Deck 17: International Trade

Question 1

Suppose Aharoni and Kalinga are the only two countries in the world and they produce computers and shoes.Aharoni has 100 workers,and Kalinga has 200 workers.The table below shows the per-day production possibilities for each country.Aharoni has:
Table 19.1:
?
$$\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Computers } \\\text { (units) }\end{array} & \begin{array} { l } \text { Shoes } \\\text { (pairs) }\end{array} \\\hline \text { Aharoni } & 600 & 300 \\\hline \text { Kalinga } & 200 & 400 \\\hline\end{array}$$

A)an absolute advantage in computers only.
B)an absolute advantage in shoes only.
C)a comparative advantage in computers.
D)a comparative advantage in shoes.
E)neither absolute advantage nor comparative advantage in computers.

Answer 1

a comparative advantage in computers.

Question 2

The production possibilities curve of a country will be a straight line if _____.

A)the production of each commodity is subject to economies of scale
B)the country completely specializes in the production of the good with the highest opportunity cost
C)the country has an absolute advantage in the production of each commodity
D)the resources in the country are equally adaptable to the production of each commodity
E)the country completely specializes in the production of the good with the lowest opportunity cost

Answer 2

the resources in the country are equally adaptable to the production of each commodity

Question 3

In a two-country,two-commodity framework,when one country has an absolute advantage in the production of both commodities,_____.

A)autarky is always preferred to trade
B)differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains
C)the country with the lowest opportunity cost of production is the least competitive in international markets
D)the countries gain from mutual trade as long as tastes differ across countries
E)the countries gain from specialization and exchange as long as they are the same size

Answer 3

differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains

Question 4

Which of the following is true of the terms of trade?

A)It is determined by supply and demand factors.
B)It is a legal limit on the amount of a commodity that can be imported.
C)It is determined by General Agreement on Tariffs and Trade.
D)It is independent of the negotiations between trading partners.
E)It is identical for all trading partners with differences in tastes.

Question 5

For each pound of blueberry cheesecake Abura produces,it gives up the opportunity to make 150 screwdrivers.Mayo can produce one pound of blueberry cheesecake for every 300 screwdrivers it produces.If specialization and trade were to occur between these two countries,which of the following is true with regard to opportunity costs in the two countries?

A)The opportunity cost of producing cheesecakes is lower in Abura than Mayo.
B)The opportunity cost of producing screwdrivers is lower in Abura than Mayo.
C)The opportunity cost of producing cheesecakes is identical in both countries.
D)The opportunity cost of producing screwdrivers is higher in Abura than Mayo.
E)In Mayo,the opportunity cost of producing one unit of screwdriver is one pound of cheesecake.

Question 6

For each watch Marina produces,it gives up the opportunity to make 50 pounds of cheese.Cambria can produce one watch for every 100 pounds of cheese it produces.If specialization and trade were to occur between these two countries,which of the following is true with regard to opportunity costs in the two countries?

A)The opportunity cost of producing watches is higher in Marina than Cambria.
B)The opportunity cost of producing cheese is higher in Marina than Cambria.
C)The opportunity cost of producing cheese is identical in both countries.
D)The opportunity cost of producing watches is lower in Cambria than Marina.
E)In both countries combined,the opportunity cost of one watch is 150 pounds of cheese.

Question 7

Suppose one worker in New Ralph Island can produce 40 walking sticks or 10 boomerangs each hour.The opportunity cost of producing 1 walking stick is _____.

A)40 boomerangs
B)0.01 hour of labor
C)4 boomerangs
D)0.25 boomerangs
E)0.5 hours of labor

Question 8

If a country has an absolute advantage in producing a good,_____.

