Deck 9: Monopoly

Question 1

Protectionism refers to government policies that:

A)restrict imports of foreign products.
B)give foreign producers tax credits in an effort to increase their exports.
C)stimulate trade between countries and increase domestic producers profit.
D)restrict the output of domestic producers to keep their prices high.

Answer 1

A

Question 2

The U.S. government restricting the quantity of sugar importsinto the country is an example of a(n):

A)trade quota.
B)embargo.
C)trade settlement.
D)market hanger.

Answer 2

A

Question 3

Imposing a restrictive quota on the import of sugar will likely:

A)increase the price of sugar and decrease the quantity consumed.
B)increase the price of sugar and increase the quantity consumed.
C)leave the price of sugar unchanged and decrease the quantity consumed.
D)leave the price of sugar unchanged and increase the quantity consumed.

Answer 3

A

Question 4

(Figure: Foreign Trade) Refer to the figure. What quantitywould be traded in the absence of any international trade?

A)600
B)1,400
C)1,000
D)800

Question 5

Figure: Foreign Trade (Figure: Foreign Trade) Refer to the figure. What is the dollarvalue of the deadweight loss created as a result of prohibitingtrade in this market?

A)$2,500
B)$10,000
C)$7,500
D)$5,000

Question 6

Reference: Ref 9-1(Figure: Foreign Trade) Refer to the figure. What quantitywould be traded in a free-trade environment?

A)600
B)1,400
C)1,000
D)800

Question 7

(Figure: Foreign Trade) Refer to the figure. What is the dollarvalue of the producer surplus gained as a result of prohibitingtrade in this market?

A)$15,000
B)$30,000
C)$12,500
D)$22,500

Question 8

(Figure: Foreign Trade with a Tariff) Refer to the figure. A $1tariff results in:

A)an increase in imports of 80 million units.
B)a decrease in imports of 80 million units.(True Answer )Correct
C)an increase in imports of 100 million units.
D)a decrease in imports of 100 million units.

Question 9

Figure: Foreign Trade with a Tariff (Figure: Foreign Trade with a Tariff) Refer to the figure. A $1tariff generates increased domestic production by:

A)$40 million units.
B)$90 million units.
C)$140 million units.
D)$180 million units.

Question 10

A tariff is a:

A)tax credit for domestic exports.
B)tax on imports.
C)temporary grant of monopoly rights.
D)renewable subsidy to the energy industry.

Question 11

In terms of economics, international trade is very similar totrade between two people in a small local neighborhood,except:

A)for the impact of specialization that does not occur in local trade.
B)for political considerations such as country borders.(True Answer )Correct
C)that international trade is based on the concept of comparative advantage whereas local trade is not.
D)for the impact of division of knowledge that does not exist in local trade.

Question 12

Consider the following statements:
I) Relative to a no-trade situation, if the United States exportedwheat, the U.S. domestic wheat price would rise and domesticproduction of wheat would expand
II)Relative to a no-trade situation, international trade causesprices of all goods to rise.

A)I is true; II is false.
B)I is false; II is true.
C)Both I and II are true.
D)Both I and II are false.

Question 13

Figure: Foreign Trade (Figure: Foreign Trade) Refer to the figure. What is the dollarvalue of the consumer surplus that consumers could gain if thetrade restriction were removed?

A)$35,000
B)$22,500
C)$30,000
D)$25,000

Question 14

(Figure: Foreign Trade) Refer to the figure. What quantitywould be produced domestically?

A)600
B)1,400
C)1,000
D)800

Question 15

Economic policies of protectionism include:
I) reduced trade barriers
II)tariffs
III) quotas.

A)I and II only
B)II and III only
C)I and III only
D)I, II, and III

Question 16

The benefits of trade include:
I) greater productivity due to specialization
II)higher output due to specialization according tocomparative advantage
III) increased welfare when preferences differ.

A)I and II only
B)II and III only
C)I and III only
D)I, II, and III

Question 17

(Figure: Foreign Trade with a Tariff) Refer to the figure. A $1tariff generates government revenue of:

A)$100 million.
B)$140 million.
C)$180 million.
D)$200 million.

Question 18

A tariff is a:

A)tax on imports.
B)subsidy on exports.
C)restriction on the quantity of domestic goods consumed by foreigners.
D)restriction on the quantity of imports from foreign producers.

Question 19

Which of the following is TRUE about the economic policy of"protectionism"?

A)It raises prices of foreign goods in domestic markets.
B)It restricts competitive forces in domestic markets.
C)It can be achieved through quotas and tariffs.
D)All of these statements are correct.

Question 20

(Figure: Foreign Trade) Refer to the figure. What is the dollarvalue of wasted resources as a result of prohibiting trade inthis market?

A)$30,000
B)$5,000
C)$2,500
D)$22,500

Question 21

If quotas on sugar were eliminated in the United States,domestic production of sugar would fall. Why is this a benefitin economic terms for the United States?
I) because it frees up resources that could be used moreefficiently elsewhereII. because it allows foreign producers of sugar to earn incomeand thus those countries are better offIII. U.S. consumers are able to enjoy increased consumersurplus because of the lower prices of imported sugar.

