Deck 15: Foreign Trade

Question 1

Trade based upon comparative advantage is economically beneficial because:

A)it promotes an efficient allocation of world resources
B)it gives consumers a narrower range of products to choose from
C)it gives governments the chance to charge high tariffs on imports
D)it allows government policy makers to choose the products the economy will specialize in
E)it gives domestic businesses the chance to reduce the number of competitors they face in product markets

Answer 1

A

Question 2

Whether or not a country can export a product efficiently is determined by which of the following factors?

A)its use of export subsidies
B)the prevalence of its quotas on imports
C)the size of its tariffs on imports
D)the size of its markets
E)the number of trade agreements it has signed

Answer 2

D

Question 3

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } \hline { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \\\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \\\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \\\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \\\hline\end{array}$$


-The opportunity cost of 1 fish in Scandia is:

A)12 chips
B)4 chips
C)16 chips
D)1 chip
E)3 chips

Answer 3

3 chips

Question 4

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } \hline { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \\\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \\\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \\\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \\\hline\end{array}$$


-Assume that before specialization and trade,each nation devoted half of its workforce to each product.If these two nations now fully specialize in accordance with comparative advantage,the total gains from specialization would be:

A)8 chips
B)50 chips and 24 fish
C)32 fish
D)8 chips and 32 fish
E)24 chips and 32 fish

Question 5

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } \hline { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \\\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \\\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \\\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \\\hline\end{array}$$


-If Landia and Scandia fully specialize in accordance with comparative advantage,their total output will be:

A)80 fish and 576 chips
B)160 fish and 480 chips
C)96 fish and 400 chips
D)96 fish and 480 chips
E)160 fish and 576 chips

Question 6

If a nation has a comparative advantage in the production of product X,this means that the nation:

A)cannot benefit by producing and trading this product
B)must give up less of other products than other nations in producing a unit of X
C)has production choices identical to those of other nations
D)is not able to produce this product efficiently
E)should import this product

Question 7

Given two nations and two products,when each nation has an absolute advantage in making one product:

A)the nations should specialize and trade
B)the nations should not trade
C)the nations should not specialize
D)both nations have a comparative advantage
E)the other country also has an absolute advantage in making that same product

Question 8

A worker in Country A can produce 6 smartphones or 1 computer tablet per day,while a worker in Country B can produce 4 smartphones or 3 computer tablets per day.Therefore:

A)workers in A should produce computer tablets and workers in B should produce smartphones, based on the principle of comparative advantage
B)workers in A should produce smartphones and workers in B should produce computer tablets, based on the principle of comparative advantage
C)workers in A should produce computer tablets and workers in B should produce smartphones, based on the principle of absolute advantage
D)workers in A should produce smartphones and workers in B should produce computer tablets, based on the principle of absolute advantage
E)half the workers in each country should produce each good

Question 9

Between 2011 and 2060,the PPP-adjusted share of global GDP represented by rich economies of the West is forecast to:

A)fall from a half to a third
B)rise from one-half to two-thirds
C)fall from two-thirds to under a half
D)fall from four-fifths to a fifth
E)stay approximately the same

Question 10

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } \hline { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \\\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \\\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \\\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \\\hline\end{array}$$


-On the basis of these data,we can say that:

A)Landia has a comparative advantage in chips while Scandia has a comparative advantage in fish
B)Landia has a comparative advantage in fish while Scandia has a comparative advantage in chips
C)both Landia and Scandia have a comparative advantage in fish
D)both Landia and Scandia have a comparative advantage in chips
E)neither Landia nor Scandia has a comparative advantage in chips

Question 11

According to the concept of comparative advantage,a product should be produced in that region or nation where:

A)its opportunity cost is greatest
B)money is used as a medium of exchange
C)its opportunity cost is least
D)the terms of trade are maximized
E)the terms of trade are minimized

Question 12

Specialization in production is important primarily because it:

A)results in greater total output
B)allows society to avoid the problem of shortages
C)allows society to trade by barter
D)allows society to have fewer capital goods
E)allows society to avoid the problem of surpluses

Question 13

Assume that by devoting all of its resources to the production of X,nation Alpha can produce 40 units of X.By devoting all of its resources to the production of Y,Alpha can produce 60 units of Y.Comparable figures for nation Beta are 60 units of X and 40 units of Y.On the basis of this information,we can conclude that:

A)the terms of trade will be 3 units of X equals 1 unit of Y
B)Alpha should specialize in Y and Beta in X
C)Alpha should specialize in X and Beta in Y
D)there is no basis for mutually beneficial specialization and trade
E)the terms of trade will be 3 units of Y equals 1 unit of X

Question 14

Canada's merchandise exports to the US make up what approximate percentage of overall Canadian merchandise exports?

