Question 1

Developing countries have reduced their dependence on _____________ over the past 20 to 30 years.

Accepted Answer

A)  income taxes 
B)  wealth taxes 
C)  tariffs 
D)  value-added taxes 
A)  income taxes 
B)  wealth taxes 
C)  tariffs 
D)  value-added taxes

Question 2

(Figure: Consumer Surplus) By how much will consumer surplus increase if the price of the product decreases to $10?

Accepted Answer

A)  $441. 
B)  $256. 
C)  $185. 
D)  $160. 
A)  $441. 
B)  $256. 
C)  $185. 
D)  $160.

Question 3

In 2009, the European Union agreed to grant tariff-free access to its former colonies and to reduce tariffs on imports by 35% over seven years on _________, which finally ended a 15-year feud between the European Union and the United States and Latin American producers.

Accepted Answer

A)  pineapples 
B)  bananas 
C)  avocados 
D)  oranges 
A)  pineapples 
B)  bananas 
C)  avocados 
D)  oranges

Question 4

The home import demand curve is downward sloping because:

Accepted Answer

A)  as the government forces the price down, consumers buy more. 
B)  foreign companies want to help domestic competitors. 
C)  as the price falls below domestic equilibrium, the shortage in demand is filled by importing more quantity from abroad. 
D)  consumers can control the price of the good. 
A)  as the government forces the price down, consumers buy more. 
B)  foreign companies want to help domestic competitors. 
C)  as the price falls below domestic equilibrium, the shortage in demand is filled by importing more quantity from abroad. 
D)  consumers can control the price of the good.

Question 5

To measure the impact of a tariff on the total welfare of society, we calculate the:

Accepted Answer

A)  rise in consumer surplus plus the rise in producer surplus. 
B)  rise in producer surplus plus the increase in tariff revenue going to the government minus the loss of consumer surplus. 
C)  rise in government revenues plus the rise in consumer surplus. 
D)  total number of jobs saved by the tariff times the average wage. 
A)  rise in consumer surplus plus the rise in producer surplus. 
B)  rise in producer surplus plus the increase in tariff revenue going to the government minus the loss of consumer surplus. 
C)  rise in government revenues plus the rise in consumer surplus. 
D)  total number of jobs saved by the tariff times the average wage.

Question 6

Who collects quota rents when the government gives quota licenses to domestic firms?

Accepted Answer

A)  domestic consumers 
B)  foreign suppliers 
C)  domestic producers 
D)  the government 
A)  domestic consumers 
B)  foreign suppliers 
C)  domestic producers 
D)  the government

Question 7

In general, a tariff reduces the national welfare of the small importing nation because:

Accepted Answer

A)  there is a fall in producer surplus. 
B)  there is a rise in consumer surplus. 
C)  the gain in consumer surplus is smaller than the loss in producer surplus. 
D)  the gain in producer surplus is smaller than the loss in consumer surplus. 
A)  there is a fall in producer surplus. 
B)  there is a rise in consumer surplus. 
C)  the gain in consumer surplus is smaller than the loss in producer surplus. 
D)  the gain in producer surplus is smaller than the loss in consumer surplus.

Question 8

When consumers are able to buy a product at a price lower than its marginal value to them, it is called:

Accepted Answer

A)  consumer surplus. 
B)  consumer sovereignty. 
C)  producer surplus. 
D)  marginal utility. 
A)  consumer surplus. 
B)  consumer sovereignty. 
C)  producer surplus. 
D)  marginal utility.

Question 9

A small country in international trade faces:

Accepted Answer

A)  a perfectly elastic world supply curve. 
B)  a perfectly inelastic world supply curve. 
C)  a perfectly elastic world demand curve. 
D)  a perfectly inelastic world demand curve. 
A)  a perfectly elastic world supply curve. 
B)  a perfectly inelastic world supply curve. 
C)  a perfectly elastic world demand curve. 
D)  a perfectly inelastic world demand curve.

Question 10

In what way did the U.S. tariff on tires imported from China violate provisions of the GATT?

Accepted Answer

The U.S. tariff on tires imported from C

Question 11

Why didn't U.S. tire producers support the recently enacted tariff on imported Chinese tires?

Accepted Answer

A)  Many of them manufacture tires in China. 
B)  They were already earning monopoly profits. 
C)  Since the union supported the tariff, they naturally had to oppose it. 
D)  They wanted the government to impose an import quota rather than an import tariff. 
A)  Many of them manufacture tires in China. 
B)  They were already earning monopoly profits. 
C)  Since the union supported the tariff, they naturally had to oppose it. 
D)  They wanted the government to impose an import quota rather than an import tariff.

