Microeconomics: Chapter 9

Suppose the U.S. government imposes a​ $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. With the tariff in​ place, the United States consumes

31 million pounds of rice.

Suppose the U.S. government imposes a​ $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. Without the tariff in​ place, the United States consumes

42 million pounds of rice.

Suppose the U.S. government imposes a​ $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. With the tariff in​ place, the United States produces

15 million pounds of rice.

Suppose the U.S. government imposes a​ $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. The loss in domestic consumer surplus as a result of the tariff is equal to the area

C​ + D​ + E​ + F.

Since 1953 the United States has imposed a quota to limit the imports of peanuts. The figure to the right illustrates the impact of the quota. What is the area that represents the deadweight loss as a result of the​ quota?

E + M

Which of the following statements is​ true?

Each country as a whole is made better off as a result of international​ trade, but individuals within each country may be made worse off.

Linda and Sandy own The Preppy​ Puppy, a dog grooming business. The table above lists the number of dogs Linda and Sandy can each bathe and groom in one week. Select the statement that accurately interprets the data in the table.

Sandy has a comparative advantage in dog grooming.

​________ raised average tariff rates by over 50 percent in the United States in 1930.

The​ Smoot-Hawley Tariff

A numerical limit imposed by a government on the quantity of a good that can be imported into the country is called a

quota.

The main purpose of most tariffs and quotas is to

reduce the foreign competition that domestic firms face.

Suppose the U.S. government imposes a​ $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. Without the tariff in​ place, the United States produces

9 million pounds of rice.

If Canada imports fishing poles from Mexico and Mexico imports bacon from​ Canada, which of the following would explain this pattern of​ trade?

The opportunity cost of producing fishing poles in Canada is higher than it is in​ Mexico, and the opportunity cost of producing bacon in Mexico is higher than it is in Canada.

Suppose the U.S. government imposes a​ $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. The increase in domestic producer surplus as a result of the tariff is equal to the area

C

​________ is the ability of an​ individual, a​ firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Comparative advantage

Suppose the U.S. government imposes a​ $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. The tariff revenue collected by the government equals the area

E

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

they believe the restrictions will protect their jobs.

In 1995​ ________, which was established in​ 1948, was replaced by​ ________.

the​ GATT; the WTO

When​ Roxanne, a U.S.​ citizen, purchases a designer dress from Barneys of New York that was made in​ Milan, the purchase is

a U.S. import and an Italian export.

Countries that engage in trade will tend to specialize in the production of goods and services in which they have​ ________ and will​ ________ these goods and services.

a comparative​ advantage; export

A tariff is

a tax imposed by a government on goods imported into a country.

A situation in which a country does not trade with other countries is called

autarky

Whenever a buyer and a seller agree to​ trade,

both must believe they will be made better off.

The selling of a product for a price below its cost of production is called

dumping.

Suppose the U.S. government imposes a​ $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. With the tariff in​ place, the United States

imports 16 million pounds of rice.

Exports are domestically produced goods and services

sold to other countries.

NAFTA refers to a 1994 agreement that eliminated most tariffs among which​ countries?

the United States, Canada, and Mexico

The ratio at which a country can trade its exports for imports from other countries is called

the terms of trade.