ECON CH 9

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is Question 17 options: A. if it works consumer surplus will decline. B. if it works producer surplus falls. C. if it fails the country faces a choice between two bad options. D. if it fails total surplus will increase.

C

The size of the tariff on roses is Question 10 options: A. $4. B. $2. C. $2. D. $1.

D

Producer surplus in this market after trade is Question 25 options: A. C. B. C + B. C. A + B + D. D. B + C + D.

A

The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. Refer to Scenario 9-1. If trade in peaches is allowed, the price of peaches in the United States Question 8 options: A. will increase, and this will cause consumer surplus to decrease. B. will decrease, and this will cause consumer surplus to increase. C. will be unaffected, and consumer surplus will be unaffected as well. D. could increase or decrease or be unaffected; this cannot be determined.

A

A major difference between tariffs and import quotas is that Question 7 options: A. tariffs create deadweight losses, but import quotas do not. B. tariffs help domestic consumers, and import quotas help domestic producers. C. tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import. D. All of the above are correct.

C

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should Question 13 options: A. export copper, since that country has a comparative advantage in copper. B. import copper, since that country has a comparative advantage in copper. C. neither export nor import copper, since that country cannot gain from trade. D. neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

A

If China were to abandon a no-trade policy in favor of a free-trade policy, Question 9 options: A. Chinese producers of pencil sharpeners would become worse off. B. Chinese consumers of pencil sharpeners would become better off. C. total surplus in the Chinese economy would increase. D. All of the above are correct.

C

A tariff is a Question 11 options: A. limit on how much of a good can be exported. B. limit on how much of a good can be imported C.tax on an exported good. D. tax on an imported good.

D

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price, Question 6 options: A. the country will be an exporter of the good. B. the country will be an importer of the good. C. the country will be neither an exporter nor an importer of the good. D. Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

A

With free trade, the country Question 20 options: A. exports 20 units of the good. B. imports 20 units of the good. C. exports 30 units of the good. D. imports 30 units of the good.

B

With trade and without a tariff, the price and domestic quantity demanded are Question 12 options: A. P1 and Q1. B. P1 and Q4. C. P2 and Q2. D. P2 and Q3.

B

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be Question 23 options: A. better off regardless of how Colombia responds. B. better off if Colombia removes the subsidies, and will be no worse off if it doesn't. C. worse off if Colombia doesn't remove the subsidies in response to the threat. D. worse off regardless of how Colombia responds.

C

Suppose the government imposes a tariff of $10 per unit. With trade and a tariff, consumer surplus is Question 19 options: A. $625 and producer surplus is $25. B. $625 and producer surplus is $225. C. $1,225 and producer surplus is $25. D. $1,225 and producer surplus is $225.

C

The North American Free Trade Agreement Question 24 options: A. is an example of the unilateral approach to free trade. B. eliminated tariffs on imports to North America from the rest of the world. C. reduced trade restrictions among Canada, Mexico and the United States. D. All of the above are correct.

C

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy, Question 22 options: A. consumer surplus increases and total surplus increases in the market for that good. B. consumer surplus increases and total surplus decreases in the market for that good. C. consumer surplus decreases and total surplus increases in the market for that good. D. consumer surplus decreases and total surplus decreases in the market for that good.

D

Which of the following is not a commonly-advanced argument for trade restrictions? Question 21 options: A.the jobs argument B. the national-security argument C. the infant-industry argument D. the efficiency argument

D

The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that Question 2 options: A. Farmland has a comparative advantage, relative to other countries, in producing beef. B. other countries have an absolute advantage, relative to Farmland, in producing beef. C. the price of beef in Farmland exceeds the world price of beef. D. if Farmland were to allow trade, it would export pepper.

A

When trade is allowed, Question 3 options: A. Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off. B. Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off. C. both Guatemalan producers and consumers of coffee become better off. D. both Guatemalan producers and consumers of coffee become worse off.

A

Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the world price of televisions to the price of televisions in Teeveeland, we can determine whether Question 18 options: A. consumer surplus exceeds producer surplus in Teeveeland. B. Teeveeland has an absolute advantage in producing televisions. C. Teeveeland has a comparative advantage in producing televisions. D. All of the above are correct.

B

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so Question 15 options: A. because it is impossible to analyze the gains and losses from international trade without making this assumption. B. because then we can assume that world prices of goods are unaffected by that country's participation in international trade. C. in order to rule out the possibility of tariffs or quotas. D. All of the above are correct.

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 the Question 5 options: A. national-security argument. B. infant-industry argument. C. unfair-competition argument. D. jobs argument.

B

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy, Question 14 options: A. consumer surplus increases and total surplus increases in the market for that good. B. consumer surplus increases and total surplus decreases in the market for that good. C. consumer surplus decreases and total surplus increases in the market for that good. D. consumer surplus decreases and total surplus decreases in the market for that good.

B

When the country for which the figure is drawn allows international trade in crude oil, Question 4 options: A. consumer surplus changes from the area A + B + D to the area A. B. producer surplus changes from the area C to the area B + C + D. C. total surplus decreases by the area D. D. All of the above are correct.

B

With free trade, the country for which the figure is drawn will Question 1 options: A. export 30 units of textiles. B. export 50 units of textiles. C. import 30 units of textiles. D. import 50 units of textiles.

D

With trade, the country Question 16 options: A. exports 200 units of the good. B. exports 400 units of the good. C. imports 400 units of the good. D. imports 600 units of the good.

D