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Deck 21: International Trade Restrictions
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Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Employers and workers in the protected industry know that the consequences of protection are principally:
A)lower prices for their output, lower profits for owners, and lower wages for workers.
B)higher prices for their output, lower profits for owners, and lower wages for workers.
C)higher prices for their output, lower profits for owners, and higher wages for workers.
D)lower prices for their output, higher profits for owners, and higher wages for workers.
E)higher prices for their output, higher profits for owners, and higher wages for workers.
Employers and workers in the protected industry know that the consequences of protection are principally:
A)lower prices for their output, lower profits for owners, and lower wages for workers.
B)higher prices for their output, lower profits for owners, and lower wages for workers.
C)higher prices for their output, lower profits for owners, and higher wages for workers.
D)lower prices for their output, higher profits for owners, and higher wages for workers.
E)higher prices for their output, higher profits for owners, and higher wages for workers.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
If international trade is restricted by the government of a country:
A)the domestic consumers are benefited.
B)the domestic producers are adversely affected.
C)the domestic consumers pay higher prices for imported goods.
D)the resources are equally distributed among domestic and foreign producers.
E)the resources are allocated to their highest paid uses.
If international trade is restricted by the government of a country:
A)the domestic consumers are benefited.
B)the domestic producers are adversely affected.
C)the domestic consumers pay higher prices for imported goods.
D)the resources are equally distributed among domestic and foreign producers.
E)the resources are allocated to their highest paid uses.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following statements is true of the impact of trade restrictions on domestic employment?
A)Domestic firms will produce the goods that otherwise would have been produced abroad, thus employing foreign workers instead of domestic workers.
B)Beside the protected industry, other industries will also benefit in terms of employment.
C)Workers in the protected industry migrate to other industries.
D)Restrictions imposed on trade redistribute jobs by creating employment in the protected industry and reducing employment elsewhere.
E)Minimum wages for skilled and unskilled labor increase in the domestic country.
Which of the following statements is true of the impact of trade restrictions on domestic employment?
A)Domestic firms will produce the goods that otherwise would have been produced abroad, thus employing foreign workers instead of domestic workers.
B)Beside the protected industry, other industries will also benefit in terms of employment.
C)Workers in the protected industry migrate to other industries.
D)Restrictions imposed on trade redistribute jobs by creating employment in the protected industry and reducing employment elsewhere.
E)Minimum wages for skilled and unskilled labor increase in the domestic country.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
People who call for creating a "level playing field" believe that:
A)a country with relatively low wages is typically a country with an abundance of low-skilled labor.
B)trading on the basis of comparative advantage benefits both domestic and foreign firms.
C)creating a "level playing field" undermines the basis for specialization and economic efficiency.
D)production in accordance with comparative advantage is unfair.
E)free trade allocates the scarce resources in an efficient way.
People who call for creating a "level playing field" believe that:
A)a country with relatively low wages is typically a country with an abundance of low-skilled labor.
B)trading on the basis of comparative advantage benefits both domestic and foreign firms.
C)creating a "level playing field" undermines the basis for specialization and economic efficiency.
D)production in accordance with comparative advantage is unfair.
E)free trade allocates the scarce resources in an efficient way.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
The notion of reciprocity means that one nation will impose import restrictions on another in order to:
A)stimulate an increase in trade restrictions in the latter.
B)stimulate a decrease in trade restrictions in the latter.
C)eliminate trade restrictions immediately in both countries.
D)improve the government revenue collections through tariffs in both countries.
E)enforce standards of product quality in the latter.
The notion of reciprocity means that one nation will impose import restrictions on another in order to:
A)stimulate an increase in trade restrictions in the latter.
B)stimulate a decrease in trade restrictions in the latter.
C)eliminate trade restrictions immediately in both countries.
D)improve the government revenue collections through tariffs in both countries.
E)enforce standards of product quality in the latter.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Commercial policy is a government policy aimed at influencing:
A)the operation of commercial banks.
B)domestic trade flows.
C)domestic private corporations.
D)international trade flows.
E)the operation of capital markets.
Commercial policy is a government policy aimed at influencing:
A)the operation of commercial banks.
B)domestic trade flows.
C)domestic private corporations.
D)international trade flows.
E)the operation of capital markets.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following statements about international trade restrictions is true?
A)They ensure that only efficient producers survive.
B)They ensure that countries specialize only in those products that they can produce most efficiently.
C)They harm domestic consumers in the majority of cases.
D)They typically benefit foreign producers at the expense of domestic consumers.
E)They ensure that higher-quality goods are provided at lower prices.
Which of the following statements about international trade restrictions is true?
A)They ensure that only efficient producers survive.
B)They ensure that countries specialize only in those products that they can produce most efficiently.
C)They harm domestic consumers in the majority of cases.
D)They typically benefit foreign producers at the expense of domestic consumers.
E)They ensure that higher-quality goods are provided at lower prices.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
In the light of the infant industry argument, identify the industry which is likely to have substantially high initial costs.
A)Fashion designing
B)Retail industry
C)Iron and steel industry
D)Dairy industry
E)Software industry
In the light of the infant industry argument, identify the industry which is likely to have substantially high initial costs.
A)Fashion designing
B)Retail industry
C)Iron and steel industry
D)Dairy industry
E)Software industry
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Steel producers in the United States observe that foreign sales of U.S. steel has drastically declined due to stringent trade policies adopted by the foreign governments and unfair treatment of U.S. steel exports in foreign countries. The lobbying efforts of such loss making U.S. steel manufacturers induce the domestic government to restrict the entry of imported steel and help stimulate the sales of domestically produced steel. Which of the following tariffs is most similar to the example mentioned above?
A)A tariff imposed by the government to stimulate domestic production of a high-technology good with positive spillover effects
B)A tariff imposed by the government on the import of cotton textiles because it is an infant industry in the domestic country
C)An import tariff applied against a foreign monopoly supplying the domestic market
D)Tariffs imposed by the government on an import competing industry that generates a negative production externality
E)Reciprocal tariffs introduced by the government of a country as a call for fair trade
Steel producers in the United States observe that foreign sales of U.S. steel has drastically declined due to stringent trade policies adopted by the foreign governments and unfair treatment of U.S. steel exports in foreign countries. The lobbying efforts of such loss making U.S. steel manufacturers induce the domestic government to restrict the entry of imported steel and help stimulate the sales of domestically produced steel. Which of the following tariffs is most similar to the example mentioned above?
A)A tariff imposed by the government to stimulate domestic production of a high-technology good with positive spillover effects
B)A tariff imposed by the government on the import of cotton textiles because it is an infant industry in the domestic country
C)An import tariff applied against a foreign monopoly supplying the domestic market
D)Tariffs imposed by the government on an import competing industry that generates a negative production externality
E)Reciprocal tariffs introduced by the government of a country as a call for fair trade
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Developing countries often justify imposition of tariffs because:
A)it creates a burden on government budget.
B)it is easy to collect direct taxes from people in the developing countries.
C)a large number of people in the developing countries earn a taxable income.
D)developing countries find income taxes difficult to levy and collect.
E)the volume of imports of these countries is considerably low.
Developing countries often justify imposition of tariffs because:
A)it creates a burden on government budget.
B)it is easy to collect direct taxes from people in the developing countries.
C)a large number of people in the developing countries earn a taxable income.
D)developing countries find income taxes difficult to levy and collect.
E)the volume of imports of these countries is considerably low.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
The infant industry argument is that:
A)those industries that produce products for infants should be protected.
B)developing industries should be allowed to face foreign competition.
C)protectionism should be used to create a level playing field for the domestic firms to compete with foreign firms.
D)protectionism promotes complete specialization in the country on the basis of comparative advantage.
E)new industries should be protected from foreign competition until they have had adequate time to develop.
The infant industry argument is that:
A)those industries that produce products for infants should be protected.
B)developing industries should be allowed to face foreign competition.
C)protectionism should be used to create a level playing field for the domestic firms to compete with foreign firms.
D)protectionism promotes complete specialization in the country on the basis of comparative advantage.
