Economics Chapter 6,7, and 9
What is meant by tax incidence?
A tax burden is shared between buyer and sellers
What is a tariff?
Tax on imports
When are price controls enacted by the government?
When policy advisors say it is unfair to everyone
The maximum price that a buyer will pay for a good is called _________________ to pay
Willingness
The price of a. good that prevails in a world market is called the _______________ price
World
___________________________________________is located in Geneva, Switzerland. It governs 97% of world trade. it administers trade agreements and handles dispute
World trade organization
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it A. maximizes both the total revenue for firms and the quantity supplied for the prodcut b. maximizes the combined welfare of buyers and sellers c. mimeses costs and maximizes output d. minimizes the level of welfare payments
b
If a worker is highly skilled and his/her equilbrium wage is higher than minimum wage, then minimum wage is a. binding b. not binding c. neither of the above d. both a and b
b
Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run. This observation helps to explain why many economists are skeptical about how. a. national-security argument b. Infant-industry argument c. unfair-competition argument d. Jobs argument
b
Why are price controls enacted by government?
being treaded unfairly
What is a price floor?
The lowest a price can be
What is meant by world price?
The price of a good that prevails the world market for that good
Economists typically measure efficiency using _____________________. _____________________
Total surplus
What agreement will replace NAFTA?
United States Mexico Canada Agreement
When a country allows trade and becomes an import of coal: a. the losses of the domestic producers of coal exceed the gains of the domestic consumers of coal b. The losses of the domestic consumers of coal exceed the gains of the domestic producers of coal C. the gains of the domestic producers of coal exceed the losses of the domestic consumers of coal D. The gains of the domestic consumers of coal exceed the losses of the domestic producers of coal
d
When speaking of market outcomes, there are three things to consider: A. free markets allocate the supply of goods to the buyers who value them most highly b. free markets allocate the demand for goods to the sellers who can produce them at the least possible cost c. fee markets produce the quantity of goods that maximizes the same of consumer and producer surplus d. all of the above
d
Countries that restrict trade are likely to have more firms with DOMESTIC or FOREIGN market power?
domestic
Welfare economics is the study of how ___________________________________________________________
efficiently we allocate our scare resources
What is the word used to describe the "property of distributing economic prosperity uniformly among the members of society"
equality
If the price floor is below the ________________________price, the price floor has no binding affect
equilbrium
Suppose Brazil has a comparative advantage over other countries in producing almonds, but other countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil will import or export almonds?
export
for any country if the world price of copper is higher than the domestic price of copper without trade, that country should export or import copper since that country has a comparative advantage in copper?
export
Free markets allocate the supply of goods to the buyers who value them most highly and to the sellers who can produce them at the highest cots. true or false
false
When a market has no government controls, it is called a _____________ market.
free
When a market has no government controls, it is called a _______________ market
free
When a market has no government controls, it is called a ________market
free
What does the term laissez-faire mean?
hands free
If the price ceiling is below the equilibrium price, the price ceiling has a binding constraint or does not have a binding constraint
has a binding constraint
a tariff is a tax on __________________ goods.
imported
If a country allows trade and for a certain good the domestic price without trade is higher than the world price, the country will be an importers or exporter of the good?
importer
If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price, the country will be an importer or exporter of the good?
importer
The _________________________________ hand takes all the information about buyers and sellers into account and guides everyone in the market to the best outcome as judged by the standard of economic efficiency. That is why economists advocate free markets as the best way to organize economic activity
invisible
_______________________ is a type of free trade approach whereby all countries reduce trade restrictions
multi lateral
There are various arguments for restricting trade a. protecting jobs b. Defending _____________________ security c. helping ___________________ industries d. preventing _________________competition e. responding to foreign trade restrictions
national beginning unfair
If the price ceiling is able the equilibrium price, does the price ceiling have a binding affect? yes or not
no
If the price floor is below the equilibrium price, does the price floor have a biding affect? yes or no
no
if the price ceiling is above the equilibrium price, the price ceiling has a binding affect or does not have a biding affect
not have a binding affect
What do the letters OPEC translate as?