A)95 percent
B)85 percent
C)75 percent
D)65 percent
E)55 percent

Question 15

If Paul can mow a lawn in 1 hours and weed a vegetable garden in 3 hours and Mary can mow a lawn in 2 hours and weed a vegetable garden in 1 hour,then:

A)on the basis of absolute advantage Mary should mow the lawn and Paul should weed the vegetable garden
B)on the basis of absolute advantage Paul should mow the lawn and Mary should weed the vegetable garden
C)on the basis of comparative advantage Mary should mow the lawn and Paul should weed the vegetable garden
D)on the basis of comparative advantage Paul should mow the lawn and Mary should weed the garden
E)Paul and Mary do not have an absolute or comparative advantage in either activity

Question 16

If country A can produce both products X and Y more efficiently,that is with smaller amounts of resources than can country B:

A)mutually advantageous specialization and trade between A and B may still be possible
B)we can conclude that A is an "advanced" economy and B is "less developed"
C)it will necessarily be advantageous for B to import both X and Y from A
D)mutually advantageous specialization and trade between A and B will not be possible
E)it will necessarily be advantageous for A to import both X and Y from B

Question 17

According to the theory of comparative advantage,a product should be produced in that nation where:

A)the opportunity cost is greatest
B)its cost is least in terms of alternative products that might otherwise be produced
C)there is an absolute advantage in its production
D)its absolute money cost of production is least
E)the consumer benefits are the greatest

Question 18

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } \hline { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \\\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \\\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \\\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \\\hline\end{array}$$


-The opportunity cost of 1 fish in Landia is:

A)10 chips
B)2 chips
C)4 chips
D)8 chips
E)5 chips

Question 19

Canada's merchandise imports from the US make up what approximate proportion of overall Canadian merchandise imports?

A)almost one third
B)just over two fifths two fifths
C)about one half
D)just under two thirds
E)over four fifths

Question 20

As a percentage of the country's GDP,exports in Canada are:

A)relatively low when compared with major economies such as China and the United States
B)relatively high when compared with small economies such as Belgium
C)roughly the same as for countries such as the United States and the United Kingdom
D)higher than for the US and Japan but lower than for Belgium
E)roughly the same as for small economies such as Belgium

Question 21

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } \hline { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \\\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \\\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \\\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \\\hline\end{array}$$


-Which of the following would be feasible terms of trade between Landia and Scandia?

A)1 fish for 4 chips
B)1 fish for 6 chips
C)1 fish for 7 chips
D)2 fish for 4 chips
E)8 chips for 1 fish

Question 22

Given free trade,that is assuming no tariff,the outputs produced by domestic and foreign producers,respectively,would be:

A)0v and vz
B)0w and wy
C)0w and wz
D)vx and xz
E)vw and yz

Question 23

Given the tariff,the quantities sold by foreign and domestic producers,respectively,would be:

A)xz and 0x
B)0y and yz
C)0x and xz
D)vz and 0v
E)wy and 0w

Question 24

The following data outline production choices (A or B) in two nations, Latalia and Trombonia. Latalia has a workforce of 14 and Trombonia has a workforce of 10.