E)new industries should be protected from foreign competition until they have had adequate time to develop.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
According to empirical observations, the cost of restricting international trade in the U.S. is much greater than the benefits generated from restriction. In the light of the above observation, which of the following statements is true?
A)Domestic producers end up earning lower profits than what they would earn without trade restrictions.
B)Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer.
C)U.S. GDP would be over $14 billion higher with import restrictions than without restrictions.
D)Protection of the U.S. textile and sugar industries means that all consumers pay a lower price for clothing and sugar.
E)Protection of the domestic industries enable the producers to charge lower prices for their products.
According to empirical observations, the cost of restricting international trade in the U.S. is much greater than the benefits generated from restriction. In the light of the above observation, which of the following statements is true?
A)Domestic producers end up earning lower profits than what they would earn without trade restrictions.
B)Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer.
C)U.S. GDP would be over $14 billion higher with import restrictions than without restrictions.
D)Protection of the U.S. textile and sugar industries means that all consumers pay a lower price for clothing and sugar.
E)Protection of the domestic industries enable the producers to charge lower prices for their products.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Nascent industries require adequate protection from foreign competition because:
A)they experience economies of scale at the initial stages of production.
B)they experience diseconomies of scale at high levels of output.
C)the quality of the products of such industries are comparatively inferior than the products of their foreign competitors.
D)they could undermine other developed industries by selling higher quality products at lower prices.
E)their initial costs of production are considerably high and they incur losses.
Nascent industries require adequate protection from foreign competition because:
A)they experience economies of scale at the initial stages of production.
B)they experience diseconomies of scale at high levels of output.
C)the quality of the products of such industries are comparatively inferior than the products of their foreign competitors.
D)they could undermine other developed industries by selling higher quality products at lower prices.
E)their initial costs of production are considerably high and they incur losses.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
It is often argued that if foreign goods are kept out of the domestic economy:
A)jobs will be lost at home.
B)jobs will be created abroad.
C)domestic consumers will enjoy product surpluses.
D)jobs will be created at home.
E)foreign consumers will suffer product shortages.
It is often argued that if foreign goods are kept out of the domestic economy:
A)jobs will be lost at home.
B)jobs will be created abroad.
C)domestic consumers will enjoy product surpluses.
D)jobs will be created at home.
E)foreign consumers will suffer product shortages.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Generally speaking, protection from foreign competition benefits:
A)both domestic producers and foreign producers.
B)both domestic consumers and foreign consumers.
C)domestic consumers and foreign consumers.
D)neither domestic producers nor foreign producers.
E)domestic producers at the expense of domestic consumers.
Generally speaking, protection from foreign competition benefits:
A)both domestic producers and foreign producers.
B)both domestic consumers and foreign consumers.
C)domestic consumers and foreign consumers.
D)neither domestic producers nor foreign producers.
E)domestic producers at the expense of domestic consumers.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following probably best explains why trade restrictions are imposed even if the costs to consumers are greater than the benefits to protected industries?
A)Indifference on the government's part to the interests of domestic workers
B)A desire to make other countries suffer
C)Government's desire to earn high revenues
D)Successful lobbying by employers and workers in protected industries
E)Government's preference to safeguard the interest of the producers at the expense of the consumers
Which of the following probably best explains why trade restrictions are imposed even if the costs to consumers are greater than the benefits to protected industries?
A)Indifference on the government's part to the interests of domestic workers
B)A desire to make other countries suffer
C)Government's desire to earn high revenues
D)Successful lobbying by employers and workers in protected industries
E)Government's preference to safeguard the interest of the producers at the expense of the consumers
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).
A)domestic consumers; domestic producers
B)domestic consumers; government
C)domestic producers; domestic consumers
D)foreign producers; domestic producers
E)foreign producers; domestic consumers
When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).
A)domestic consumers; domestic producers
B)domestic consumers; government
C)domestic producers; domestic consumers
D)foreign producers; domestic producers
E)foreign producers; domestic consumers
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Protection provided to the infant industries is rarely withdrawn because:
A)the costs of withdrawing protection outweigh the benefits.
B)the industries begin to experience diseconomies of scale.
C)it leads to a loss of government revenue.
D)the industries produce goods which are close substitutes of the imported goods.
E)the larger and more successful the industry becomes, the more political power it wields.
Protection provided to the infant industries is rarely withdrawn because:
A)the costs of withdrawing protection outweigh the benefits.
B)the industries begin to experience diseconomies of scale.
C)it leads to a loss of government revenue.
D)the industries produce goods which are close substitutes of the imported goods.
E)the larger and more successful the industry becomes, the more political power it wields.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Protection of an infant industry should be withdrawn once that industry:
A)charges the same price as foreign competitors.
B)goes public on the stock exchange.
C)raises a large amount of sales revenue.
D)achieves sufficient size to compete with foreign firms.
E)earns enough profit as a result of the subsidies to remain in business.
Protection of an infant industry should be withdrawn once that industry:
A)charges the same price as foreign competitors.
B)goes public on the stock exchange.
C)raises a large amount of sales revenue.
D)achieves sufficient size to compete with foreign firms.
E)earns enough profit as a result of the subsidies to remain in business.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Typically, restrictions to "save domestic jobs" simply redistribute jobs by creating:
A)employment in the protected industry and reducing employment elsewhere.
B)employment in nonprotected industries and reducing employment in the protected industry.
C)labor unions in the nonprotected industries at the expense of employment in the protected industries.
D)employment in the primary sector at the expense of the secondary sector.
E)labor unions in the protected industries at the expense of employment in nonunionized industries.
Typically, restrictions to "save domestic jobs" simply redistribute jobs by creating:
A)employment in the protected industry and reducing employment elsewhere.
B)employment in nonprotected industries and reducing employment in the protected industry.
C)labor unions in the nonprotected industries at the expense of employment in the protected industries.
D)employment in the primary sector at the expense of the secondary sector.
E)labor unions in the protected industries at the expense of employment in nonunionized industries.
Question
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, if the international price of the good is P1, which of the following statements is true?
A)The domestic market is in equilibrium.
B)There is an excess supply in the domestic market by the amount Q4 - Q2.
C)The country will export Q3 - Q1 units of the good.
D)There is an excess demand of Q4 - Q2 units in the domestic market.
E)The country needs to import Q5 - Q1 units of the good to satisfy domestic demand.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, if the international price of the good is P1, which of the following statements is true?
A)The domestic market is in equilibrium.
B)There is an excess supply in the domestic market by the amount Q4 - Q2.
C)The country will export Q3 - Q1 units of the good.
D)There is an excess demand of Q4 - Q2 units in the domestic market.
E)The country needs to import Q5 - Q1 units of the good to satisfy domestic demand.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
One of the primary objectives of the WTO is:
A)to create trade restrictions across the countries.
B)to reduce trade barriers created by the different countries.
C)to enable certain countries to maintain their autarkic conditions.
D)to enable the western countries to emerge as major players in the international trade.
E)to redistribute wealth from the first world to the third world countries.
One of the primary objectives of the WTO is:
A)to create trade restrictions across the countries.
B)to reduce trade barriers created by the different countries.
C)to enable certain countries to maintain their autarkic conditions.
D)to enable the western countries to emerge as major players in the international trade.
E)to redistribute wealth from the first world to the third world countries.
Question
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
If the world price of a good is lower than its domestic equilibrium price, the country will:
A)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
B)export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
C)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers.
D)export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically.
E)import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
If the world price of a good is lower than its domestic equilibrium price, the country will:
A)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
B)export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
C)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers.
D)export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically.
E)import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following is a tool of commercial policy?
A)Corporate income tax
B)Payroll tax
C)Excise duty
D)Tariff
E)Octroi duty
Which of the following is a tool of commercial policy?
A)Corporate income tax
B)Payroll tax
C)Excise duty
D)Tariff
E)Octroi duty
Question
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, the domestic equilibrium quantity of the good is:
A)Q1.
B)Q5.
C)Q2.
D)Q3.
E)Q4.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, the domestic equilibrium quantity of the good is:
A)Q1.
B)Q5.
C)Q2.