organization of petroleum export countries
Consumer surplus in a market can be represented by the area below the demand curve and above the _______________.
price
In a free competitive market, what is the rationing mechanism?
price
in a free competitive market, what is the rationing mechanism?
price
a ________________is when prices are not allowed to fall below a certain level.
price floor
The area below the price and above the supply curve measure the ___________________surplus in a market
producer
the area below the price and above the supply curve measures the ___________________surplus in a market
producer
What tools are used by economists to study the welfare of buyers and sellers in a market? Consumer surplus and ___________________________-
producer surplus
When a country allows trade and becomes an exporter of a good, __________________ of the good are better off, and ______________ of the good are worse off
producers consumers
When there is a shortage of a good or service, sellers may ______________ the scare good/service among the large number of potential buyers
ration
Whenever there is a shortage of a good because of a price ceiling, things happen - such as, long lines, sellers selling only to friends and family, etc. Sellers must ____________the scarce goods among the large numbers of potential buyers.
ration
Producer surplus is used to measure the well being of sellers or buyers?
sellers
If the price ceiling is below the eqiuibrium price is there a shortage or surplus of the product?
shortage
Once the government imposes a tariff, the domestic price exceeds the world price by the amount of the _________________
tariff
What is a tax on an imported good called?
tariff
A _____________________ - a tax on imports- moves a market closer to the equilibrium that would exist without trade and, therefore, INCREASES or REDUCES the gains from trade. Although domestic ___________are better off ant the government raises revenue, the losses to ____________________exceed these gains.
tariff, increases, produces, consumers
According to one of the ten principles of economics listed in our textbook, ___________________ can make everyone better off.
trade
If the price floor is below the equilibrium price, the price floor has no binding affect. True or false
true
If the sellers pay a majority of the tax, then we know that the supply is more inelastic than the demand. true or false
true
In a free market, the price serves as the rationing mechanism; and sellers can sell all they want to at the equilibrium price. true or false
true
One should be especially wary of the national-security argument for restricting trade when that argument is made by an industry not defense. True or false
true
Opponents of the minimum wage contend that is not the best way to combat poverty. they note that a high minimum wage causes unemployment, encourages teenagers to drop out of school, and prevents some unskilled workers from getting on the job training. true or false
true
Trade raises the economic well being of a nation in the sense that the gains of the winners exceed the losses of the losers. true or false
true
Within a country the domestic price of a product will equal the world price if the country allows free trade. True or false
true
What causes a surplus of workers according to your text?
when price floor is above the equilibrium
The maximum price that a buyer will pay for a good is called ____________ to pay
willingness
Consumer surplus is a good measure of economic well being if policymakers want to respect the preferences of buyers. yes or no
yes
Consumer surplus is a good measure of economic wellbeing if policymakers want to respect the preference of buyers. yes or no
yes
Is it true according to economists, that gains from trade exceed the losses?yes for no
yes
Markets are a good way to organize economic activity. yes or no
yes
When a country exports a good, will their domestic price of that good rise to the world price. yes or no
yes
Within a country, the domestic price of a product will equal the world price if the country allows free trade? yes or no
yes
if an allocation of resources maximizes total surplus, we say the allocation exhibits efficiency. yes or no
yes
Congressman Smith cites the "jobs argument" when he argues in favor of restriction on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that a. There is no evidence that nay worker ever lost his or her job because of free trade b. unemployment of labor is not a serious problem relative to other economic problems c. The grains from trade are based one comparative advantage D.. the gains from trade are based on absolute advantage
c
Economists typically measure efficiency using a. the price paid by buyers b. the price paid by sellers c. total surplus d. profits to firms
c
Tarifss a. increase the quantity of imports and raise the domestic price of the good b. increase the quantity of imports and lower the domestic price of the good C. decrease the quantity of imports and raise the domestic price of the good D. decrease the quantity of imports and lower the domestic price of the good
c
Which of the ten principles of economics does welfare economics explain more fully? a. the cost of something is what you give up to get it. b. trade can make everyone better off. C. Markets are usually a good way to organize economic activity d. a country standard of living depends on its ability to produce goods and services
c
A shortage of apartment rentals will occur when the equilibrium price is higher than the ____________price
ceiling.
