Test 3 Micro
Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals
$100
Refer to Figure 9-5. With trade, the price of tricycles in this country is
$11, with 200 tricycles produced in this country and another 320 tricycles imported.
Refer to Table 10-1. How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially-optimal outcome?
$2
Refer to Figure 10-8. What is the equilibrium price in this market?
$8
Refer to Figure 10-8. What is the socially-optimal quantity of output in this market?
10 units
Refer to Figure 9-6. When the tariff is imposed, domestic consumers
?lose by $200.
When a country that imports a particular good imposes a tariff on that good,
?not producer surplus decreases and total surplus decreases in the market for that good
Refer to Figure 9-9. Total surplus in this market after trade is
A + B + C + D.
Refer to Figure 9-1. When trade is allowed,
Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off.
Suppose Japan exports cars to Russia and imports wine from France. This situation suggests
Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine.
Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are
P1 and Q4
If the government were to impose a fine of $4,000 for each unit of air-pollution released by a fertilizer plant, the policy would be considered
a corrective tax
The principle of comparative advantage asserts that
countries can become better off by specializing in what they do best.
Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala
decreases by the area B + D.
A tariff on a product makes
domestic sellers better off and domestic buyers worse off
Refer to Figure 9-6. Before the tariff is imposed, this country
imports 400 roses
A tax on an imported good is called a
tariff
An externality is
the uncompensated impact of one person's actions on the well-being of a bystander
All externalities
cause markets to fail to allocate resources efficiently
What is the fundamental basis for trade among nations?
comparative advantage
Negative externalities lead markets to produce
greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels
Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to German wheat farmers. As a result of the French subsidy, sales of French wheat to Germany
may prompt German farmers to invoke the unfair-competition argument. increase the consumer surplus of German buyers of wheat. increase the total surplus of the German people
The North American Free Trade Agreement
reduced trade restrictions among Canada, Mexico and the United States.
Positive externalities
result in smaller than efficient equilibrium quantity.
Internalizing a positive externality will cause the demand curve to
shift to the right
The "unfair-competition" argument might be cited by an American who believes that
the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.
After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,
the domestic price of coffee will equal the world price of coffee.
If education produces positive externalities, we would expect
the government to subsidize education.
Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that
the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed.
Which of the following tools and concepts is useful in the analysis of international trade?
total surplus domestic supply equilibrium price
An optimal tax on pollution would result in which of the following?
Producers will internalize the cost of the pollution.
Refer to Table 10-1. What is the socially-optimal quantity of output in this market?
2 units
Karen's cat causes Danny to sneeze. Karen values her cat's companionship at $300 per year. The cost to Danny of tissues and her allergy medication is $350 per year. Based on the Coase theorem,
Danny should pay Karen $325 to give away her cat.
Refer to Figure 10-9, Panel (b). The market equilibrium quantity is
Q3, and the socially optimal quantity is Q2.
Which of the following is an example of an externality?
cigarette smoke that permeates an entire restaurant a flu shot that prevents a student from transmitting the virus to her roommate a beautiful flower garden outside of the local post office
Negative externalities occur when one person's actions
adversely affect the well-being of a bystander who is not a party to the action.
If the world price of coffee is higher than Colombia's domestic price of coffee without trade, then Colombia
has a comparative advantage in coffee and should export coffee.
A country has a comparative advantage in a product if the world price is
higher than that country's domestic price without trade.
For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should
import copper
One reason that private solutions to externalities do not always work is that
interested parties incur costs in the bargaining process.
All remedies for externalities share the goal of
moving the allocation of resources toward the socially optimal equilibrium
Refer to Figure 9-1. In the absence of trade, total surplus in Guatemala is represented by the area
not abcdefg
When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,
producer surplus increases and total surplus decreases in the market for that good.
Refer to Figure 10-4. The socially optimal quantity would be
q2
If gasoline taxes were significantly increased in the United States, then
some of the government regulations that require automakers to produce more fuel-efficient cars would become unnecessary. other taxes, such as income taxes, could be lowered. it is likely that roads would become safer and the environment would become cleaner
Refer to figure 9-26. The figure shows that
the U.S. will export baseballs when the market opens to international trade.