$\begin{array} { | l | c | c | l | c | c | c | } \hline { \text { Output per worker in Latalia } } & &&& { \text { Output per worker in Trombonia } } \\\hline & \text { A } & \text { B } & & & \text { A } & \text { B } \\\hline \text { Pork (tons) } & 4 & 0 & & \text { Pork (tons) } & 8 & 0 \\\hline \text { Beans (tons) } & 0 & 20 & & \text { Beans (tons) } & 0 & 24 \\\hline\end{array}$

-If these two nations specialize in accordance with the principle of comparative advantage:

A)Trombonia will produce beans and Latalia will produce pork
B)Trombonia will produce both beans and pork and Latalia will produce neither
C)Latalia will produce both beans and pork and Trombonia will produce neither
D)Latalia will produce beans and Trombonia will produce pork
E)there will still be no trade between the two countries

Question 25

The terms of trade show:

A)the ratio at which regions or nations exchange two products
B)how the gains from trade can be shared equally
C)the value of one nation's currency in terms of another nation's currency
D)the opportunity cost of one product in terms of another in a single country
E)the potential losses from trade

Question 26

A tariff can best be described as a(n):

A)excise tax on an imported good
B)government payment to domestic producers to enable them to sell competitively in world markets
C)excise tax on an exported good
D)law that sets a limit upon the amount of a good that can be imported
E)law that sets a limit on the amount of a good that can be exported

Question 27

The following are domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { supplied } \\\text { (domestic) }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity } \\\text { demanded } \\\text { (domestic) }\end{array} \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$

-If this nation were entirely closed to international trade,the equilibrium price and quantity would be:

A)$5 and 2 units
B)$1 and 1 unit
C)$4 and 4 units
D)$3 and 7 units
E)$2 and 11 units

Question 28

Given the imposition of a per-unit tariff in the amount of P_cP_t,price and total quantity sold (both domestically produced and imported),respectively,would be:

A)0P_t and 0x
B)0P_c and 0z
C)0P_t and 0z
D)0P_a and 0x
E)0P_t and 0y

Question 29

In effect,tariffs on imports are:

A)special taxes on domestic producers
B)subsidies to domestic consumers
C)subsidies to foreign producers
D)subsidies to domestic producers
E)income taxes on foreign consumers

Question 30

If the economy is opened to free trade,the price and quantity sold (both domestically produced and imported)of this product,respectively,would be:

A)0P_c and 0v
B)0P_t and 0w
C)0P_t and 0y
D)0P_c and 0z
E)0P_t and 0z

Question 31

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10.

$\begin{array}{|l|c|c|l|l|c|c|}\hline{\text { Output per worker in Gamma }} & &&&{\text { Output per worker in Sigma }} \\\hline & \mathrm{A} & \mathrm{B} & & & \mathrm{A} & \mathrm{B} \\\hline \text { Tea } & 120 & 0 & & \text { Tea } & 40 & 0 \\\hline \text { Pots } & 0 & 120 & & \text { Pots } & 0 & 120 \\\hline\end{array}$

-Assume that before specialization and trade,each nation devoted half of its workforce to each product.If these two nations fully specialize in accordance with comparative advantage,the total gains from specialization would be:

A)200 units of tea and 200 pots
B)400 pots
C)400 units of tea
D)400 units of tea and 400 pots
E)600 units of tea and 600 pots

Question 32

The following data outline production choices (A or B) in two nations, Latalia and Trombonia. Latalia has a workforce of 14 and Trombonia has a workforce of 10.

$\begin{array} { | l | c | c | l | c | c | c | } \hline { \text { Output per worker in Latalia } } & &&& { \text { Output per worker in Trombonia } } \\\hline & \text { A } & \text { B } & & & \text { A } & \text { B } \\\hline \text { Pork (tons) } & 4 & 0 & & \text { Pork (tons) } & 8 & 0 \\\hline \text { Beans (tons) } & 0 & 20 & & \text { Beans (tons) } & 0 & 24 \\\hline\end{array}$

-Assume that before specialization and trade,each nation devoted half of its workforce to each product.If these two nations fully specialize in accordance with comparative advantage,the total gains from specialization would be:

A)12 tons of pork and 20 tons of beans
B)88 tons of pork and 120 tons of beans
C)100 tons of pork and 100 tons of beans
D)12 tons of pork and 120 tons of beans
E)88 tons of pork and 100 tons of beans

Question 33

The following data outline production choices (A or B) in two nations, Latalia and Trombonia. Latalia has a workforce of 14 and Trombonia has a workforce of 10.

