Question 1

An import tariff will worsen the terms of trade for a "small" country but improve the terms of trade for a "large" country.

Accepted Answer

A) True 
 B)False

Question 2

The redistributive effect of an import tariff is the transfer of income from the domestic

Accepted Answer

A)  producers to domestic buyers of the good. 
B)  buyers to domestic producers of the good. 
C)  buyers to the domestic government. 
D)  government to the domestic buyers. 
A)  producers to domestic buyers of the good. 
B)  buyers to domestic producers of the good. 
C)  buyers to the domestic government. 
D)  government to the domestic buyers.

Question 3

Relatively low wages in Mexico make it impossible for U.S.manufacturers of labor-intensive goods to compete against Mexican manufacturers.

Accepted Answer

A) True 
 B)False

Question 4

Which type of tariff is prohibited by the United States Constitution?

Accepted Answer

A)  import tariff 
B)  export tariff 
C)  specific tariff 
D)  ad valorem tariff 
A)  import tariff 
B)  export tariff 
C)  specific tariff 
D)  ad valorem tariff

Question 5

The offshore assembly provision in the U.S.

Accepted Answer

A)  provides favorable treatment to U.S. trading partners. 
B)  discriminates against primary product importers. 
C)  provides favorable treatment to products assembled abroad from U.S. manufactured components. 
D)  hurts the U.S. consumer. 
A)  provides favorable treatment to U.S. trading partners. 
B)  discriminates against primary product importers. 
C)  provides favorable treatment to products assembled abroad from U.S. manufactured components. 
D)  hurts the U.S. consumer.

Question 6

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price.
Figure 4.1. Import Tariff Levied by a "Small" Country  
-Consider Figure 4.1.With free trade, Mexico's producer surplus and consumer surplus respectively equal

Accepted Answer

A)  $5 and $605. 
B)  $25 and $380. 
C)  $45 and $250. 
D)  $85 and $195. 
A)  $5 and $605. 
B)  $25 and $380. 
C)  $45 and $250. 
D)  $85 and $195.

Question 7

The revenue that producers receive over and above the minimum necessary for production is called

Accepted Answer

A)  deadweight loss. 
B)  deadweight gain. 
C)  producer surplus. 
D)  consumer surplus. 
A)  deadweight loss. 
B)  deadweight gain. 
C)  producer surplus. 
D)  consumer surplus.

Question 8

When material inputs enter a country at a very low tariff while the final imported product is protected by a high tariff, the result tends to be a high rate of protection for domestic producers of the final product.

Accepted Answer

A) True 
 B)False

Question 9

Assume the United States is a large consumer of steel that is able to influence the world price. Its demand and supply schedules are respectively denoted by DU.S. and SU.S. in Figure 4.2. The overall (United States plus world) supply schedule of steel is denoted by SU.S.+W.
Figure 4.2. Import Tariff Levied by a "Large" Country   ?
-Suppose that the production of a $30,000 automobile in Canada requires $10,000 worth of steel.The Canadian nominal tariff rates for importing these goods are 25 percent for automobiles and 10 percent for steel.Given this information, the effective rate of protection for the Canadian automobile industry is approximately

Accepted Answer

A)  15 percent. 
B)  32 percent. 
C)  48 percent. 
D)  67 percent. 
A)  15 percent. 
B)  32 percent. 
C)  48 percent. 
D)  67 percent.

Question 10

Assume that the United States imports automobiles from South Korea at a price of $20,000 per vehicle and that these vehicles are subject to an import tariff of 20 percent. Also assume that U.S. components are used in the vehicles assembled by South Korea and that these components have a value of $10,000.
-Refer to Exhibit 4.1.In the absence of the Offshore Assembly Provision of U.S.tariff policy, the price of an imported vehicle to the U.S.consumer after the tariff has been levied is

Accepted Answer

A)  $22,000. 
B)  $23,000. 
C)  $24,000. 
D)  $25,000. 
A)  $22,000. 
B)  $23,000. 
C)  $24,000. 
D)  $25,000.

Question 11

Figure 4.3 Domestic Market for Gasoline in the United States   ​
-Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?

Accepted Answer

A)  60 gallons of gasoline 
B)  $120 
C)  $60 
D)  $3 
A)  60 gallons of gasoline 
B)  $120 
C)  $60 
D)  $3

Question 12

In the absence of international trade, assume that the equilibrium price and quantity of motorcycles in Canada is $14,000 and 10 units respectively. Assuming that Canada is a small country that is unable to affect the world price of motorcycles, suppose its market is opened to international trade. As a result, the price of motorcycles falls to $12,000 and the total quantity demanded rises to 14 units; out of this total, 6 units are produced in Canada while 8 units are imported. Now assume that the Canadian government levies an import tariff of $1,000 on motorcycles. With the tariff, 8 units are produced in Canada and quantity demanded is 12 units.
-Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in producer surplus would be

Accepted Answer

A)  $15. 
B)  $12.50. 
C)  $47.50. 
D)  $57.50. 
A)  $15. 
B)  $12.50. 
C)  $47.50. 
D)  $57.50.

Question 13

A foreign-trade zone (FTZ) is an area within the United States where business can operate without the responsibility of paying customs duties on imported products or materials for as long as they remain within this area and do not enter the U.S.marketplace.

