Question 1

If worker productivity is the same in each country,outsourcing and labor migration will both result in an equalization of wages across the two countries.

Accepted Answer

A) True 
 B)False  True

Question 2

Explain how an import quota might be more inefficient than an import tariff that has the same impact on prices.

Accepted Answer

An import quota results in a difference in the price at which exporters buy and the price at which they sell.With a tariff,that difference is paid as a tax to the government -- so someone benefits.In the case of import quotas,exporters will get that same benefit as profit unless they have to compete (in terms of something like lobbying)to get the right to be the ones to export and import.If such political competition for the right to export and import exists,the effort expended in the process may be socially wasteful in the sense that it is a cost for the firms who export and import but it is not received as a benefit by anyone else.

Question 3

If country A is importing good x from country B where x is produced along a perfectly inelastic supply curve,then country B will suffer the entire deadweight loss from any tariff imposed on imports to country A.

Accepted Answer

A) True 
 B)False  False

Question 4

Suppose the price of good x in country A is lower than the price of good x in country B when no trade is permitted.In the absence of transportation costs,if the supply curve for good x in the two countries is sufficiently elastic,free trade in good x implies that country B will stop producing x.

Accepted Answer

A) True 
 B)False

Question 5

In a world of certainty about future demand and supply,speculators cause price fluctuations across time to decrease.

Accepted Answer

A) True 
 B)False

Question 6

When tariffs on exports are eliminated,there is at least in principle a way for everyone to benefit.

Accepted Answer

A) True 
 B)False

Question 7

The larger a country is relative to the rest of the world,the less likely it is to be able to produce a net benefit for its citizens by imposing an import tariff.

Accepted Answer

A) True 
 B)False

Question 8

While some countries might be better off (in terms of social surplus)from the imposition of a tariff,the world overall is always worse off (in terms of social surplus)when import tariffs are imposed.

Accepted Answer

A) True 
 B)False

Question 9

Quality of life indexes produced in popular magazines often place a heavy emphasis on the cost of housing in different cities -- with a lower housing cost entering the index as a positive feature of the city.Why might such quality of life indeces be misleading?

Accepted Answer

The reason that housing prices may be lo

Question 10

When speculators buy gasoline during the low demand spring in order to sell it during the high demand summer,they cause an increase in dead weight loss in the spring that is more than made up for by an increase in social surplus in the summer.

Accepted Answer

A) True 
 B)False

Question 11

Suppose there is a tradeable goods market (such as products like textiles that can be shipped across markets)and a non-tradable goods market (such as services like hair cuts).Can outsourcing impact wages in the non-tradable market?

Accepted Answer

Yes.The non-tradable good cannot itself

Question 12

Explain the impact of speculators on markets is similar and how it may be different from the impact of exporters and importers.

Accepted Answer

Both speculators and exporters/importers

Question 13

Regardless of what types of workers are available in different countries,unrestricted labor outsourcing always results in an equalization of wages across countries.

Accepted Answer

A) True 
 B)False

Question 14

When tariffs on imports are eliminated,everyone benefits.

Accepted Answer

A) True 
 B)False

Question 15

For any import quota a country imposes,there exists a tariff the country could have imposed that will have the same impact on producers and consumers.

Accepted Answer

A) True 
 B)False

Question 16

A speculator who takes a long position in a market buys low and sells high,whereas a speculator who taxes a short position in a market buys high and sells low.

Accepted Answer

A) True 
 B)False

Question 17

The smaller a country is,the less of an ability it has to export a portion of the burden of an import tariff to other countries.

Accepted Answer

A) True 
 B)False

Question 18

If country A is importing good x from country B where x is produced in a perfectly competitive industry (composed of identical firms),then,in the long run,country A will suffer the entire deadweight loss from any tariff it might impose on imports of x from country B.

Accepted Answer

A) True 
 B)False

Exam 20: Prices and Distortions Across Markets

If worker productivity is the same in each country,outsourcing and labor migration will both result in an equalization of wages across the two countries.

Explain how an import quota might be more inefficient than an import tariff that has the same impact on prices.

If country A is importing good x from country B where x is produced along a perfectly inelastic supply curve,then country B will suffer the entire deadweight loss from any tariff imposed on imports to country A.

Suppose the price of good x in country A is lower than the price of good x in country B when no trade is permitted.In the absence of transportation costs,if the supply curve for good x in the two countries is sufficiently elastic,free trade in good x implies that country B will stop producing x.

In a world of certainty about future demand and supply,speculators cause price fluctuations across time to decrease.

When tariffs on exports are eliminated,there is at least in principle a way for everyone to benefit.

The larger a country is relative to the rest of the world,the less likely it is to be able to produce a net benefit for its citizens by imposing an import tariff.

While some countries might be better off (in terms of social surplus)from the imposition of a tariff,the world overall is always worse off (in terms of social surplus)when import tariffs are imposed.

Quality of life indexes produced in popular magazines often place a heavy emphasis on the cost of housing in different cities -- with a lower housing cost entering the index as a positive feature of the city.Why might such quality of life indeces be misleading?

When speculators buy gasoline during the low demand spring in order to sell it during the high demand summer,they cause an increase in dead weight loss in the spring that is more than made up for by an increase in social surplus in the summer.

Suppose there is a tradeable goods market (such as products like textiles that can be shipped across markets)and a non-tradable goods market (such as services like hair cuts).Can outsourcing impact wages in the non-tradable market?

Explain the impact of speculators on markets is similar and how it may be different from the impact of exporters and importers.

Regardless of what types of workers are available in different countries,unrestricted labor outsourcing always results in an equalization of wages across countries.

When tariffs on imports are eliminated,everyone benefits.

For any import quota a country imposes,there exists a tariff the country could have imposed that will have the same impact on producers and consumers.

A speculator who takes a long position in a market buys low and sells high,whereas a speculator who taxes a short position in a market buys high and sells low.

The smaller a country is,the less of an ability it has to export a portion of the burden of an import tariff to other countries.

If country A is importing good x from country B where x is produced in a perfectly competitive industry (composed of identical firms),then,in the long run,country A will suffer the entire deadweight loss from any tariff it might impose on imports of x from country B.

Introduction

A Consumers Economic Circumstances

Economic Circumstances in Labor and Financial Markets

Tastes and Indifference Curves

Different Types of Tastes

Doing the Best We Can

Income and Substitution Effects in Consumer Goods Markets

Wealth and Substitution Effects in Labor and Capital Markets

Demand for Goods and Supply of Labor and Capital

Consumer Surplus and Deadweight Loss

One Input and One Output: a Short-Run Producer Model

Production With Multiple Inputs

Production Decisions in the Short and Long Run

Competitive Market Equilibrium

The Invisible Hand and the First Welfare Theorem

General Equilibrium

Choice and Markets in the Presence of Risk

Elasticities, Price-Distorting Policies, and Non-Price Rationing

Distortionary Taxes and Subsidies

Externalities in Competitive Markets

Asymmetric Information in Competitive Markets

Monopoly

Strategic Thinking and Game Theory

Oligopoly

Product Differentiation and Innovation in Markets

Public Goods

Governments and Politics

What Is Good Challenges From Psychology and Philosophy

Filters