A)I and II only
B)I and III only
C)II and III only
D)I, II, and III

Question 22

Which of the following statements is TRUE?
I) If the United States bans the importation of bananas,consumer surplus will decrease
II)If the United States bans the importation of bananas,producer surplus will decrease
III) If the United States bans the importation of bananas, itwill produce bananas at a cost exceeding their world purchaseprice.

A)I, II, and III
B)I and II only
C)I and III only
D)II and III only

Question 23

Figure: Foreign Trade Market (Figure: Foreign Trade Market) Refer to the figure. What isthe dollar value of the deadweight loss created by the loss offoreign trade?

A)$10,000
B)$4,000
C)$36,000
D)$6,000

Question 24

Why does economic growth require job destruction?

A)Economic growth requires international trade, which has been proven to cause short-term job loss.
B)Economic growth comes from creating and producing goods that use resources more productively, causing job loss in
Industries that use out-dated technology.(True Answer
)Correct
C)Excessive job creation can destroy economic growth.
D)When economic growth occurs, there are not enough resources left over for worker retraining and re-education
Programs.

Question 25

In most cases, trade restrictions will:

A)save jobs without any other costs.
B)save some jobs and destroy other jobs.(True Answer )Correct
C)benefit both producers and consumers.
D)benefit only the government.

Question 26

Which, if any, of the following conditions for efficient marketfunctioning do tariffs and quotas violate?
I) demanders with the highest willingness to pay purchase thesupply of goodsII. producers with the lowest costs produce and sell the supplyof goodsIII. the sum of consumer and producer surplus is maximized

A)I only
B)II and III only
C)I, II, and III
D)III only

Question 27

(Figure: Foreign Trade Market) Refer to the figure. What isthe dollar value of the lost consumer surplus as a result ofprohibiting trade in this market?

A)$26,000
B)$28,000
C)$32,000
D)$36,000

Question 28

A tariff results in a higher:
I) consumer surplus
II)producer surplus
III) government revenue.

A)I and II only
B)II and III only
C)I and III only
D)I, II, and III

Question 29

(Figure: World Imports) Refer to the figure. The solution for acountry without trade restrictions is where the equilibriumprice and quantity are ________, respectively.

A)$20 and 4
B)$40 and 11
C)$20 and 11
D)$20 and 20

Question 30

A trade quota on imports:

A)benefits domestic producers and hurts domestic consumers.
B)benefits domestic consumers and hurts domestic producers.
C)benefits both domestic producers and domestic consumers.
D)hurts both domestic producers and domestic consumers.

Question 31

(Figure: A Tariff on Imports) Refer to the figure. Suppose thegovernment intervenes with a $2 tariff; the total value ofdeadweight loss as a result of the tariff is:

A)$150 million.
B)$200 million.
C)$400 million.
D)$550 million.

Question 32

(Figure: Foreign Trade Market) Refer to the figure. What isthe dollar value of wasted resources as a result of prohibitingtrade in this market?

A)$10,000
B)$4,000
C)$7,500
D)$6,000

Question 33

Which of the following statements describes reasons why freetrade is beneficial for the United States?

A)Free trade increases consumer surplus for imported goods that are cheaper than U.S.goods.
B)Free trade directs U.S.resources to those goods and services for which the United States has a comparative
Advantage.
C)Through specialization the U.S.and its trading partners can use the same overall amount of resources to produce and
Consume a larger amount of goods.
D)All of these statements are correct.

Question 34

Figure: World Imports (Figure: World Imports) Refer to the figure. An imposition ofextreme trade restrictions that eliminated all trade in thatmarket, would generate wasted resources of:

A)$70.
B)$530.
C)$90.
D)$160.

Question 35

Economists consider tariffs to be:

A)necessary.
B)beneficial to domestic consumers.
C)harmful to domestic producers.
D)obstacles that reduce gains from trade.(True Answer )Correct

Question 36

Which of the following decreases the volume of internationaltrade?

A)increasing tariffs
B)decreasing quotas
C)lower transportation costs
D)stable monetary conditions

Question 37

Which of the following arguments is valid in the economics ofinternational trade?

A)Trade restrictions are good ways to raise a country's employment.
B)Protectionism increases the well-being of domestic consumers.
C)Trade restrictions help to reduce child labor in poor countries.
D)Trade can result in a net job gain in the whole country.

Question 38

(Figure: World Imports) Refer to the figure. The imposition ofa $20 tariff would generate a value of lost gains from trade of:

A)$45.
B)$90.
C)$70.
D)$160.

Question 39

One of the costs of protectionism is:

A)increases in total national output.
B)a reduction in the variety of goods in domestic markets.
C)greater competition.
D)lower opportunity costs of domestic production.

Question 40

(Figure: A Tariff on Imports) Refer to the figure. Suppose thegovernment intervenes with a $2 tariff; the total cost of thetariff to the citizens in that country is:

A)$350 million.
B)$400 million.
C)$550 million.
D)$700 million.