$\begin{array} { | l | c | c | l | c | c | c | } \hline { \text { Output per worker in Latalia } } & &&& { \text { Output per worker in Trombonia } } \\\hline & \text { A } & \text { B } & & & \text { A } & \text { B } \\\hline \text { Pork (tons) } & 4 & 0 & & \text { Pork (tons) } & 8 & 0 \\\hline \text { Beans (tons) } & 0 & 20 & & \text { Beans (tons) } & 0 & 24 \\\hline\end{array}$

-In Latalia,the opportunity cost of 1 ton of pork is:

A)3 tons of beans
B)1/4 of a ton of beans
C)4 tons of beans
D)1/5 of a ton of beans
E)5 tons of beans

Question 34

If this economy was entirely closed to international trade,equilibrium price and quantity,respectively,would be:

A)0P_c and 0z
B)0P_t and 0w
C)0P_c and 0v
D)0P_t and 0y
E)0P_a and 0x

Question 35

The terms of trade reflect the:

A)rate at which gold exchanges internationally for any domestic currency
B)ratio at which nations will exchange two products
C)fact that the gains from trade will be divided equally
D)cost conditions embodied in the production of two products in a single country
E)the ratio of the two countries' currencies

Question 36

The total amount of tariff revenue collected on this product would be:

A)P_aP_t x wy
B)P_cP_a x 0x
C)P_cP_t x wy
D)P_cP_t x 0z
E)P_aP_t x 0x

Question 37

The following data outline production choices (A or B) in two nations, Latalia and Trombonia. Latalia has a workforce of 14 and Trombonia has a workforce of 10.

$\begin{array} { | l | c | c | l | c | c | c | } \hline { \text { Output per worker in Latalia } } & &&& { \text { Output per worker in Trombonia } } \\\hline & \text { A } & \text { B } & & & \text { A } & \text { B } \\\hline \text { Pork (tons) } & 4 & 0 & & \text { Pork (tons) } & 8 & 0 \\\hline \text { Beans (tons) } & 0 & 20 & & \text { Beans (tons) } & 0 & 24 \\\hline\end{array}$

-Which of the following would be feasible terms for trade between Latalia and Trombonia?

A)1 ton of beans = 1 ton of pork
B)8 tons of beans = 1 ton of pork
C)6 tons of beans = 1 ton of pork
D)1 ton of beans = 4 tons of pork
E)4 tons of beans = 1 ton of pork

Question 38

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10.

$\begin{array}{|l|c|c|l|l|c|c|}\hline{\text { Output per worker in Gamma }} & &&&{\text { Output per worker in Sigma }} \\\hline & \mathrm{A} & \mathrm{B} & & & \mathrm{A} & \mathrm{B} \\\hline \text { Tea } & 120 & 0 & & \text { Tea } & 40 & 0 \\\hline \text { Pots } & 0 & 120 & & \text { Pots } & 0 & 120 \\\hline\end{array}$

-On the basis of this information,we can say that:

A)Gamma should export both tea and pots to Sigma
B)Sigma should export tea to Gamma and Gamma should export pots to Sigma
C)Gamma should export tea to Sigma and Sigma should export pots to Gamma
D)Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots
E)Sigma should export both tea and pots to Gamma

Question 39

Given the tariff,prices received by domestic and foreign producers,respectively,would be:

A)0P_c and 0P_a
B)0P_a and 0P_c
C)0P_a and 0P_t
D)0P_t and 0P_c
E)0P_c and 0P_t

Question 40

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10.

$\begin{array}{|l|c|c|l|l|c|c|}\hline{\text { Output per worker in Gamma }} & &&&{\text { Output per worker in Sigma }} \\\hline & \mathrm{A} & \mathrm{B} & & & \mathrm{A} & \mathrm{B} \\\hline \text { Tea } & 120 & 0 & & \text { Tea } & 40 & 0 \\\hline \text { Pots } & 0 & 120 & & \text { Pots } & 0 & 120 \\\hline\end{array}$

-What are the limits of the terms of trade between Gamma and Sigma?

