Chapter 20 Quiz

​Which of the following would be expected if the tariff on foreign-produced automobiles was increased?

The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise

​A U.S. tariff on French wine will likely benefit U.S. wine producers and the U.S. government (by increasing tax revenue), but harm U.S. wine drinkers and French wine producers.

True

A reduction in government purchases and decline in the money supply

curve has a different slope

​Which of the following is not a result of a U.S. tariff on foreign autos?

decrease the quantity of domestic autos purchased by U.S. consumers

​Compared to the no-trade situation, when a country exports a good:

domestic consumers lose, domestic producers gain, and the gains outweigh the losses

​The infant industry argument for protectionism suggest that an industry must be protected in the early stages of its development so that:

domestic producers can attain the economies of scale to allow them to compete in world markets

​The difference between the price the consumer is willing to pay for a good or service and what he would have to pay for that unit is called:

the gain in consumer surplus

​If a nation does not have an absolute advantage in producing anything, it

will have a comparative advantage in the activity in which its disadvantage is the least.

​A U.S. import tariff imposed on steel is likely to:

increase employment in the U.S. steel industry

​Imposing a quota on metal softball bats shipped into the United States would likely:

increase the price of the bats but decrease the total quantity of bats purchased in the United States