Question 41

Protectionism protects domestic industries from thecompetitive forces exerted by foreign firms.

Question 42

Which of the following statements is TRUE about the removalof trade barriers?

A)Consumers are harmed while some suppliers benefit.
B)Consumers benefit while some suppliers are harmed.(True Answer )Correct
C)Everyone benefits.
D)Everyone is harmed.

Question 43

In a typical month in the United States:

A)almost 1.0 million jobs are lost because of unfair international trade.
B)several hundred thousand jobs are lost and several hundred thousand jobs are gained.
C)the unemployment rate averages 8.7 percent.
D)All of these observations are correct.

Question 44

Which of the following statements is TRUE?

A)Although inefficient, trade restrictions are effective at reducing child labor.
B)Most child labor around the world takes place in factories that export products.
C)Rising real GDP per capita has been an important force in reducing child labor.
D)About 50 percent of the world's children aged 10-14 work.

Question 45

The paradox of trade restrictions on countries with child laboris that:

A)these restrictions aim to reduce child labor, but because they make the countries poorer, they actually cause more child
Labor.
B)children from those countries are actually more efficient than the adults.
C)children can be hired at lower wages than adults.
D)restrictions on trade cause losses in consumer surplus.

Question 46

Taxes and quotas on imports can ______ jobs in the importindustry and ________ jobs in export industries.

A)decrease; increase
B)increase; increase
C)increase; decrease
D)decrease; decrease

Question 47

Because of pressure from the United States, the garmentindustry in Bangladesh dismissed 30,000 to 50,000 childlaborers. This action:

A)was very beneficial, for most of the children returned to school full time.
B)resulted in many of the children turning to prostitution, street begging, or working in jobs with even worse working
Conditions.
C)led to a civil uprising in Bangladesh, claiming the lives of almost 4,000 of these children.
D)None of the answers is correct.

Question 48

If the United States bans the importation of Japaneseautomobiles:

A)U.S.consumers of cars will be better off as their consumer surplus increases.
B)there will likely be more U.S.auto workers but fewer Americans working in other industries.(True Answer
)Correct
C)U.S.producers of cars will be worse off because their producer surplus shrinks.
D)everyone in the United States will be much better off.

Question 49

Consider the following two statements and select the bestanswer.I. The national security argument might be a valid argumentfor trade protection
II)Industries with spillover effects should be protected fromforeign competition.

A)I and II are both true.
B)I and II are both false.
C)I is likely to be true, and II is likely to be false.(True Answer )Correct
D)I is likely to be false, and II is likely to be true.

Question 50

With free trade, the domestic price of a good must be equal tothe world price of a good.

Question 51

History has shown that one of the most effective tools againstchild labor is:

A)regulations.
B)laws.
C)economic growth.
D)quotas.

Question 52

Trade restrictions:

A)help to save jobs in the protected industry, which causes these workers to spend more money in other industries,
Netting increased output and job opportunities throughout the
Economy.
B)are a very inexpensive way of saving jobs, cheaper than job retraining programs.
C)may save jobs in one industry but at a cost of less job growth in other industries.
D)often have little support by politicians, media, and the public.

Question 53

Economic growth requires:

A)job destruction.
B)trade barriers.
C)government intervention.
D)job creation.

Question 54

If the United States imports teacups from other countries, thenU.S. producers of teacups are better off, and U.S. consumersof teacups are worse off, as a result of trade.

Question 55

Trade increases competition for domestic producers andresults in lower prices of domestic goods.

Question 56

Economic benefits to tariffs and import quotas include: morejobs in the protected industry, lower prices to consumers, andincreased gains from trade.

Question 57

Studies show that more openness to trade __________ incomeand _______ child labor.

A)increases; increases
B)increases; decreases
C)decreases; decreases
D)decreases; increases

Question 58

In a demand and supply diagram, the effects of a tariff and aquota on the supply and demand curves are identical.

Question 59

A quota is a stated quality standard that an imported goodmust reach before it can be allowed into the borders of theimporting country.

Question 60

Suppose a government is facing accusations of allowingdomestic jobs to be lost to foreign labor in other countries.How can the government address these concerns?
I) Governments can ensure that unemployment insurance andstrong education programs exist to help workers retrain fornew jobs
II)Governments can stress the importance of job creation inthose industries that benefit from international trade, andencourage job creation in those industries
III) Governments can set up extensive trade restrictions tolimit the impact of foreign firms on domestic production.

A)I only
B)II and III only
C)I and II only
D)I, II, and III

Question 61

If the world price of a good is greater than the domestic pricein a country that can engage in international trade, then thatcountry becomes an importer of that good.

Question 62

There is strong evidence to support the idea that protectionismincreases domestic job growth.

Question 63

Removing tariffs and quotas will ensure that goods are sold bythe low-cost producers and increase the sum of consumer andproducer surplus.

Question 64

A tariff benefits domestic producers but hurts domesticconsumers.

Question 65

Economic theory supports the existence of specialized majorsin college.

Question 66

Economic growth requires job destruction, since the destroyedjobs free up resources for more productive activities.