Accepted Answer

A) True 
 B)False

Question 14

Assume that Japan is a large country and levies an "optimal tariff." In this case, the tariff's terms of trade effect more than offsets the consumption and production losses and the tariff results in an overall welfare gain for Japan.

Accepted Answer

A) True 
 B)False

Question 15

A country whose imports of a product constitute a very small portion of the world market supply of that product is a price taker.Thus, this country faces a constant world price for the imports of this product.

Accepted Answer

A) True 
 B)False

Question 16

A worker is likely to benefit from a tariff in the short run if the worker is employed in the industry that is protected by the tariff.

Accepted Answer

A) True 
 B)False

Question 17

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price.
Figure 4.1. Import Tariff Levied by a "Small" Country  
-Consider Figure 4.1.The tariff would be prohibitive (i.e., eliminate imports) if it equaled

Accepted Answer

A)  $2. 
B)  $3. 
C)  $4. 
D)  $5. 
A)  $2. 
B)  $3. 
C)  $4. 
D)  $5.

Question 18

For small countries, free trade results in a higher level of national welfare than tariff protection.

Accepted Answer

A) True 
 B)False

Question 19

Producer surplus is the revenue producers receive over and above the minimum necessary for production.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that the tariff on imported steel is 40 percent, the tariff on imported iron ore is 20 percent, and 30 percent of the cost of producing a ton of steel consists of the iron ore it contains.The effective rate of protection of steel is approximately 49 percent.

Accepted Answer

A) True 
 B)False

An import tariff will worsen the terms of trade for a "small" country but improve the terms of trade for a "large" country.

The redistributive effect of an import tariff is the transfer of income from the domestic

Relatively low wages in Mexico make it impossible for U.S.manufacturers of labor-intensive goods to compete against Mexican manufacturers.

Which type of tariff is prohibited by the United States Constitution?

The offshore assembly provision in the U.S.

The revenue that producers receive over and above the minimum necessary for production is called

When material inputs enter a country at a very low tariff while the final imported product is protected by a high tariff, the result tends to be a high rate of protection for domestic producers of the final product.

Figure 4.3 Domestic Market for Gasoline in the United States -Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?

A foreign-trade zone (FTZ) is an area within the United States where business can operate without the responsibility of paying customs duties on imported products or materials for as long as they remain within this area and do not enter the U.S.marketplace.

Assume that Japan is a large country and levies an "optimal tariff." In this case, the tariff's terms of trade effect more than offsets the consumption and production losses and the tariff results in an overall welfare gain for Japan.

A country whose imports of a product constitute a very small portion of the world market supply of that product is a price taker.Thus, this country faces a constant world price for the imports of this product.

A worker is likely to benefit from a tariff in the short run if the worker is employed in the industry that is protected by the tariff.

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price. Figure 4.1. Import Tariff Levied by a "Small" Country -Consider Figure 4.1.The tariff would be prohibitive (i.e., eliminate imports) if it equaled

For small countries, free trade results in a higher level of national welfare than tariff protection.

Producer surplus is the revenue producers receive over and above the minimum necessary for production.

Suppose that the tariff on imported steel is 40 percent, the tariff on imported iron ore is 20 percent, and 30 percent of the cost of producing a ton of steel consists of the iron ore it contains.The effective rate of protection of steel is approximately 49 percent.

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters

Exam 4: Tariffs

An import tariff will worsen the terms of trade for a "small" country but improve the terms of trade for a "large" country.

The redistributive effect of an import tariff is the transfer of income from the domestic

Relatively low wages in Mexico make it impossible for U.S.manufacturers of labor-intensive goods to compete against Mexican manufacturers.

Which type of tariff is prohibited by the United States Constitution?

The offshore assembly provision in the U.S.

The revenue that producers receive over and above the minimum necessary for production is called

When material inputs enter a country at a very low tariff while the final imported product is protected by a high tariff, the result tends to be a high rate of protection for domestic producers of the final product.

Figure 4.3 Domestic Market for Gasoline in the United States ​ -Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?

A foreign-trade zone (FTZ) is an area within the United States where business can operate without the responsibility of paying customs duties on imported products or materials for as long as they remain within this area and do not enter the U.S.marketplace.

Assume that Japan is a large country and levies an "optimal tariff." In this case, the tariff's terms of trade effect more than offsets the consumption and production losses and the tariff results in an overall welfare gain for Japan.

A country whose imports of a product constitute a very small portion of the world market supply of that product is a price taker.Thus, this country faces a constant world price for the imports of this product.

A worker is likely to benefit from a tariff in the short run if the worker is employed in the industry that is protected by the tariff.

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price. Figure 4.1. Import Tariff Levied by a "Small" Country -Consider Figure 4.1.The tariff would be prohibitive (i.e., eliminate imports) if it equaled

For small countries, free trade results in a higher level of national welfare than tariff protection.

Producer surplus is the revenue producers receive over and above the minimum necessary for production.

Suppose that the tariff on imported steel is 40 percent, the tariff on imported iron ore is 20 percent, and 30 percent of the cost of producing a ton of steel consists of the iron ore it contains.The effective rate of protection of steel is approximately 49 percent.

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters

Figure 4.3 Domestic Market for Gasoline in the United States -Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?