A)the country is able to produce that good using fewer resources than other countries
B)the opportunity cost of producing the good is the lowest in that country
C)the productivity of workers in that country is lower than that in all countries
D)the country produces as many units of the good as demanded domestically
E)countries of the same size have the same opportunity cost of producing both goods

Question 9

The terms of trade refers to:

A)the quantity of one good exchanged for a unit of another good.
B)the world price of a good determined by the world supply and demand for the good.
C)the quantity of a good demanded by U.S.consumers at a market-clearing price.
D)the price of a good in a country after the imposition of a tariff.
E)the maximum amount of credit that a country can borrow for a particular line of credit.

Question 10

Suppose workers in Transylvania can produce only two goods-yo-yos or sweatsocks.If the Transylvanian currency is the daler,then the opportunity cost of producing yo-yos is measured in terms of _____.

A)dalers
B)dalers per yo-yo
C)dalers per sweatsock
D)yo-yos
E)sweatsocks

Question 11

The law of comparative advantage states that:

A)each country should specialize in producing the good with the lowest opportunity cost.
B)a country able to produce something using fewer resources than other countries would gain from specialization and trade.
C)international trade barriers slow the introduction of new goods and better technologies.
D)countries can gain from trade if production is subject to economies of scale.
E)countries must agree on how much of one good exchanges for another.

Question 12

Which of the following is true of autarky?

A)Each country's consumption possibilities are the same as its production possibilities.
B)Equilibrium is attained with the maximum gains from specialization and trade.
C)There is no legal limit on the amount of a commodity that can be imported.
D)Countries export products they can produce more cheaply in return for products that are unavailable domestically or are cheaper elsewhere.
E)World price is determined by the world supply and demand for a product.

Question 13

In determining comparative advantage,the cost of producing a good is measured in terms of:

A)foreign currency.
B)domestic currency.
C)only gold.
D)marginal cost of the resources employed.
E)opportunities forgone.

Question 14

Which of the following does not result in a mutually beneficial trade between two countries?

A)One country having a higher opportunity cost of production of a good than the other
B)One country having an abundant supply of natural resources than the other
C)One country's production being more efficient than the other
D)One country having an absolute advantage over the other
E)One country having a comparative advantage in producing a good than the other

Question 15

For each pair of jeans Casina produces,it gives up the opportunity to make 50 pounds of chocolate truffle.Marina can produce one pair of jeans for every 100 pounds of chocolate truffle it produces.Suppose the data is converted into production possibilities frontiers (PPFs),with constant opportunity costs,for both countries.While the pounds of chocolate truffle produced is measured on the vertical axis,the pairs of jeans produced are measured along the horizontal axis.Identify the correct statement in this case.

A)The slope of Marina's production possibilities frontier is equal to −50.
B)The slope of Marina's production possibilities frontier is flatter than Casina's.
C)The slope of Marina's production possibilities frontier is equal to −0.02.
D)The slope of Marina's production possibilities frontier is steeper than Casina's.
E)The slope of Casina's production possibilities frontier is equal to −0.01.

Question 16

International trade is most likely to occur whenever:

A)nations have an absolute advantage in the production of goods.
B)all of the trading nations are self-sufficient.
C)world production equals world consumption.
D)each of the trading nations gains from trade.
E)labor is cheaper abroad.

Question 17

The basis of the benefits of specialization is:

A)comparative advantage.
B)absolute advantage.
C)the size of the country.
D)identical production costs between two countries.
E)agreeable terms of trade.

Question 18

For each fancy dress Cafilla produces,it gives up the opportunity to make 50 pounds of cheese.Bodoni can produce one fancy dress for every 100 pounds of cheese it produces.If specialization and trade were to occur between these two countries,which of the following would be consistent with the theory of comparative advantage?​

A)Cafilla has the comparative advantage in dresses and cheese.
B)Bodoni has the comparative advantage in dresses and cheese.
C)Bodoni has the comparative advantage in only dresses.
D)Cafilla has the comparative advantage in only dresses.
E)Cafilla has the comparative advantage in only cheese.