Question 12

Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 19 European countries, including Finland.) Finland, a small country, imposes a €60-per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. Suppose that Finland decides to use an import quota to achieve the same effects on domestic steel production as the tariff. How large a quota must it use?

Accepted Answer

A)  €60 
B)  100,000 tons 
C)  200,000 tons 
D)  300,000 tons 
A)  €60 
B)  100,000 tons 
C)  200,000 tons 
D)  300,000 tons

Question 13

I. What is the price of U.S. soybeans before trade?
II. What is the price of U.S. soybeans after trade?
III. After trade, what will be the quantity of soybeans consumed in the United States?
IV. After trade, how many tons will be produced by the United States?
V. Suppose the U.S. government imposes a tariff of $3 per ton on imported soybeans. What will be the new U.S. price?
VI. What is the new U.S. quantity produced domestically with the tariff of $3 per ton on imported soybeans?
VII. What is the new level of imports with the tariff of $3 per ton on imported soybeans?
VIII. How much revenue will the U.S. government collect when it imposes the $3 per ton tariff?
IX. How large a tariff would eliminate all imports?

Accepted Answer

The answer of   I. What is the price...

Question 14

If S = 1P represents a country's home supply curve and D = 100 - 1P represents its home demand curve, then the equilibrium price and quantity in autarky are:

Accepted Answer

A)  $100 and 0 units. 
B)  $50 and 50 units. 
C)  $0 and 100 units. 
D)  $75 and 25 units. 
A)  $100 and 0 units. 
B)  $50 and 50 units. 
C)  $0 and 100 units. 
D)  $75 and 25 units.

Question 15

(Table: Export Supply Elasticities) This table gives the foreign elasticity of supply for several types of U.S. steel imports.   For which product is the U.S. optimal tariff the smallest?

Accepted Answer

A)  alloy steel 
B)  steel bars and rods 
C)  steel tubes and pipes 
D)  steel flat-rolled products 
A)  alloy steel 
B)  steel bars and rods 
C)  steel tubes and pipes 
D)  steel flat-rolled products

Question 16

A tariff levied on a good produced in a small nation with an inelastic supply that maximizes the gain to a large nation is called a(n):

Accepted Answer

A)  retaliatory tariff. 
B)  prime tariff. 
C)  inelastic tariff. 
D)  optimal tariff. 
A)  retaliatory tariff. 
B)  prime tariff. 
C)  inelastic tariff. 
D)  optimal tariff.

Question 17

Under the WTO provision of Article XIX, countries can:

Accepted Answer

A)  never charge a tariff on an import. 
B)  always charge a tariff on imports. 
C)  temporarily charge a higher tariff on certain imports. 
D)  provide subsidies to all domestic producers of import competing products. 
A)  never charge a tariff on an import. 
B)  always charge a tariff on imports. 
C)  temporarily charge a higher tariff on certain imports. 
D)  provide subsidies to all domestic producers of import competing products.

Question 18

(Figure: The Import-Competing Industry) Suppose that, with free trade, the world price of the product is $15. In comparison to a no-trade situation, with free trade, producer surplus:

Accepted Answer

A)  increases to $75. 
B)  decreases to $75. 
C)  increases to $150. 
D)  decreases to $150. 
A)  increases to $75. 
B)  decreases to $75. 
C)  increases to $150. 
D)  decreases to $150.

Question 19

Suppose that the supply curve for widgets is described by this equation: P = 1/2Q. What is the value of producer surplus when P = 5?

Accepted Answer

A)  $5 
B)  $12.50 
C)  $25 
D)  $50 
A)  $5 
B)  $12.50 
C)  $25 
D)  $50

Question 20

One feature of the GATT and now the WTO is that all member nations get the same treatment from their trading partners in terms of trade rules and restrictions. This provision is:

Accepted Answer

A)  beggar thy neighbor. 
B)  the good neighbor policy. 
C)  rotating obligations. 
D)  most favored nation status. 
A)  beggar thy neighbor. 
B)  the good neighbor policy. 
C)  rotating obligations. 
D)  most favored nation status.

Developing countries have reduced their dependence on _____________ over the past 20 to 30 years.

(Figure: Consumer Surplus) By how much will consumer surplus increase if the price of the product decreases to $10?

In 2009, the European Union agreed to grant tariff-free access to its former colonies and to reduce tariffs on imports by 35% over seven years on _________, which finally ended a 15-year feud between the European Union and the United States and Latin American producers.