D)Q3.
E)Q4.
Question
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 when the international price is P1:
A)the government revenue will equal the area represented by the triangle HFG.
B)the quantity of the good imported by the domestic country declines.
C)the quantity of the good exported by the domestic country declines.
D)the domestic market achieves equilibrium.
E)the government revenue will equal the area represented by the triangle ABH.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 when the international price is P1:
A)the government revenue will equal the area represented by the triangle HFG.
B)the quantity of the good imported by the domestic country declines.
C)the quantity of the good exported by the domestic country declines.
D)the domestic market achieves equilibrium.
E)the government revenue will equal the area represented by the triangle ABH.
Question
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Which of the following would result from a tariff?
A)An increase in government budget deficit
B)An increase in domestic production
C)A greater volume of international trade
D)Increased domestic consumption
E)Decrease in prices of the imported goods
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Which of the following would result from a tariff?
A)An increase in government budget deficit
B)An increase in domestic production
C)A greater volume of international trade
D)Increased domestic consumption
E)Decrease in prices of the imported goods
Question
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 while the international price is P1, the dollar value of the tariff is equal to:
A)P3 - P1.
B)P2 - P3.
C)P2 - P1.
D)P1 - P2.
E)P1 - P3.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 while the international price is P1, the dollar value of the tariff is equal to:
A)P3 - P1.
B)P2 - P3.
C)P2 - P1.
D)P1 - P2.
E)P1 - P3.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following tools of commercial policy yields a revenue to the government?
A)Quota
B)Tariff
C)Export subsidy
D)Government procurement policy
E)Health and safety standards
Which of the following tools of commercial policy yields a revenue to the government?
A)Quota
B)Tariff
C)Export subsidy
D)Government procurement policy
E)Health and safety standards
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Proponents of strategic trade policy contend that:
A)government should tax domestic firms to generate greater revenues.
B)government should encourage imports to prevent monopoly in the domestic market.
C)government should provide subsidies to domestic firms with decreasing costs.
D)government should discourage domestic firms with decreasing costs from continuing production.
E)government should tax domestic import competing firms.
Proponents of strategic trade policy contend that:
A)government should tax domestic firms to generate greater revenues.
B)government should encourage imports to prevent monopoly in the domestic market.
C)government should provide subsidies to domestic firms with decreasing costs.
D)government should discourage domestic firms with decreasing costs from continuing production.
E)government should tax domestic import competing firms.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
According to strategic trade policy, international trade largely involves firms that:
A)enjoy monopolistic power in the domestic market.
B)have a high initial cost of production.
C)pursue economies of scale.
D)have high opportunity costs.
E)generate adequate employment in the domestic economy.
According to strategic trade policy, international trade largely involves firms that:
A)enjoy monopolistic power in the domestic market.
B)have a high initial cost of production.
C)pursue economies of scale.
D)have high opportunity costs.
E)generate adequate employment in the domestic economy.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. However, a government subsidy allows Flettner to enter the helicopter market and Cicare incurs a loss of $4 million due to its entry. Eventually, Flettner evolves as the monopoly supplier of helicopters while Cicare is forced to shut down. This conclusion rests on which of the following assumptions?
A)The German government is experiencing a budget surplus.
B)There is low demand for Cicare automobiles in the world market.
C)The German government is able to forecast accurately the subsidy required to induce helicopter production.
D)The quality of Flettner's helicopters are inferior compared to that of Cicare's.
E)The Argentine government is not a proponent of "fair trade," hence does not retaliate by subsidizing Cicare.
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. However, a government subsidy allows Flettner to enter the helicopter market and Cicare incurs a loss of $4 million due to its entry. Eventually, Flettner evolves as the monopoly supplier of helicopters while Cicare is forced to shut down. This conclusion rests on which of the following assumptions?
A)The German government is experiencing a budget surplus.
B)There is low demand for Cicare automobiles in the world market.
C)The German government is able to forecast accurately the subsidy required to induce helicopter production.
D)The quality of Flettner's helicopters are inferior compared to that of Cicare's.
E)The Argentine government is not a proponent of "fair trade," hence does not retaliate by subsidizing Cicare.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
According to economists, which of the following acts was partially responsible for the Great Depression of the 1930s?
A)The Robinson-Patman Act
B)The National Recovery Act
C)The Smoot-Hawley Tariff Act
D)The Sarbanes-Oxley Act
E)The Sherman Antitrust Act
According to economists, which of the following acts was partially responsible for the Great Depression of the 1930s?
A)The Robinson-Patman Act
B)The National Recovery Act
C)The Smoot-Hawley Tariff Act
D)The Sarbanes-Oxley Act
E)The Sherman Antitrust Act
Question
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, the tariff revenue earned by the domestic government is equal to the:
A)area ABEFH.
B)area FEQ4Q2.
C)area ABH.
D)area HFP1P2.
E)area BEFH
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, the tariff revenue earned by the domestic government is equal to the:
A)area ABEFH.
B)area FEQ4Q2.
C)area ABH.
D)area HFP1P2.
E)area BEFH
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
One important unintended consequence of the Smoot-Hawley Tariff Act was to:
A)lessen the severity of the Great Depression by increasing exports.
B)provide the federal government with an effective tool for exercising monetary policy.
C)decrease the efficiency of domestic automobile production.
D)cause other countries to retaliate and thus leading to a decline in exports.
E)increase the U.S. government budget deficit by $15 million.
One important unintended consequence of the Smoot-Hawley Tariff Act was to:
A)lessen the severity of the Great Depression by increasing exports.
B)provide the federal government with an effective tool for exercising monetary policy.
C)decrease the efficiency of domestic automobile production.
D)cause other countries to retaliate and thus leading to a decline in exports.
E)increase the U.S. government budget deficit by $15 million.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following is true of a tariff?
A)It is a tax levied by the government on domestic production of goods and services.
B)It is a quantitative restriction on imports imposed by the government.
C)It is a monetary benefit received by exporters from the government.
D)It is a monetary benefit received by importers from the government.
E)It is a tax on import and export levied by the government.
Which of the following is true of a tariff?
A)It is a tax levied by the government on domestic production of goods and services.
B)It is a quantitative restriction on imports imposed by the government.
C)It is a monetary benefit received by exporters from the government.
D)It is a monetary benefit received by importers from the government.
E)It is a tax on import and export levied by the government.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. Although a government subsidy allows Flettner to enter the helicopter market, the company is unable to reap profits in the long run. Which of the following could have led to this outcome?
A)Flettner experienced high production costs due to inadequate supply of inputs.
B)New firms entered the helicopter industry.
C)The German government ran a balance of payment deficit.
D)The Argentine government retaliated by subsidizing Cicare.
E)There was very low investment in research and development in this industry.
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. Although a government subsidy allows Flettner to enter the helicopter market, the company is unable to reap profits in the long run. Which of the following could have led to this outcome?
A)Flettner experienced high production costs due to inadequate supply of inputs.
B)New firms entered the helicopter industry.
C)The German government ran a balance of payment deficit.
D)The Argentine government retaliated by subsidizing Cicare.
E)There was very low investment in research and development in this industry.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
The abbreviation GATT stands for:
A)General Analysis of Taxes and Transfers.
B)General Agreement on Tariffs and Trade.
C)Government Agency for Trade and Transportation.
D)Government Agency for Treaties and Taxes.
E)General Agreement on Terms of Trade.
The abbreviation GATT stands for:
A)General Analysis of Taxes and Transfers.
B)General Agreement on Tariffs and Trade.
C)Government Agency for Trade and Transportation.
D)Government Agency for Treaties and Taxes.
E)General Agreement on Terms of Trade.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
If average costs of production decline with increases in output for a particular large firm in an industry:
A)many small firms will be more efficient than the single large firm in the industry.
B)the single large firm will be more efficient than many small firms in the industry.
C)product diversification will be necessary for the firm to spread its overhead.
D)diseconomies of scale become significant as its output increases.
E)its variable cost of production will exceed its fixed costs.
If average costs of production decline with increases in output for a particular large firm in an industry:
A)many small firms will be more efficient than the single large firm in the industry.