A)1 unit of tea = 1 pot to 3 units of tea = 1 pot
B)1 unit of tea = 3 pots to 1 unit of tea = 6 pots
C)1 unit of tea = 1 pot to 1 unit of tea = 3 pots
D)6 units of tea = 1 pot to 1 unit of tea = 1 pot
E)6 units of tea = 1 pot to 6 pots = 1 unit of tea

Question 41

The following are domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { supplied } \\\text { (domestic) }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity } \\\text { demanded } \\\text { (domestic) }\end{array} \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$

-Given free trade,that is assuming no tariff,the outputs produced by domestic and foreign producers,respectively,would be:

A)1 unit and 15 units
B)4 units and 7 units
C)7 units and 0 units
D)1 unit and 16 units
E)7 units and 7 units

Question 42

When compared with the case of free trade,the imposition of a quota of wy will:

A)lower domestic price and increase domestic consumption
B)increase the revenues of domestic producers by areas E + F + K
C)increase the revenues of domestic producers by areas G + H
D)increase the revenues of domestic producers by areas E + F + G + H + J
E)lower the revenues of domestic producers by areas E + F + G + H + J

Question 43

Which of the following statements concerning the Free Trade Agreement (FTA)is true?

A)Some, but not all, tariffs on trade between Canada and the U.S.were phased out by 1998.
B)Canadian cultural industries are fully included in the agreement.
C)Restrictions have been placed on government attempts to screen American investment in Canada.
D)The agreement does not deal with Canadian energy exports to the U.S.
E)The agreement has not affected the operation of the Auto Pact.

Question 44

A protective tariff will:

A)increase the sales revenues of foreign producers
B)increase the sales revenues of domestic producers
C)result in a transfer of income from government to domestic consumers
D)result in a transfer of income from government to domestic producers
E)result in a transfer of income from government to foreign producers

Question 45

The following are domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { supplied } \\\text { (domestic) }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity } \\\text { demanded } \\\text { (domestic) }\end{array} \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$

-Given the imposition of a $1 per unit tariff,the price and total quantity sold (both domestically produced and imported)will be:

A)$3 and 7 units
B)$4 and 4 units
C)$2 and 4 units
D)$5 and 2 units
E)$2 and 11 units

Question 46

The "increase domestic employment" argument for tariff protection holds that:

A)domestic inflation is a desirable policy goal because it stimulates exports
B)domestic deflation is a desirable policy goal because it stimulates imports
C)an increase in tariffs will increase imports and stimulate domestic employment
D)an increase in tariffs will decrease imports and stimulate domestic employment
E)domestic deflation is a desirable goal because it stimulates exports

Question 47

The size of the import quota:

A)is vz
B)is vy
C)is 0y
D)is wx
E)is wy

Question 48

Assuming there is no tariff,the imposition of the import quota:

A)will increase the revenue of the Canadian government by areas G + H
B)will increase the revenue of the Canadian government by areas E + F + G + H + J
C)leads to an extra revenue to foreign producers equal to areas G + H, which partly counteracts the loss they bear because of lower quantities supplied
D)will increase the revenues of foreign producers by area E
E)will increase the revenues of foreign producers by area F + J

Question 49

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

A)labour costs and product prices are not related
B)there is no discernible relationship between wage rates and labour productivity
C)wage rates and labour productivity are directly related
D)wage rates and labour productivity are inversely related
E)wages are now higher in many low-income countries than they are in high-income countries

Question 50

The effect of the import quota on domestic price and domestic consumption is:

A)the same as that of a tariff of P_cP_t
B)the same as that of a tariff of P_tP_a
C)the same as that of a tariff of P_cP_a
D)to raise price by more and reduce consumption by less than a tariff of P_cP_t
E)to raise price by less and reduce consumption by more than a tariff of P_cP_t

Question 51

The following are domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { supplied } \\\text { (domestic) }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity } \\\text { demanded } \\\text { (domestic) }\end{array} \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$

-If a $1 tariff is imposed on this product,the total amount of tariff revenue collected will be:

A)$15
B)$11
C)$7
D)$4
E)$16

Question 52

A tariff of P_cP_t will:

A)have the bigger effect than an import quota of wy on the volume of imports
B)have the bigger effect than an import quota of wy on domestic price
C)have the same effect as an import quota of wy on the revenues of domestic producers
D)have the same effect as an import quota of wy on the revenues of foreign producers
E)have the same effect as an import quota of wy on government revenues

Question 53

The General Agreement on Tariffs and Trade (GATT)and its successor,the World Trade Organization (WTO):

A)have been based upon the principle that trade policies of member countries do not need to treat all other members equally
B)have led to significant increases in trade barriers among member countries since World War II
C)have allowed for limited forms of trade retaliation if disputes among member countries cannot be settled in other ways
D)have had little effect on member countries' trade policies
E)have worked primarily through changes in nontariff barriers rather than tariff barriers to trade\

Question 54

Which combination of policies would provide the greatest stimulus to domestic employment and output in the short run?