The home import demand curve is downward sloping because:

To measure the impact of a tariff on the total welfare of society, we calculate the:

Who collects quota rents when the government gives quota licenses to domestic firms?

In general, a tariff reduces the national welfare of the small importing nation because:

When consumers are able to buy a product at a price lower than its marginal value to them, it is called:

A small country in international trade faces:

In what way did the U.S. tariff on tires imported from China violate provisions of the GATT?

Why didn't U.S. tire producers support the recently enacted tariff on imported Chinese tires?

If S = 1P represents a country's home supply curve and D = 100 - 1P represents its home demand curve, then the equilibrium price and quantity in autarky are:

(Table: Export Supply Elasticities) This table gives the foreign elasticity of supply for several types of U.S. steel imports. For which product is the U.S. optimal tariff the smallest?

A tariff levied on a good produced in a small nation with an inelastic supply that maximizes the gain to a large nation is called a(n):

Under the WTO provision of Article XIX, countries can:

(Figure: The Import-Competing Industry) Suppose that, with free trade, the world price of the product is $15. In comparison to a no-trade situation, with free trade, producer surplus:

Suppose that the supply curve for widgets is described by this equation: P = 1/2Q. What is the value of producer surplus when P = 5?

One feature of the GATT and now the WTO is that all member nations get the same treatment from their trading partners in terms of trade rules and restrictions. This provision is:

Trade in the Global Economy

Trade and Technology: The Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Offshoring of Goods and Services

Import Tariffs and Quotas Under Imperfect Competition

Export Subsidies in Agriculture and High-Technology Industries

International Agreements: Trade, Labor, and the Environment

The Global Macroeconomy

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Exchange Rates II: the Asset Approach in the Short Run

National and International Accounts: Income, Wealth, and the Balance of Payments

Balance of Payments I: the Gains From Financial Globalization

Balance of Payments II: Output, Exchange Rates, and Macroeconomic Policies in the Short Run

Fixed Versus Floating: International Monetary Experience

Exchange Rate Crises: How Pegs Work and How They Break

The Euro

Topics in International Macroeconomics

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Exam 8: Import Tariffs and Quotas Under Perfect Competition

Developing countries have reduced their dependence on _____________ over the past 20 to 30 years.

(Figure: Consumer Surplus) By how much will consumer surplus increase if the price of the product decreases to $10?

In 2009, the European Union agreed to grant tariff-free access to its former colonies and to reduce tariffs on imports by 35% over seven years on _________, which finally ended a 15-year feud between the European Union and the United States and Latin American producers.

The home import demand curve is downward sloping because:

To measure the impact of a tariff on the total welfare of society, we calculate the:

Who collects quota rents when the government gives quota licenses to domestic firms?

In general, a tariff reduces the national welfare of the small importing nation because:

When consumers are able to buy a product at a price lower than its marginal value to them, it is called:

A small country in international trade faces:

In what way did the U.S. tariff on tires imported from China violate provisions of the GATT?

Why didn't U.S. tire producers support the recently enacted tariff on imported Chinese tires?

If S = 1P represents a country's home supply curve and D = 100 - 1P represents its home demand curve, then the equilibrium price and quantity in autarky are:

(Table: Export Supply Elasticities) This table gives the foreign elasticity of supply for several types of U.S. steel imports. For which product is the U.S. optimal tariff the smallest?

A tariff levied on a good produced in a small nation with an inelastic supply that maximizes the gain to a large nation is called a(n):

Under the WTO provision of Article XIX, countries can:

(Figure: The Import-Competing Industry) Suppose that, with free trade, the world price of the product is $15. In comparison to a no-trade situation, with free trade, producer surplus:

Suppose that the supply curve for widgets is described by this equation: P = 1/2Q. What is the value of producer surplus when P = 5?

One feature of the GATT and now the WTO is that all member nations get the same treatment from their trading partners in terms of trade rules and restrictions. This provision is:

Trade in the Global Economy

Trade and Technology: The Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Offshoring of Goods and Services

Import Tariffs and Quotas Under Imperfect Competition

Export Subsidies in Agriculture and High-Technology Industries

International Agreements: Trade, Labor, and the Environment

The Global Macroeconomy

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Exchange Rates II: the Asset Approach in the Short Run

National and International Accounts: Income, Wealth, and the Balance of Payments

Balance of Payments I: the Gains From Financial Globalization

Balance of Payments II: Output, Exchange Rates, and Macroeconomic Policies in the Short Run

Fixed Versus Floating: International Monetary Experience

Exchange Rate Crises: How Pegs Work and How They Break

The Euro

Topics in International Macroeconomics

Filters