B)the single large firm will be more efficient than many small firms in the industry.
C)product diversification will be necessary for the firm to spread its overhead.
D)diseconomies of scale become significant as its output increases.
E)its variable cost of production will exceed its fixed costs.
Question
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following statements about an increasing-returns-to-scale industry is not true?
A)It will tend to concentrate production in the hands of a very few large firms.
B)Firms in the industry face higher costs per unit of production as their level of output increases.
C)Opportunity costs may rise with the level of output in such industries.
D)Tariffs can be used to stimulate production by a domestic industry capable of achieving increasing returns to scale.
E)The costs of producing a unit of output fall as more output is produced in such industries.
Which of the following statements about an increasing-returns-to-scale industry is not true?
A)It will tend to concentrate production in the hands of a very few large firms.
B)Firms in the industry face higher costs per unit of production as their level of output increases.
C)Opportunity costs may rise with the level of output in such industries.
D)Tariffs can be used to stimulate production by a domestic industry capable of achieving increasing returns to scale.
E)The costs of producing a unit of output fall as more output is produced in such industries.
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
According to Figure 21.2, if the world price of wheat is $25, and a tariff of $25 is imposed by the domestic government, the total tariff revenue collected by the government is:
A)$2,000.
B)$0.
C)$200.
D)$100.
E)$4,000
According to Figure 21.2, if the world price of wheat is $25, and a tariff of $25 is imposed by the domestic government, the total tariff revenue collected by the government is:
A)$2,000.
B)$0.
C)$200.
D)$100.
E)$4,000
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium quantity demanded?
A)35 gallons
B)50 gallons
C)20 gallons
D)65 gallons
E)5 gallons
In Figure 21.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium quantity demanded?
A)35 gallons
B)50 gallons
C)20 gallons
D)65 gallons
E)5 gallons
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price of wheat is $25 and a $10 tariff is imposed:
A)imports will decrease from 300 to 200 bushels of wheat.
B)imports will increase from 200 to 400 bushels of wheat.
C)imports will remain unchanged.
D)domestic production will decrease from 200 to 150 bushels of wheat.
E)domestic production will remain unchanged.
In Figure 21.2, if the world price of wheat is $25 and a $10 tariff is imposed:
A)imports will decrease from 300 to 200 bushels of wheat.
B)imports will increase from 200 to 400 bushels of wheat.
C)imports will remain unchanged.
D)domestic production will decrease from 200 to 150 bushels of wheat.
E)domestic production will remain unchanged.
Question
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Which of the following countries is forbidden to impose export tariff by its constitution?
A)The United States
B)Brazil
C)The United Kingdom
D)Japan
E)Mexico
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Which of the following countries is forbidden to impose export tariff by its constitution?
A)The United States
B)Brazil
C)The United Kingdom
D)Japan
E)Mexico
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
According to Figure 21.2, if the world price per bushel of wheat is $25, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
According to Figure 21.2, if the world price per bushel of wheat is $25, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
By restricting the amount of a good that may be imported:
A)quotas, increase prices, thus causing domestic producers to sell less than they would with free trade.
B)tariffs lower prices, thus allowing domestic producers to sell more than they would with free trade.
C)quotas increase prices, thus allowing domestic producers to sell more at higher prices than they would with free trade.
D)tariffs lower prices, thus causing domestic producers to realize lower total revenue.
E)quotas simply replace foreign production with domestic production.
By restricting the amount of a good that may be imported:
A)quotas, increase prices, thus causing domestic producers to sell less than they would with free trade.
B)tariffs lower prices, thus allowing domestic producers to sell more than they would with free trade.
C)quotas increase prices, thus allowing domestic producers to sell more at higher prices than they would with free trade.
D)tariffs lower prices, thus causing domestic producers to realize lower total revenue.
E)quotas simply replace foreign production with domestic production.
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:
A)cause foreign producers to be better off, because the price they charge is now higher by $1 per box.
B)cause domestic producers to be worse off by $5 per box.
C)make domestic consumers worse off as they would be paying $1 more than the domestic price.
D)make domestic consumers pay $1 more than the free trade price, but still $1 less than the domestic price.
E)cause domestic producers to be worse off by $10 per box.
Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:
A)cause foreign producers to be better off, because the price they charge is now higher by $1 per box.
B)cause domestic producers to be worse off by $5 per box.
C)make domestic consumers worse off as they would be paying $1 more than the domestic price.
D)make domestic consumers pay $1 more than the free trade price, but still $1 less than the domestic price.
E)cause domestic producers to be worse off by $10 per box.
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price per bushel of wheat is $25, and a tariff of $10 is imposed, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
In Figure 21.2, if the world price per bushel of wheat is $25, and a tariff of $10 is imposed, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price per bushel of wheat is $25, how much wheat will be imported?
A)450 bushels
B)350 bushels
C)200 bushels
D)150 bushels
E)300 bushels
In Figure 21.2, if the world price per bushel of wheat is $25, how much wheat will be imported?
A)450 bushels
B)350 bushels
C)200 bushels
D)150 bushels
E)300 bushels
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
According to Figure 21.2, if the world price per bushel of wheat is $25, how much is the domestic demand?
A)400 bushels
B)450 bushels
C)200 bushels
D)300 bushels
E)150 bushels
According to Figure 21.2, if the world price per bushel of wheat is $25, how much is the domestic demand?
A)400 bushels
B)450 bushels
C)200 bushels
D)300 bushels
E)150 bushels
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, what are the equilibrium price and quantity in the absence of trade?
A)$8, 50 gallons
B)$12, 35 gallons
C)$8, 35 gallons
D)$4, 20 gallons
E)$16, 50 gallons
In Figure 21.3, what are the equilibrium price and quantity in the absence of trade?
A)$8, 50 gallons
B)$12, 35 gallons
C)$8, 35 gallons
D)$4, 20 gallons
E)$16, 50 gallons
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, if the world price per gallon is $8, then without quotas:
A)50 gallons of corn syrup will be imported.
B)35 gallons of corn syrup will be imported.
C)30 gallons of corn syrup will be imported.
D)20 gallons of corn syrup will be imported.
E)45 gallons of corn syrup will be imported.
In Figure 21.3, if the world price per gallon is $8, then without quotas:
A)50 gallons of corn syrup will be imported.
B)35 gallons of corn syrup will be imported.
C)30 gallons of corn syrup will be imported.
D)20 gallons of corn syrup will be imported.
E)45 gallons of corn syrup will be imported.
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
According to Figure 21.2, if the world price of wheat is $25, and a tariff of $10 is imposed by the domestic government, the total tariff revenue collected by the government is:
A)$5,000.
B)$4,000.
C)$2,000.
D)$1,000.
E)$0.
According to Figure 21.2, if the world price of wheat is $25, and a tariff of $10 is imposed by the domestic government, the total tariff revenue collected by the government is:
A)$5,000.
B)$4,000.
C)$2,000.
D)$1,000.
E)$0.
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price of wheat is $35 and a $15 tariff is imposed:
A)domestic consumption will decrease from 400 to 350 bushels of wheat.
B)the government will collect $200 in revenue from the tariff.
C)domestic consumption will increase from 150 to 200 bushels of wheat.
D)there will be no trade, and the domestic equilibrium quantity will prevail.
E)domestic price for wheat will be higher than its world price.
In Figure 21.2, if the world price of wheat is $35 and a $15 tariff is imposed:
A)domestic consumption will decrease from 400 to 350 bushels of wheat.
B)the government will collect $200 in revenue from the tariff.
C)domestic consumption will increase from 150 to 200 bushels of wheat.
D)there will be no trade, and the domestic equilibrium quantity will prevail.
E)domestic price for wheat will be higher than its world price.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?
A)$4
B)$6
C)$8
D)$10
E)$12
In Figure 21.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?
A)$4
B)$6
C)$8
D)$10
E)$12
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The effect of an import quota on the domestic market is to shift the:
A)demand curve to the right by the amount of the quota.
B)demand curve to the left by the amount of the quota.
C)supply curve to the right by the amount of the quota.