A)raising trade barriers on imports and subsidizing exports
B)raising trade barriers on imports and imposing special taxes on exports
C)lowering trade barriers on imports and imposing special taxes on exports
D)lowering trade barriers on imports and subsidizing exports
E)subsidizing imports and imposing special taxes on exports

Question 55

The primary economic advantage of the European Union to its members is that:

A)the tax structures of each participating nation have been made nearly identical
B)each nation is free to formulate its own trade policies
C)all participating nations use a common currency
D)the reduction of trade barriers permits producers to specialize based on the principle of comparative advantage
E)all labour and safety regulations are now standardized through the area

Question 56

The following are domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { supplied } \\\text { (domestic) }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity } \\\text { demanded } \\\text { (domestic) }\end{array} \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$

-Given the tariff,prices (revenue per unit)received by domestic and foreign producers,respectively,would be:

A)$2 and $1
B)$1 and $2
C)$2 and $2
D)$3 and $2
E)$4 and $3

Question 57

The following are domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { supplied } \\\text { (domestic) }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity } \\\text { demanded } \\\text { (domestic) }\end{array} \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$

-If the economy is opened to free trade and the world price of $1 prevailed,the price and total quantity sold of this product (both domestically produced and imported)would be:

A)$1 and 1 unit
B)$4 and 10 units
C)$3 and 7 units
D)$2 and 11 units
E)$1 and 16 units

Question 58

The following are domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { supplied } \\\text { (domestic) }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity } \\\text { demanded } \\\text { (domestic) }\end{array} \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$

-Given the $1 per unit tariff,the quantities sold by foreign and domestic producers,respectively:

A)are 15 units and 1 unit
B)are 7 units and 4 units
C)are 11 units and 4 units
D)are 1 unit and 15 units
E)are 4 units and 7 units

Question 59

Ceteris paribus,a tariff is:

A)superior to an import quota for Canadians because a tariff increases the profits of foreign producers
B)inferior to an import quota for Canadians because a tariff increases the profits of domestic producers
C)superior to an import quota for Canadians because a tariff generates revenue for the Canadian government
D)inferior to an import quota for Canadians because a tariff generates revenue for the Canadian government
E)the same as an import quota for Canadians because both are forms of trade protection

Question 60

When compared with the case of free trade,the imposition of a tariff of P_cP_t will:

A)lower domestic price and increase domestic consumption
B)increase the revenues of domestic producers by areas E + F + K
C)increase the revenues of domestic producers by areas G + H
D)increase the revenues of domestic producers by areas E + F + G + H + J
E)increase the revenues of foreign producers by G + H

Question 61

In the view of Tyler Cowen:

A)there are limits to how much computers can replace human labour
B)computers are capable of recognizing text but will never engage in fully natural speech
C)the computer revolution is having only a minor impact on education sector
D)the potential for machine intelligence to replace human labour is almost limitless
E)there will likely be a political revolt against the growing role of computers in society

Question 62

According to Tyler Cowen,the rise in global youth unemployment is primarily due to the:

A)2008 financial crisis
B)impact of the growing productivity of intelligent machines
C)shift of economic activity from rich Western countries to countries in the emerging world
D)fact that economic inequality in countries such as Canada and the US is lessening
E)fact that so many young people are no longer pursuing post-secondary education

Question 63

Which of the following statements concerning the North American Free Trade Agreement (NAFTA)is not true?

A)The agreement extends most of the provisions of the Free Trade Agreement (FTA) to include Mexico.
B)The agreement is important because Canada's trade with Mexico is a significant part of Canadian trade.
C)The agreement is an example of a trilateral trade accord.
D)Side agreements allow for penalties against a member country that is not enforcing labour or environmental laws.
E)In future, the agreement may become the base for a wider free trade area that covers all of the Americas.