WGU C211 Comp 5 Assessing Global Economic Performance 12% CH 9, 7, 23
Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?
$8
Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?
A multilateral approach requires the agreement of two or more nations.
Which transaction is included in the consumption component of GDP?
A person pays for a haircut.
Which of the following is included in GDP?
Both the market value of rental housing services and the market value of owner-occupied housing services
What is the fundamental basis for trade among nations?
Comparative advantage
Suppose there is an early freeze in California that reduces the size of the lemon crop. As the price of lemons rises, what happens to consumer surplus in the market for lemons?
Consumer surplus decreases.
Import quotas and tariffs produce some common results. Which of the following is not one of those common results?
Equal revenue is always raised for the domestic government.
Which quantity measures the market value of all final goods and services produced within a country in a given period of time?
Gross domestic product (GDP)
An import tariff is implemented on apples. What is the effect on domestic government revenue?
It increases.
Which statement about consumer surplus is true?
It is a good measure of economic well-being if policymakers want to satisfy the preferences of buyers.
What is true about producer surplus?
It is used to measure the well-being of sellers.
Which of the following is not a commonly-advanced argument for trade restrictions?
The efficiency argument
When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?
The losses of domestic consumers of the good exceed the gains of domestic producers of the good.
Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?
The purchase of a new house
Which of the following is included in the calculation of GDP?
The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.
What is true about tariffs?
They allow the government to raise revenue.
In a simple circular-flow diagram, total income and total expenditure are
always equal because every transaction has a buyer and a seller.
On a graph, consumer surplus is represented by the area
below the demand curve and above price.
Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,
both Janine and Henry experience an increase in consumer surplus.
Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to
both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.
For the purpose of calculating GDP, investment is spending on
capital equipment, inventories, and structures, including household purchases of new housing.
If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the
consumer does not purchase the good.
When a country that imports a particular good imposes a tariff on that good,
consumer surplus decreases and total surplus decreases in the market for that good.
When a country that imports a particular good imposes an import quota on that good,
consumer surplus decreases and total surplus decreases in the market for that good.
A drought in California destroys many red grapes causing the prices of both red grapes and red wine to rise . As a result, the consumer surplus in the market for red grapes
decreases, and the consumer surplus in the market for red wine decreases.
According to the circular-flow diagram GDP, can be computed as
either the revenue firms receive from the sales of goods and services or the payments they make to factors of production.
An example of positive analysis is studying
how market forces produce equilibrium.
The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that
if Wheatland were to allow trade, it would import corn.
Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is
included in U.S. GDP, but it is not included in U.S. GNP.
A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called
intermediate goods.
The value of goods added to a firm's inventory in a certain year is treated as
investment, since GDP aims to measure the value of the economy's production that year.
In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,
market prices.
The particular price that results in quantity supplied being equal to quantity demanded is the best price because it
maximizes the combined welfare of buyers and sellers.
A demand curve reflects each of the following except the
quantity that each buyer will ultimately purchase .
A tax on an imported good is called a
tariff
GDP is defined as the
value of all final goods and services produced within a country in a given period of time.
If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be
worse off if Colombia doesn't remove the subsidies in response to the threat.
To encourage formation of small businesses, the government could provide subsidies; these subsidies
would not be included in GDP because they are transfer payments.