D)supply curve to the left by the amount of the quota.
E)consumers' marginal utility curves if they prefer foreign goods to domestic goods.
The effect of an import quota on the domestic market is to shift the:
A)demand curve to the right by the amount of the quota.
B)demand curve to the left by the amount of the quota.
C)supply curve to the right by the amount of the quota.
D)supply curve to the left by the amount of the quota.
E)consumers' marginal utility curves if they prefer foreign goods to domestic goods.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, suppose an import quota of 30 gallons of corn syrup is imposed. If the world price per gallon is $4:
A)there will be an excess domestic demand of 30 gallons.
B)the domestic market will be in equilibrium.
C)there will be an excess domestic demand for 10 gallons.
D)there will be an excess supply of 20 gallons.
E)there will be an excess domestic demand for 20 gallons.
In Figure 21.3, suppose an import quota of 30 gallons of corn syrup is imposed. If the world price per gallon is $4:
A)there will be an excess domestic demand of 30 gallons.
B)the domestic market will be in equilibrium.
C)there will be an excess domestic demand for 10 gallons.
D)there will be an excess supply of 20 gallons.
E)there will be an excess domestic demand for 20 gallons.
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
Refer to Figure 21.2. In the absence of international trade, what are the domestic equilibrium price and quantity?
A)$30 and 200 bushels
B)$50 and 400 bushels
C)$30 and 400 bushels
D)$50 and 300 bushels
E)$25 and 150 bushels
Refer to Figure 21.2. In the absence of international trade, what are the domestic equilibrium price and quantity?
A)$30 and 200 bushels
B)$50 and 400 bushels
C)$30 and 400 bushels
D)$50 and 300 bushels
E)$25 and 150 bushels
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price per bushel of wheat is $25, and a tariff of $10 is imposed by the domestic government, what is the domestic demand?
A)400 bushels
B)450 bushels
C)200 bushels
D)300 bushels
E)150 bushels
In Figure 21.2, if the world price per bushel of wheat is $25, and a tariff of $10 is imposed by the domestic government, what is the domestic demand?
A)400 bushels
B)450 bushels
C)200 bushels
D)300 bushels
E)150 bushels
Question
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
Which of the following tools of commercial policy acts as a quantitative restriction on imports?
A)Tariff
B)Subsidy
C)Health and Safety regulations
D)Quota
E)Government procurement
Which of the following tools of commercial policy acts as a quantitative restriction on imports?
A)Tariff
B)Subsidy
C)Health and Safety regulations
D)Quota
E)Government procurement
Question
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
Refer to Figure 21.4. If cocoa sells for $6 per pound in the world market, determine the volume of U.S. cocoa imports.
A)250 pounds
B)350 pounds
C)300 pounds
D)150 pounds
E)200 pounds
Refer to Figure 21.4. If cocoa sells for $6 per pound in the world market, determine the volume of U.S. cocoa imports.
A)250 pounds
B)350 pounds
C)300 pounds
D)150 pounds
E)200 pounds
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Which of the following can be considered as a cultural barrier to trade?
A)Prohibition on Zimbabwean aircrafts from flying over or landing in Canada
B)Restriction on the export of luxury goods to the Democratic Peoples Republic of Korea from Canada
C)An arms embargo imposed on China by the U.K. government
D)Japanese law requiring a new retail firm to receive permission from other retailers in the area in order to open a business
E)Restriction on the export of strategic goods to Ghana imposed by the government of U.K
Which of the following can be considered as a cultural barrier to trade?
A)Prohibition on Zimbabwean aircrafts from flying over or landing in Canada
B)Restriction on the export of luxury goods to the Democratic Peoples Republic of Korea from Canada
C)An arms embargo imposed on China by the U.K. government
D)Japanese law requiring a new retail firm to receive permission from other retailers in the area in order to open a business
E)Restriction on the export of strategic goods to Ghana imposed by the government of U.K
Question
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
In reality international trade is determined solely by comparative advantage and the free market forces of supply and demand.
In reality international trade is determined solely by comparative advantage and the free market forces of supply and demand.
Question
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
Refer to Figure 21.4. Assume that Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound. If the U.S. enters into a free trade agreement (FTA) with Ghana, what would be its total cocoa imports?
A)100 pounds
B)300 pounds
C)200 pounds
D)150 pounds
E)250 pounds
Refer to Figure 21.4. Assume that Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound. If the U.S. enters into a free trade agreement (FTA) with Ghana, what would be its total cocoa imports?
A)100 pounds
B)300 pounds
C)200 pounds
D)150 pounds
E)250 pounds
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Suppose, in the United States, each farmer is given a federal agricultural subsidy worth $30,000. What will be the effect of such subsidy?
A)It discourages domestic agricultural production.
B)It allows U.S. farmers to sell their products for lower prices in foreign markets.
C)It gives foreign producers an unfair cost advantage.
D)It increases the amount of agricultural imports into the United States.
E)It reduces the prices of the primary products in the U.S. market.
Suppose, in the United States, each farmer is given a federal agricultural subsidy worth $30,000. What will be the effect of such subsidy?
A)It discourages domestic agricultural production.
B)It allows U.S. farmers to sell their products for lower prices in foreign markets.
C)It gives foreign producers an unfair cost advantage.
D)It increases the amount of agricultural imports into the United States.
E)It reduces the prices of the primary products in the U.S. market.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
One of the negative impacts of export subsidy is that:
A)the price of the domestic good increases in the world market.
B)the domestic supply of the goods increases more than proportionately than increase in demand.
C)the domestic cost of production of the exportable increase.
D)it results in a general deflation and hence the domestic producers incur losses.
E)it is financed by the taxes paid by domestic consumers and hence it harms them.
One of the negative impacts of export subsidy is that:
A)the price of the domestic good increases in the world market.
B)the domestic supply of the goods increases more than proportionately than increase in demand.
C)the domestic cost of production of the exportable increase.
D)it results in a general deflation and hence the domestic producers incur losses.
E)it is financed by the taxes paid by domestic consumers and hence it harms them.
Question
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
According to Figure 21.4, the no-trade equilibrium price and quantity of cocoa in the U.S. market are:
A)$8 and 150 pounds.
B)$10 and 250 pounds.
C)$4 and 200 pounds.
D)$10 and 200 pounds.
E)$6 and 300 pounds.
According to Figure 21.4, the no-trade equilibrium price and quantity of cocoa in the U.S. market are:
A)$8 and 150 pounds.
B)$10 and 250 pounds.
C)$4 and 200 pounds.
D)$10 and 200 pounds.
E)$6 and 300 pounds.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The trade-creation effect refers to:
A)the outcome of a preferential trade agreement that reduces economic efficiency by shifting production to a higher-cost producer.
B)the effect of an increase in the quantity of imports relative to the effect of a tariff applicable to all imports.
C)the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home.
D)the effect of a diversion of production to a country that has comparative advantage due to a free trade agreement.
E)the effect of a decrease in the quantity of exports relative to the effect of a subsidy applicable to all exports.
The trade-creation effect refers to:
A)the outcome of a preferential trade agreement that reduces economic efficiency by shifting production to a higher-cost producer.
B)the effect of an increase in the quantity of imports relative to the effect of a tariff applicable to all imports.
C)the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home.
D)the effect of a diversion of production to a country that has comparative advantage due to a free trade agreement.
E)the effect of a decrease in the quantity of exports relative to the effect of a subsidy applicable to all exports.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Subsidies are payments made by the government of a country to:
A)foreign firms to encourage imports from the country in question.
B)foreign firms to boost their exports.
C)domestic firms to encourage exports.
D)domestic firms to encourage imports.
E)domestic consumers to encourage consumption of imported goods.
Subsidies are payments made by the government of a country to:
A)foreign firms to encourage imports from the country in question.
B)foreign firms to boost their exports.
C)domestic firms to encourage exports.
D)domestic firms to encourage imports.
E)domestic consumers to encourage consumption of imported goods.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
A customs union is an organization of nations whose members:
A)have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers.
B)have no trade barriers among themselves but impose common trade barriers on nonmembers.