A logical starting point from which the study of international trade begins is the principle of _________________advantage
comparative
To say that markets are efficient, there are several assumptions that need to be made: Markets are perfectly __________________, and market outcomes matter only to buyers and sellers
competitive
______________________is the difference between what consumers are willing to pay and the amount they actually have to pay.
consumer surplus
who benefits more from imported goods? consumers or producers
consumers
Producers: A. john's costs - $60 B. Sarah's costs - $55 C. Harry's costs - $75 Consumers: A. Sue has $200 to spend on car cleaning. B. Jack has $125 to spend on car cleaning c. Tom has $90 to spend on car cleaning All three have their cars cleaned at a cost of $85 each what is the producer surplus? What is the consumer surplus? What is the total surplus?
$65 $160 $225
Three consumers are willing to spend the following flat screen tv: Joan - $2500; Terry - $1800; and loren - $2150. The tv price is $1900. There are three on the shelves What is the consumer surplus?
$850
The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither importing nor exporting TVs. We can conclude that producer surplus in Aquilonia is now. A. higher in the steel market, lower in the rice market, and unchanged in the TV market B. Higher in the rice and steel markets and unchanged in the TV market C. Lower in the rice and TV markets, and higher in the steel market D. Lower in the rice and steel markets and the same in the TV market
A
What are some key changes with USMCA?
All work done by people on vehicles will be people earning at least $16 per hour 75% of car and truck components must be manufactured among these countries The us. gets a longer milk product in Canada
To say that a price ceiling is binding is to say that the price ceiling causes?
Causes quantity demanded to exceed quantity supplied
A high domestic price indicates that the rest of the world has a ___________________ advantage in producing the good and that the country will become an importer or exporter.
Comparative importer
The effects of free trade can be determined by comparing the domestic price without trade to the world price. A low domestic price indicates that the country has a ______________ advantage in producing the good and that country will become an importer or exporter
Comparative, exporter
_________________________is the difference between what consumers are willing to pay and the amount they actually have to pay
Consumer surplus
When a country allows trade and becomes an importer of a good, __________________ are better off, and ___________are worse off.
Consumers and producers
Welfare economics is the study of how the allocation of resources affects ___________________________________
Economic wellbeing
The world price of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almond in Uruguay was $3.00 Once Uruguay began allowing trade in almonds with other countries, Uruguay began importing or exporting almonds and the price per pound in Uruguay increased to $4.50.
Exporting
If the price ceiling is below the equilibrium price, the price ceiling has a binding constraint or does not have a binding constraint?
Has a binding constraint
Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television in Paraguay was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began importing or exporting televisions and the price of a. television in Paraguay decreased to $300.
Importing
The __________________________. _______________________ takes all the information about buyers and sellers into account and guides everyone in the market to the best outcome as judged by the standard of economic efficiency. That is why economists advocate _______________ markets as the best way to organize economic activity.
Invisible hand, free
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it ____________________ the combined welfare of buyers and sellers.
Maximizes
NAFTA( which is? __________________________________) is going to be replaced by (____________________________________) USMCA
North American Free Trade Agreement United States Mexico Canada Agreement
In a market, the marginal buyer is the buyer who would be ______________________________________________________________________
Person to leave the market if the price is too high
In a market, the marginal seller is the seller who would e
The first to leave a market if the price goes down
In a market the marginal buyer is the buyer who would be?
The first to leave a market if the price goes up
What is meant by a price ceiling?
The highest a price can be