Question 19

Autarky is: ​

A)the situation of national self-sufficiency,in which there is no economic interaction with foreign producers or consumers.
B)the situation in which there is no legal limit on the amount of a commodity that can be imported.
C)the situation in which countries export products they can produce more cheaply in return for products that are unavailable domestically or are cheaper elsewhere.
D)the situation in which world price is determined by the world supply and demand for a product.
E)the situation in which each country specializes in making goods with the lowest opportunity cost.

Question 20

Which of the following factors is most significant in determining the pattern of international trade?

A)Absolute advantage
B)Diplomatic expertise
C)Comparative advantage
D)Overpowering military strength
E)The size of a nation

Question 21

Differences in tastes among nations:

A)make gains from trade possible even in the absence of differences in resource endowments.
B)make gains from trade possible only when there are differences in resource endowments.
C)negate any potential gains from trade.
D)are caused by differences in resource endowments.
E)occur only among countries whose people are of different religions.

Question 22

The following table shows per-day production data of rice and T-shirts for two countries,Cambria and Bodoni.Based on the table,it can be said that the opportunity cost of 1 T-shirt in Cambria is _____.
Table 19.1
?
$$\begin{array} { | c | c | c | c | } \hline { \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}$$

A)4 tons of rice
B)0.5 ton of rice
C)0.75 ton of rice
D)0.025 ton of rice
E)2 tons of rice

Question 23

The following table shows per-day production data of rice and T-shirts for two countries,Cambria and Bodoni.Based on the table,it can be said that the opportunity cost of 1 T-shirt in Bodoni is _____.
Table 19.1
?
$$\begin{array} { | c | c | c | c | } \hline { \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}$$

A)0.9 ton of rice
B)0.5 ton of rice
C)0.75 ton of rice
D)0.01 ton of rice
E)0.02 ton of rice

Question 24

Differences in resource endowments are differences in:

A)tariffs charged by each country.
B)consumption patterns across nations.
C)production patterns across nations.
D)the quantity,but not the quality,of resources available in different nations.
E)the quality and quantity of resources available in different nations.

Question 25

Which of the following is true of international trade?

A)It allows a country to specialize in the production of certain goods and services.
B)It leads to a reduction in the world production of goods and services.
C)It allows a country to move to a lower consumption possibilities frontier.
D)It allows a country's consumption possibilities frontier to lie inside its production possibilities frontier.
E)It makes a country's production possibilities frontier a downward-sloping straight line.

Question 26

The United States is a major exporter of _____.

A)diamonds
B)bananas
C)coffee
D)corn
E)gold

Question 27

The consumption possibilities frontier shows:

A)a nation's possible combinations of goods available as a result of specialization and exchange.
B)a nation's opportunity cost of producing different goods for consumption.
C)possible combinations of goods that residents of a nation consume at different income levels.
D)the difference between the most that consumers would pay for a good and the actual amount they pay.
E)a nation's possible combinations of how much of one good exchanges for another.

Question 28

Which of the following is true of a country's production possibilities frontier?

A)International trade makes it possible for a country's consumption possibilities to exceed its production possibilities.
B)International trade requires that a country's production possibilities exceed its consumption possibilities.
C)A country's production possibilities always equal its consumption possibilities.
D)A country's consumption possibilities can never equal its production possibilities because of leakages in the system.
E)The slope of a country's production possibilities frontier is equal to the absolute advantage of producing a particular good.

Question 29

If production is subject to economies of scale,_____.

A)countries can gain from trade if each nation specializes
B)the domestic price will be above the world price and the quantity produced will be below the free trade level
C)higher output levels result in higher average production costs
D)every consumer gets to buy goods at their market-clearing prices
E)autarky will be preferred to trade

Question 30

The following table shows per-day production data of rice and T-shirts for two countries,Cambria and Bodoni.Which of the following is true in such a case?
Table 19.1
?
$$\begin{array} { | c | c | c | c | } \hline { \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}$$

A)Bodoni has an absolute advantage in the production of both rice and T-shirts.
B)Bodoni has an absolute advantage in the production of only rice.
C)Bodoni has an absolute advantage in the production of T-shirts only.
D)Cambria has an absolute advantage in the production of both rice and T-shirts.
E)Cambria has an absolute advantage in the production of only T-shirts.