C)have no trade barriers among themselves but each member country chooses its own trade policies with nonmember countries.
D)retaliate each other by raising reciprocal tariffs and calling for fair trade.
E)neither have trade barriers among themselves nor impose any restriction on the nonmember countries.
A customs union is an organization of nations whose members:
A)have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers.
B)have no trade barriers among themselves but impose common trade barriers on nonmembers.
C)have no trade barriers among themselves but each member country chooses its own trade policies with nonmember countries.
D)retaliate each other by raising reciprocal tariffs and calling for fair trade.
E)neither have trade barriers among themselves nor impose any restriction on the nonmember countries.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Agreements to abolish most barriers to trade among nations are known as:
A)collusive trade agreements.
B)discriminatory trade agreements.
C)neutral trade agreements.
D)preferential trade agreements.
E)retaliatory trade agreements.
Agreements to abolish most barriers to trade among nations are known as:
A)collusive trade agreements.
B)discriminatory trade agreements.
C)neutral trade agreements.
D)preferential trade agreements.
E)retaliatory trade agreements.
Question
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
From Figure 21.4, determine the total volume of U.S. cocoa imports if its government imposes tariff at the rate of $2 per pound on cocoa.
A)200 pounds
B)250 pounds
C)100 pounds
D)300 pounds
E)350 pounds
From Figure 21.4, determine the total volume of U.S. cocoa imports if its government imposes tariff at the rate of $2 per pound on cocoa.
A)200 pounds
B)250 pounds
C)100 pounds
D)300 pounds
E)350 pounds
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In 1992, the EEC was replaced by the EU with an agreement to:
A)erect strong trade barriers among the member countries.
B)reduce trade barriers against nonmember countries.
C)mutually restrict all imports from nonmember countries.
D)create a single market for goods and services in western Europe.
E)enable the countries of Western Europe to emerge as major world powers.
In 1992, the EEC was replaced by the EU with an agreement to:
A)erect strong trade barriers among the member countries.
B)reduce trade barriers against nonmember countries.
C)mutually restrict all imports from nonmember countries.
D)create a single market for goods and services in western Europe.
E)enable the countries of Western Europe to emerge as major world powers.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
As a result of the government procurement policy in the U.S.:
A)the domestic consumers are required to pay a higher price than the world price for the domestically produced goods.
B)the government wields the sole authority of importing goods from abroad.
C)the government wields the sole authority of exporting goods.
D)the domestic producers can charge the government a higher price for their products than they charge consumers.
E)the government is required to sponsor research and development for the domestic firms.
As a result of the government procurement policy in the U.S.:
A)the domestic consumers are required to pay a higher price than the world price for the domestically produced goods.
B)the government wields the sole authority of importing goods from abroad.
C)the government wields the sole authority of exporting goods.
D)the domestic producers can charge the government a higher price for their products than they charge consumers.
E)the government is required to sponsor research and development for the domestic firms.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The basic difference between a tariff and quota is that:
A)a quota can be imposed both on imports and exports, whereas a tariff can be imposed only on imports.
B)a quota yields revenue to the government, whereas a tariff does not yield any revenue.
C)a tariff reduces the import of the goods with greater certainty than quota as the amount of import restricted by quota depends on the price elasticity of demand for importable.
D)a tariff is a quantitative restriction on imports, whereas a quota is an import duty.
E)a tariff raises the price of the product only in the domestic market, whereas with a quota, both domestic and foreign producers receive a higher price.
The basic difference between a tariff and quota is that:
A)a quota can be imposed both on imports and exports, whereas a tariff can be imposed only on imports.
B)a quota yields revenue to the government, whereas a tariff does not yield any revenue.
C)a tariff reduces the import of the goods with greater certainty than quota as the amount of import restricted by quota depends on the price elasticity of demand for importable.
D)a tariff is a quantitative restriction on imports, whereas a quota is an import duty.
E)a tariff raises the price of the product only in the domestic market, whereas with a quota, both domestic and foreign producers receive a higher price.
Question
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
International trade on the basis of comparative advantage maximizes world output and allows consumers to access better-quality products at lower prices than would be available in the domestic market alone.
International trade on the basis of comparative advantage maximizes world output and allows consumers to access better-quality products at lower prices than would be available in the domestic market alone.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
After the U.S. government had approved the feeding of hormones to U.S. beef cattle, several western European nations restricted the import of beef from the U.S. Which of the following tools of commercial policy had been put to use in this situation?
A)Tariff
B)Quota
C)Health and safety standards
D)Subsidy
E)Government procurement
After the U.S. government had approved the feeding of hormones to U.S. beef cattle, several western European nations restricted the import of beef from the U.S. Which of the following tools of commercial policy had been put to use in this situation?
A)Tariff
B)Quota
C)Health and safety standards
D)Subsidy
E)Government procurement
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The European Economic Community was created in 1957 by:
A)France, the United Kingdom, Italy, Belgium, the Netherlands, and Luxembourg.
B)France, West Germany, Italy, Belgium, the Netherlands, and Luxemburg.
C)France, West Germany, Italy, Belgium, the Netherlands, and the United Kingdom.
D)France, West Germany, Italy, the United Kingdom, Belgium, the Netherlands, and Luxembourg.
E)France, West Germany, Italy, Belgium, the United Kingdom, and Luxembourg.
The European Economic Community was created in 1957 by:
A)France, the United Kingdom, Italy, Belgium, the Netherlands, and Luxembourg.
B)France, West Germany, Italy, Belgium, the Netherlands, and Luxemburg.
C)France, West Germany, Italy, Belgium, the Netherlands, and the United Kingdom.
D)France, West Germany, Italy, the United Kingdom, Belgium, the Netherlands, and Luxembourg.
E)France, West Germany, Italy, Belgium, the United Kingdom, and Luxembourg.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The most successful free trade agreements achieve all of the following goals, except:
A)benefiting exporters by increasing exports to member countries.
B)increasing the volume of trade without changing the pattern of trade.
C)benefiting consumers by making a wider variety of goods available at a lower price.
D)stimulating trade creation to allow the benefits of trade to be realized.
E)protecting domestic industries from foreign competition.
The most successful free trade agreements achieve all of the following goals, except:
A)benefiting exporters by increasing exports to member countries.
B)increasing the volume of trade without changing the pattern of trade.
C)benefiting consumers by making a wider variety of goods available at a lower price.
D)stimulating trade creation to allow the benefits of trade to be realized.
E)protecting domestic industries from foreign competition.
Question
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Trade diversion reduces worldwide efficiency, because:
A)production is diverted to the country with comparative advantage.
B)production is diverted away from the country with comparative advantage.
C)unnecessary trade restrictions are created in the economies.
D)consumption is diverted to the country having inadequate demand.
E)the cost of transhipment of the goods increases thus raising their prices in the world market.
Trade diversion reduces worldwide efficiency, because:
A)production is diverted to the country with comparative advantage.
B)production is diverted away from the country with comparative advantage.
C)unnecessary trade restrictions are created in the economies.
D)consumption is diverted to the country having inadequate demand.
E)the cost of transhipment of the goods increases thus raising their prices in the world market.
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Deck 21: International Trade Restrictions
1
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Employers and workers in the protected industry know that the consequences of protection are principally:
A)lower prices for their output, lower profits for owners, and lower wages for workers.
B)higher prices for their output, lower profits for owners, and lower wages for workers.
C)higher prices for their output, lower profits for owners, and higher wages for workers.
D)lower prices for their output, higher profits for owners, and higher wages for workers.
E)higher prices for their output, higher profits for owners, and higher wages for workers.
Employers and workers in the protected industry know that the consequences of protection are principally:
A)lower prices for their output, lower profits for owners, and lower wages for workers.
B)higher prices for their output, lower profits for owners, and lower wages for workers.
C)higher prices for their output, lower profits for owners, and higher wages for workers.
D)lower prices for their output, higher profits for owners, and higher wages for workers.
E)higher prices for their output, higher profits for owners, and higher wages for workers.
higher prices for their output, higher profits for owners, and higher wages for workers.
