agricultural goods by EU nations.

C) a subsidy that reduces the cost of agricultural exports.

An export subsidy differs from a tariff in each of the following ways EXCEPT A) a tariff generates revenue. B) a tariff is applied to imports. C) a tariff results in an efficiency loss. D) a tariff is a tax. E) a tariff discourages imports.

C) a tariff results in an efficiency loss.

In the country levying the tariff, the tariff will A) increase both consumer and producer surplus. B) decrease both the consumer and producer surplus. C) decrease consumer surplus and increase producer surplus. D) increase consumer surplus and decrease producer surplus. E) decrease consumer surplus but leave producers surplus unchanged.

C) decrease consumer surplus and increase producer surplus.

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

C) domestic consumers of steel

The principle benefit of tariff protection goes to A) domestic consumers of the good produced. B) foreign consumers of the good produced. C) domestic producers of the good produced. D) foreign producers of the good produced. E) the domestic government.

C) domestic producers of the good produced

In the exporting country, an export subsidy will A) help consumers and raise the overall economic welfare of the exporting country. B) hurt consumers but raise the overall economic welfare of the exporting country. C) hurt consumers and lower the overall economic welfare of the exporting country. D) help consumers but lower economic welfare of the exporting country. E) help consumers and have no effect on the economic welfare of the exporting country.

C) hurt consumers and lower the overall economic welfare of the exporting country.

The fact that industrialized countries levy very low or no tariff on raw materials and semi processed goods A) helps developing countries export manufactured products. B) has no effect on developing country exports. C) hurts developing country efforts to export manufactured goods. D) hurts developing country efforts to export raw materials. E) does not affect industrialized countries' exports.

C) hurts developing country efforts to export manufactured goods.

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) the same as import quotas. E) import taxes calculated solely on the origin country

C) import taxes calculated as a fraction of the value of the imported goods.

Suppose the United States eliminates its tariff on ball bearings used in producing exports. Ball bearing prices in the United States would be expected to A) increase, and the foreign demand for U.S. exports would increase. B) decrease, and the foreign demand for U.S. exports would increase. C) increase, and the foreign demand for U.S. exports would decrease. D) decrease, and the foreign demand for U.S. exports would decrease. E) decrease, and the foreign demand would be unchanged

C) increase, and the foreign demand for U.S. exports would decrease.

An import quota will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

C) increase; decrease; have no effect on; have an ambiguous effect on

An imperfectly competitive firm has the following total cost curve: C = 100 + 4Q. What is average total cost equal to when Q = 10?

C/Q = [100 + (4)(10)]/10 = 14

The excess supply curve of a product we (H) import from foreign countries (F) increases as A) excess demand of country H increases. B) excess demand of country F increases. C) excess supply of country H increases. D) excess supply of country F increases. E) excess supply of country F decreases.

D) excess supply of country F increases

The tariff levied in a "large country" (Home), lowers the world price of the imported good. This causes A) foreign consumers to demand less of the good on which was levied a tariff. B) domestic demand for imports to decrease. C) domestic demand for imports to increase. D) foreign suppliers to produce less of the good on which was levied a tariff. E) no change in the foreign price of the good it imports.

D) foreign suppliers to produce less of the good on which was levied a tariff.

A voluntary export restraint will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

D) increase; decrease; have no effect on; decrease

Should the home country be "large" relative to its trade partners, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms of the trade rectangle exceed the sum of the A) revenue effect plus redistribution effect. B) protective effect plus revenue effect. C) consumption effect plus redistribution effect. D) production distortion effect plus consumption distortion effect. E) terms of trade gain.

D) production distortion effect plus consumption distortion effect.

The U.S. sugar quota A) generates government revenue. B) results in net welfare benefits to the U.S. economy. C) results in benefits to sugar producers that exceed the cost to consumers. D) results in costs to consumers that exceed the benefits to sugar producers. E) does not result in an efficiency loss.

D) results in costs to consumers that exceed the benefits to sugar producers.

The effective rate of protection measures A) the "true" ad valorem value of a tariff. B) the quota equivalent value of a tariff. C) the efficiency with which the tariff is collected at the customhouse. D) the protection given by the tariff to domestic value added. E) the difference between domestic and foreign prices of the import.

D) the protection given by the tariff to domestic value added.

The imposition of tariffs on imports results in deadweight (triangle) losses. These are A) production and consumption distortion effects. B) redistribution effects. C) revenue effects D) efficiency effects. E) distortion of incentives.

E) distortion of incentives.

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

E) gains for domestic producers

The most vocal political pressure for tariffs is generally made by A) consumers lobbying for export tariffs. B) consumers lobbying for import tariffs. C) consumers lobbying for lower import tariffs. D) producers lobbying for export tariffs. E) producers lobbying for import tariffs.

E) producers lobbying for import tariffs.

If a good is imported into (large) country H from country F, 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) lowers 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) raises the price of the good in H and lowers it in F.

An imperfectly competitive firm has the following total cost curve: C = 100 + 4Q. What is average fixed cost equal to when Q = 10?

F/Q = 100/10 = 10

An imperfectly competitive firm has the following total cost curve: C = 100 + 4Q. What is marginal cost equal to when Q = 10?

MC = 4 for any Q

An imperfectly competitive firm has the following demand curve: Q = 100 - 2P. What is marginal revenue equal to when P = 40?

Q = 20, so MR = 40 - (20/2) = 30.