Question 31

A country should export only those goods for which it has _____ relative to its trading partners.

A)a higher absolute advantage
B)lower terms of trade
C)higher consumption possibilities
D)a stronger domestic demand
E)a lower opportunity cost

Question 32

World output will be maximized if each country:

A)attempts to be self-sufficient.
B)specializes in producing those goods in which it has a comparative advantage.
C)specializes in producing those goods in which it has an absolute advantage.
D)reduces its consumption possibilities.
E)equals their consumption possibilities.

Question 33

Which of the following reasons best explains why the United States is a net importer of crude oil and metals and a net exporter of farm crops?

A)Differences in resource endowments
B)Economies of scale
C)Differences in tastes
D)Import quota
E)Import tariffs

Question 34

The following table shows per-day production data of rice and T-shirts for two countries,Cambria and Bodoni.Based on the table,it can be said that the opportunity cost of 1 ton of rice in Cambria is _____.
?
Table 19.1
?
?
$$\begin{array} { | c | c | c | c | } \hline { \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}$$

A)3 T-shirts
B)10 T-shirts
C)20 T-shirts
D)30 T-shirts
E)40 T-shirts

Question 35

Which of the following reasons best explains U.S.imports of crude oil from Saudi Arabia and diamonds from South Africa?

A)Differences in resource endowments
B)Economies of scale
C)Differences in tastes
D)Import tariffs
E)Import quota

Question 36

Which of the following reasons explains why many countries with relatively small populations import automobiles from Japan,U.S. ,and Germany rather than produce them domestically?

A)Differences in resource endowments
B)Economies of scale
C)Differences in tastes
D)Import quota
E)Import tariffs

Question 37

The source of gains from trade is _____.

A)tariff revenue
B)self-sufficiency
C)terms of trade
D)absolute advantage
E)comparative advantage

Question 38

Which of the following results in international specialization?

A)Differing consumer tastes
B)Diseconomies of scale in production
C)A high world price for a good
D)Diminishing returns to a variable factor of production
E)Differences in benefits that consumers and producers get from domestic market exchange

Question 39

One reason for international specialization is:

A)a high world price for a good.
B)higher trade restrictions imposed by a national government.
C)diminishing returns to a variable factor of production.
D)the different resource endowments throughout the world.
E)the difference in benefits that consumers and producers get from domestic market exchange.

Question 40

The following table shows per-day production data of rice and T-shirts for two countries,Cambria and Bodoni.Based on the table,it can be said that the opportunity cost of a ton of rice in Bodoni is _____.
Table 19.1
?
$$\begin{array} { | c | c | c | c | } \hline { \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}$$

A)20 T-shirts
B)3 T-shirts
C)4 T-shirts
D)10 T-shirts
E)2 T-shirts

Question 41

The following graph shows the demand for and domestic supply of a good in a country.If the country decides to trade,then at a world price of $1.00 _____.

A)20 units will be exported
B)20 units will be imported
C)50 units will be exported
D)50 units will be imported
E)10 units will be exported

Question 42

Economies of scale in the production of a good implies that:

A)the long-run average cost of production rises as the scale of operation expands.
B)the marginal cost of production falls below zero as the scale of operation contracts.
C)the long-run average cost of production falls as the scale of operation expands.
D)the long-run average cost of production remains the same as the scale of operation increases.
E)the marginal output decreases as the amount of a factor of production is incrementally increased.

Question 43

Unless there are barriers to prevent free international trade,a country becomes an importer:

A)when the world price exceeds the domestic price.
B)when the domestic price exceeds the world price.
C)when there is an excess supply in the domestic market.
D)when it wants to expand its scale of operation.
E)when the opportunity cost of producing a good is lower relative to other countries.