2
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
If international trade is restricted by the government of a country:
A)the domestic consumers are benefited.
B)the domestic producers are adversely affected.
C)the domestic consumers pay higher prices for imported goods.
D)the resources are equally distributed among domestic and foreign producers.
E)the resources are allocated to their highest paid uses.
If international trade is restricted by the government of a country:
A)the domestic consumers are benefited.
B)the domestic producers are adversely affected.
C)the domestic consumers pay higher prices for imported goods.
D)the resources are equally distributed among domestic and foreign producers.
E)the resources are allocated to their highest paid uses.
the domestic consumers pay higher prices for imported goods.
3
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following statements is true of the impact of trade restrictions on domestic employment?
A)Domestic firms will produce the goods that otherwise would have been produced abroad, thus employing foreign workers instead of domestic workers.
B)Beside the protected industry, other industries will also benefit in terms of employment.
C)Workers in the protected industry migrate to other industries.
D)Restrictions imposed on trade redistribute jobs by creating employment in the protected industry and reducing employment elsewhere.
E)Minimum wages for skilled and unskilled labor increase in the domestic country.
Which of the following statements is true of the impact of trade restrictions on domestic employment?
A)Domestic firms will produce the goods that otherwise would have been produced abroad, thus employing foreign workers instead of domestic workers.
B)Beside the protected industry, other industries will also benefit in terms of employment.
C)Workers in the protected industry migrate to other industries.
D)Restrictions imposed on trade redistribute jobs by creating employment in the protected industry and reducing employment elsewhere.
E)Minimum wages for skilled and unskilled labor increase in the domestic country.
Restrictions imposed on trade redistribute jobs by creating employment in the protected industry and reducing employment elsewhere.
4
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
People who call for creating a "level playing field" believe that:
A)a country with relatively low wages is typically a country with an abundance of low-skilled labor.
B)trading on the basis of comparative advantage benefits both domestic and foreign firms.
C)creating a "level playing field" undermines the basis for specialization and economic efficiency.
D)production in accordance with comparative advantage is unfair.
E)free trade allocates the scarce resources in an efficient way.
People who call for creating a "level playing field" believe that:
A)a country with relatively low wages is typically a country with an abundance of low-skilled labor.
B)trading on the basis of comparative advantage benefits both domestic and foreign firms.
C)creating a "level playing field" undermines the basis for specialization and economic efficiency.
D)production in accordance with comparative advantage is unfair.
E)free trade allocates the scarce resources in an efficient way.
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5
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
The notion of reciprocity means that one nation will impose import restrictions on another in order to:
A)stimulate an increase in trade restrictions in the latter.
B)stimulate a decrease in trade restrictions in the latter.
C)eliminate trade restrictions immediately in both countries.
D)improve the government revenue collections through tariffs in both countries.
E)enforce standards of product quality in the latter.
The notion of reciprocity means that one nation will impose import restrictions on another in order to:
A)stimulate an increase in trade restrictions in the latter.
B)stimulate a decrease in trade restrictions in the latter.
C)eliminate trade restrictions immediately in both countries.
D)improve the government revenue collections through tariffs in both countries.
E)enforce standards of product quality in the latter.
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6
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Commercial policy is a government policy aimed at influencing:
A)the operation of commercial banks.
B)domestic trade flows.
C)domestic private corporations.
D)international trade flows.
E)the operation of capital markets.
Commercial policy is a government policy aimed at influencing:
A)the operation of commercial banks.
B)domestic trade flows.
C)domestic private corporations.
D)international trade flows.
E)the operation of capital markets.
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7
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following statements about international trade restrictions is true?
A)They ensure that only efficient producers survive.
B)They ensure that countries specialize only in those products that they can produce most efficiently.
C)They harm domestic consumers in the majority of cases.
D)They typically benefit foreign producers at the expense of domestic consumers.
E)They ensure that higher-quality goods are provided at lower prices.
Which of the following statements about international trade restrictions is true?
A)They ensure that only efficient producers survive.
B)They ensure that countries specialize only in those products that they can produce most efficiently.
C)They harm domestic consumers in the majority of cases.
D)They typically benefit foreign producers at the expense of domestic consumers.
E)They ensure that higher-quality goods are provided at lower prices.
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8
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
In the light of the infant industry argument, identify the industry which is likely to have substantially high initial costs.
A)Fashion designing
B)Retail industry
C)Iron and steel industry
D)Dairy industry
E)Software industry
In the light of the infant industry argument, identify the industry which is likely to have substantially high initial costs.
A)Fashion designing
B)Retail industry
C)Iron and steel industry
D)Dairy industry
E)Software industry
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9
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Steel producers in the United States observe that foreign sales of U.S. steel has drastically declined due to stringent trade policies adopted by the foreign governments and unfair treatment of U.S. steel exports in foreign countries. The lobbying efforts of such loss making U.S. steel manufacturers induce the domestic government to restrict the entry of imported steel and help stimulate the sales of domestically produced steel. Which of the following tariffs is most similar to the example mentioned above?
A)A tariff imposed by the government to stimulate domestic production of a high-technology good with positive spillover effects
B)A tariff imposed by the government on the import of cotton textiles because it is an infant industry in the domestic country
C)An import tariff applied against a foreign monopoly supplying the domestic market
D)Tariffs imposed by the government on an import competing industry that generates a negative production externality
E)Reciprocal tariffs introduced by the government of a country as a call for fair trade
Steel producers in the United States observe that foreign sales of U.S. steel has drastically declined due to stringent trade policies adopted by the foreign governments and unfair treatment of U.S. steel exports in foreign countries. The lobbying efforts of such loss making U.S. steel manufacturers induce the domestic government to restrict the entry of imported steel and help stimulate the sales of domestically produced steel. Which of the following tariffs is most similar to the example mentioned above?
A)A tariff imposed by the government to stimulate domestic production of a high-technology good with positive spillover effects
B)A tariff imposed by the government on the import of cotton textiles because it is an infant industry in the domestic country
C)An import tariff applied against a foreign monopoly supplying the domestic market
D)Tariffs imposed by the government on an import competing industry that generates a negative production externality
E)Reciprocal tariffs introduced by the government of a country as a call for fair trade
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10
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Developing countries often justify imposition of tariffs because:
A)it creates a burden on government budget.
B)it is easy to collect direct taxes from people in the developing countries.
C)a large number of people in the developing countries earn a taxable income.
D)developing countries find income taxes difficult to levy and collect.
E)the volume of imports of these countries is considerably low.
Developing countries often justify imposition of tariffs because:
A)it creates a burden on government budget.
B)it is easy to collect direct taxes from people in the developing countries.
C)a large number of people in the developing countries earn a taxable income.
D)developing countries find income taxes difficult to levy and collect.
E)the volume of imports of these countries is considerably low.
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11
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
The infant industry argument is that:
A)those industries that produce products for infants should be protected.
B)developing industries should be allowed to face foreign competition.
C)protectionism should be used to create a level playing field for the domestic firms to compete with foreign firms.
D)protectionism promotes complete specialization in the country on the basis of comparative advantage.
E)new industries should be protected from foreign competition until they have had adequate time to develop.
The infant industry argument is that:
A)those industries that produce products for infants should be protected.
B)developing industries should be allowed to face foreign competition.
C)protectionism should be used to create a level playing field for the domestic firms to compete with foreign firms.
D)protectionism promotes complete specialization in the country on the basis of comparative advantage.
E)new industries should be protected from foreign competition until they have had adequate time to develop.
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12
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
According to empirical observations, the cost of restricting international trade in the U.S. is much greater than the benefits generated from restriction. In the light of the above observation, which of the following statements is true?
A)Domestic producers end up earning lower profits than what they would earn without trade restrictions.
B)Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer.
C)U.S. GDP would be over $14 billion higher with import restrictions than without restrictions.
D)Protection of the U.S. textile and sugar industries means that all consumers pay a lower price for clothing and sugar.
E)Protection of the domestic industries enable the producers to charge lower prices for their products.
According to empirical observations, the cost of restricting international trade in the U.S. is much greater than the benefits generated from restriction. In the light of the above observation, which of the following statements is true?