Question 44

The following table shows the demand,supply,and price of tulips in the Netherlands.If the world price of tulips is $1 and there are no trade restrictions,the Netherlands will:
Table 19.2
?
?
Domestic Supply and Demand
for Tulips in the Netherlands
$\begin{array}{|c|c|c|c|}\hline {\text { Demand }} & &{\text { Supply }} \\\hline Q & P(\$) & Q & P(\$) \\\hline 12,000 & 0 & 6,000 & 0 \\\hline 10,000 & 1 & 7,000 & 1 \\\hline 8,000 & 2 & 8,000 & 2 \\\hline 6,000 & 3 & 9,000 & 3 \\\hline 4,000 & 4 & 10,000 & 4 \\\hline\end{array}$

A)produce 7,000,consume 10,000,and export 3,000 tulips.
B)produce 10,000 and consume 10,000 tulips.
C)produce 9,000,consume 6,000,and export 6,000 tulips.
D)import all of the tulips that it consumes.
E)consume all of the tulips that it produces.

Question 45

A lump-sum tax per unit on imports is known as:

A)a specific tariff.
B)an import quota.
C)an ad valorem tariff.
D)an import concession.
E)an import substitution.

Question 46

The following table shows the demand,supply,and price of tulips in the Netherlands.If the world price of tulips is $4 and there are no trade restrictions,the Netherlands will:
Table 19.2
?
?
Domestic Supply and Demand
for Tulips in the Netherlands
$\begin{array}{|c|c|c|c|}\hline {\text { Demand }} & &{\text { Supply }} \\\hline Q & P(\$) & Q & P(\$) \\\hline 12,000 & 0 & 6,000 & 0 \\\hline 10,000 & 1 & 7,000 & 1 \\\hline 8,000 & 2 & 8,000 & 2 \\\hline 6,000 & 3 & 9,000 & 3 \\\hline 4,000 & 4 & 10,000 & 4 \\\hline\end{array}$

A)produce 10,000,consume 4,000,and import 6,000 tulips.
B)produce 10,000 and consume 10,000 tulips.
C)produce 8,000 and consume 8,000 tulips.
D)import all the tulips it consumes.
E)consume only some of the tulips it produces.

Question 47

Which of the following is not a reason for international specialization?

A)Some countries have educated,trained workers,while other countries have unskilled workers.
B)Tastes and preferences tend to be different in different countries.
C)Economies of scale can allow larger,specialized producers to operate at lower average cost.
D)People prefer having a choice of products.
E)The world price of a good is determined by the world supply and demand for it.

Question 48

When a country imposes a per-unit tariff on an imported good or service,_____.

A)the price that domestic consumers pay for the import falls
B)the quantity of the good or service imported into the country declines
C)the quantity of the good or service imported into the country increases
D)the price at which any supplier can sell output in the world market decreases
E)the quantity of the good or service demanded by the consumers increases

Question 49

The following graph shows U.S.demand for and supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,net welfare loss as a result of a tariff of $0.50 per unit is represented by the area ____.

A)c + i + e + f
B)i + f
C)i
D)f
E)b + d

Question 50

The following table shows the demand,supply,and price of tulips in the Netherlands.If the world price of tulips is $4 and there are no trade restrictions,the Netherlands will:
Table 19.2
?
?
Domestic Supply and Demand
for Tulips in the Netherlands
$\begin{array}{|c|c|c|c|}\hline {\text { Demand }} & &{\text { Supply }} \\\hline Q & P(\$) & Q & P(\$) \\\hline 12,000 & 0 & 6,000 & 0 \\\hline 10,000 & 1 & 7,000 & 1 \\\hline 8,000 & 2 & 8,000 & 2 \\\hline 6,000 & 3 & 9,000 & 3 \\\hline 4,000 & 4 & 10,000 & 4 \\\hline\end{array}$

A)produce 10,000,consume 4,000,and import 6,000 tulips.
B)produce 10,000,consume 4,000,and export 6,000 tulips.
C)produce 4,000,consume 10,000,and import 6,000 tulips.
D)produce 9,000,consume 6,000,and export 6,000 tulips.
E)import all of the tulips that it consumes.

Question 51

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,_____.

A)25 units will be exported
B)25 units will be imported
C)50 units will be exported
D)50 units will be imported
E)10 units will be exported

Question 52

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,the government revenue from a tariff of $0.50 per unit is represented by the area _____.

A)c
B)e + g
C)i + e + f
D)d + e
E)e

Question 53

Tariffs and quotas:

A)reduce consumer surplus and increase producer surplus in the importing country.
B)increase consumer surplus and reduce producer surplus in the importing country.
C)reduce both consumer surplus and producer surplus in the exporting country.
D)are imposed when there are differences in the opportunity cost of production across countries.
E)are imposed when production is subject to economies of scale.

Question 54

If there are no trade restrictions,a country will import a particular good if:

A)domestic quantity supplied equals domestic quantity demanded at the world price.
B)there is excess domestic quantity demanded at the world price.
C)the quantity of the good demanded by the domestic consumers decreases.
D)the quantity of the good supplied by the domestic producers increases.
E)the world price of the good is higher than its domestic price.

Question 55

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,the gain in producer surplus as a result of a tariff of $0.50 per unit is represented by the area _____.

A)c + h
B)h
C)c
D)c + g
E)g

Question 56

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by the area _____.

A)a
B)b + d
C)c + i + e + f
D)c
E)d

Question 57

A charge levied on imports in terms of a fixed percentage of value is known as a(n):

A)specific tariff.
B)ad valorem tariff.
C)import quota.
D)import concession.
E)import substitution.

Question 58

The following graph shows the market equilibrium for corn in the United States.If the world price of corn is $2 and there are no trade restrictions,the United States will:

A)produce 3,000 bushels of corn,consume 7,000 bushels of corn,and import 4,000 bushels of corn.
B)produce 3,000 bushels of corn,consume 7,000 bushels of corn,and export 4,000 bushels of corn.
C)have an excess supply of corn.
D)produce 7,000 bushels of corn.
E)produce 5,000 bushels of corn,consume 7,000 bushels of corn,and import 2,000 bushels of corn.

Question 59

The world demand for and the world supply of a good will together determine the _____.

A)tariff
B)world price
C)exchange rate
D)terms of trade
E)quota

Question 60

The following graph shows the market equilibrium for corn in the United States.If the world price of corn is $6 and there are no trade restrictions,the United States will:

A)produce 7,000 bushels of corn,consume 3,000 bushels of corn,and import 4,000 bushels of corn.
B)produce 7,000 bushels of corn,consume 3,000 bushels of corn,and export 4,000 bushels of corn.
C)have an excess demand for corn.
D)produce 3,000 bushels of corn,consume 7,000 bushels of corn,and import 4,000 bushels of corn.
E)produce 3,000 bushels of corn,consume 7,000 bushels of corn,and export 4,000 bushels of corn.

Question 61

An effective import quota:

A)lowers the price of imports.
B)lowers the price of domestic goods competing with imports.
C)increases the variety of goods available to the consumer.
D)increases federal revenues.
E)lowers the quantity of the imported good.

Question 62

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed,then the decrease in consumer surplus can be represented by the area _____.

A)f
B)i
C)h
D)f,g,and h
E)a,b,c,d,and e

Question 63

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the tariff revenue collected by the United States government is _____.

A)$4,000
B)$16,000
C)$20,000
D)$24,000
E)$48,000

Question 64

Suppose the government of an importing country is considering imposing either a tariff that would result in imports falling to 1 million units per year or an import quota of 1 million units per year.Which of the following would be true?

A)The domestic price of the imported good will rise higher with the tariff than with the quota.
B)Consumers in the importing country will be worse off with the quota than with the tariff.
C)Domestic producers that compete with the imports will be better off with the tariff than with the quota.
D)The tariff will increase the revenue of the government of the importing country,while the quota will increase the profits of the foreign exporting firms with quota rights.
E)Tariffs raise the price of a good but quotas do not.

Question 65

The following image shows the market for wheat for the country of Palatino.S^D is the domestic supply of wheat,and D^D is the domestic demand for wheat.Suppose the world price of wheat is $9 per bushel of wheat.Suppose a specific tariff of $6 is imposed on each bushel of wheat imported.Government revenue from the tariff equals:

A)$45,000.
B)$3,000,000.
C)$1,800,000.
D)$900,000.
E)$50,000.

Question 66

The following graph shows the demand for and domestic supply of a good in a country.If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed,then the gain of the foreign exporters with quota rights is represented by the area _____.

A)h
B)i
C)g
D)a and b
E)c and d

Question 67

The following image shows the market for wheat for the country of Palatino.S^D is the domestic supply of wheat,and D^D is the domestic demand for wheat.Suppose the world price of wheat is $9 per bushel.Suppose a specific tariff of $6 is imposed on each bushel of wheat imported.The net welfare loss from the tariff is represented by the area _____.

A)A and C
B)I and H
C)B and D
D)E
E)F

Question 68

The following graph shows the supply of and demand for baseballs in the United States.If the world price of a baseball is $3,then the quantity of baseballs demanded is _____.

A)4,000
B)6,000
C)8,000
D)10,000
E)12,000

Question 69

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed,then:

A)domestic production will increase from 100 to 200 units per month.
B)imports will increase from 25 to 50 units per month.
C)domestic production will increase from 100 to 175 units per month.
D)domestic production will increase from 100 to 125 units per month.
E)domestic production will increase from 100 to 150 units per month.

Question 70

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the number of baseballs purchased in the United States is _____.

A)4,000
B)6,000
C)8,000
D)10,000
E)12,000

Question 71

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit,the import quota that would least affect the level of imports in this country is_____.

A)$3.00 per unit
B)$2.00 per unit
C)50 units per month
D)100 units per month
E)150 units per month

Question 72

Quotas are favoured over free international trade by:

A)consumers in the importing country and consumers in the exporting country.
B)domestic producers in the importing country and foreign producers with quota rights.
C)domestic producers and domestic consumers in the exporting country.
D)foreign producers without quota rights and consumers in the importing country.
E)foreign consumers and domestic producers in the exporting country.

Question 73

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the tariff revenue collected by the United States government is shown by the area _____.

A)a
B)b
C)c
D)f
E)e

Question 74

Economists argue that U.S.government can earn federal revenue:

A)from quotas by auctioning off quotas to foreign producers.
B)by increasing the profitability of getting quota rights.
C)by encouraging foreign governments to retaliate with quotas and tariffs of their own.
D)from quotas,as quotas redistribute wealth from domestic consumers to domestic producers.
E)by distributing quota rights to domestic exporters.

Question 75

A legal limit on the amount of a commodity that can be imported is known as:

A)an ad valorem tariff.
B)an import quota.
C)an import concession.
D)an import substitution.
E)a specific tariff.

Question 76

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball,then _____ baseballs are imported.

A)4,000
B)6,000
C)8,000
D)10,000
E)12,000

Question 77

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,the net welfare loss of the tariff is shown by the area _____.

A)g
B)c
C)a
D)c and g
E)b and f

Question 78

The following image shows the market for wheat for the country of Palatino.S^D is the domestic supply of wheat,and D^D is the domestic demand for wheat.Suppose the world price of wheat is $9 per bushel.Suppose a specific tariff of $6 is imposed on each bushel of wheat imported.The total loss in consumer surplus after the tariff is shown by the area _____.

A)F and E
B)G
C)A,B,C,and D
D)I​
E)H

Question 79

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the number of baseballs imported is _____.

A)4,000
B)6,000
C)8,000
D)10,000
E)12,000

Question 80

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed,the welfare loss resulting from higher domestic production costs is represented by the area _____.

A)a
B)b
C)c and d
D)g and h
E)e