A)Domestic producers end up earning lower profits than what they would earn without trade restrictions.
B)Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer.
C)U.S. GDP would be over $14 billion higher with import restrictions than without restrictions.
D)Protection of the U.S. textile and sugar industries means that all consumers pay a lower price for clothing and sugar.
E)Protection of the domestic industries enable the producers to charge lower prices for their products.
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13
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Nascent industries require adequate protection from foreign competition because:
A)they experience economies of scale at the initial stages of production.
B)they experience diseconomies of scale at high levels of output.
C)the quality of the products of such industries are comparatively inferior than the products of their foreign competitors.
D)they could undermine other developed industries by selling higher quality products at lower prices.
E)their initial costs of production are considerably high and they incur losses.
Nascent industries require adequate protection from foreign competition because:
A)they experience economies of scale at the initial stages of production.
B)they experience diseconomies of scale at high levels of output.
C)the quality of the products of such industries are comparatively inferior than the products of their foreign competitors.
D)they could undermine other developed industries by selling higher quality products at lower prices.
E)their initial costs of production are considerably high and they incur losses.
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14
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
It is often argued that if foreign goods are kept out of the domestic economy:
A)jobs will be lost at home.
B)jobs will be created abroad.
C)domestic consumers will enjoy product surpluses.
D)jobs will be created at home.
E)foreign consumers will suffer product shortages.
It is often argued that if foreign goods are kept out of the domestic economy:
A)jobs will be lost at home.
B)jobs will be created abroad.
C)domestic consumers will enjoy product surpluses.
D)jobs will be created at home.
E)foreign consumers will suffer product shortages.
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15
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Generally speaking, protection from foreign competition benefits:
A)both domestic producers and foreign producers.
B)both domestic consumers and foreign consumers.
C)domestic consumers and foreign consumers.
D)neither domestic producers nor foreign producers.
E)domestic producers at the expense of domestic consumers.
Generally speaking, protection from foreign competition benefits:
A)both domestic producers and foreign producers.
B)both domestic consumers and foreign consumers.
C)domestic consumers and foreign consumers.
D)neither domestic producers nor foreign producers.
E)domestic producers at the expense of domestic consumers.
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16
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following probably best explains why trade restrictions are imposed even if the costs to consumers are greater than the benefits to protected industries?
A)Indifference on the government's part to the interests of domestic workers
B)A desire to make other countries suffer
C)Government's desire to earn high revenues
D)Successful lobbying by employers and workers in protected industries
E)Government's preference to safeguard the interest of the producers at the expense of the consumers
Which of the following probably best explains why trade restrictions are imposed even if the costs to consumers are greater than the benefits to protected industries?
A)Indifference on the government's part to the interests of domestic workers
B)A desire to make other countries suffer
C)Government's desire to earn high revenues
D)Successful lobbying by employers and workers in protected industries
E)Government's preference to safeguard the interest of the producers at the expense of the consumers
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17
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).
A)domestic consumers; domestic producers
B)domestic consumers; government
C)domestic producers; domestic consumers
D)foreign producers; domestic producers
E)foreign producers; domestic consumers
When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).
A)domestic consumers; domestic producers
B)domestic consumers; government
C)domestic producers; domestic consumers
D)foreign producers; domestic producers
E)foreign producers; domestic consumers
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18
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Protection provided to the infant industries is rarely withdrawn because:
A)the costs of withdrawing protection outweigh the benefits.
B)the industries begin to experience diseconomies of scale.
C)it leads to a loss of government revenue.
D)the industries produce goods which are close substitutes of the imported goods.
E)the larger and more successful the industry becomes, the more political power it wields.
Protection provided to the infant industries is rarely withdrawn because:
A)the costs of withdrawing protection outweigh the benefits.
B)the industries begin to experience diseconomies of scale.
C)it leads to a loss of government revenue.
D)the industries produce goods which are close substitutes of the imported goods.
E)the larger and more successful the industry becomes, the more political power it wields.
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19
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Protection of an infant industry should be withdrawn once that industry:
A)charges the same price as foreign competitors.
B)goes public on the stock exchange.
C)raises a large amount of sales revenue.
D)achieves sufficient size to compete with foreign firms.
E)earns enough profit as a result of the subsidies to remain in business.
Protection of an infant industry should be withdrawn once that industry:
A)charges the same price as foreign competitors.
B)goes public on the stock exchange.
C)raises a large amount of sales revenue.
D)achieves sufficient size to compete with foreign firms.
E)earns enough profit as a result of the subsidies to remain in business.
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20
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Typically, restrictions to "save domestic jobs" simply redistribute jobs by creating:
A)employment in the protected industry and reducing employment elsewhere.
B)employment in nonprotected industries and reducing employment in the protected industry.
C)labor unions in the nonprotected industries at the expense of employment in the protected industries.
D)employment in the primary sector at the expense of the secondary sector.
E)labor unions in the protected industries at the expense of employment in nonunionized industries.
Typically, restrictions to "save domestic jobs" simply redistribute jobs by creating:
A)employment in the protected industry and reducing employment elsewhere.
B)employment in nonprotected industries and reducing employment in the protected industry.
C)labor unions in the nonprotected industries at the expense of employment in the protected industries.
D)employment in the primary sector at the expense of the secondary sector.
E)labor unions in the protected industries at the expense of employment in nonunionized industries.
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21
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, if the international price of the good is P1, which of the following statements is true?
A)The domestic market is in equilibrium.
B)There is an excess supply in the domestic market by the amount Q4 - Q2.
C)The country will export Q3 - Q1 units of the good.
D)There is an excess demand of Q4 - Q2 units in the domestic market.
E)The country needs to import Q5 - Q1 units of the good to satisfy domestic demand.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, if the international price of the good is P1, which of the following statements is true?
A)The domestic market is in equilibrium.
B)There is an excess supply in the domestic market by the amount Q4 - Q2.
C)The country will export Q3 - Q1 units of the good.
D)There is an excess demand of Q4 - Q2 units in the domestic market.
E)The country needs to import Q5 - Q1 units of the good to satisfy domestic demand.
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22
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
One of the primary objectives of the WTO is:
A)to create trade restrictions across the countries.
B)to reduce trade barriers created by the different countries.
C)to enable certain countries to maintain their autarkic conditions.
D)to enable the western countries to emerge as major players in the international trade.
E)to redistribute wealth from the first world to the third world countries.
One of the primary objectives of the WTO is:
A)to create trade restrictions across the countries.
B)to reduce trade barriers created by the different countries.
C)to enable certain countries to maintain their autarkic conditions.
D)to enable the western countries to emerge as major players in the international trade.
E)to redistribute wealth from the first world to the third world countries.
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23
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
If the world price of a good is lower than its domestic equilibrium price, the country will:
A)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
B)export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
C)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers.
D)export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically.
E)import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
If the world price of a good is lower than its domestic equilibrium price, the country will:
A)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
B)export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
C)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers.
D)export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically.
E)import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers.
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24
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following is a tool of commercial policy?
A)Corporate income tax
B)Payroll tax
C)Excise duty
D)Tariff
E)Octroi duty
Which of the following is a tool of commercial policy?
A)Corporate income tax
B)Payroll tax
C)Excise duty
D)Tariff
E)Octroi duty
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25
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, the domestic equilibrium quantity of the good is:
A)Q1.
B)Q5.
C)Q2.
D)Q3.
E)Q4.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, the domestic equilibrium quantity of the good is:
A)Q1.
B)Q5.
C)Q2.
D)Q3.
E)Q4.
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26
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 when the international price is P1:
A)the government revenue will equal the area represented by the triangle HFG.
B)the quantity of the good imported by the domestic country declines.
C)the quantity of the good exported by the domestic country declines.
D)the domestic market achieves equilibrium.
E)the government revenue will equal the area represented by the triangle ABH.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 when the international price is P1:
A)the government revenue will equal the area represented by the triangle HFG.
B)the quantity of the good imported by the domestic country declines.
C)the quantity of the good exported by the domestic country declines.
D)the domestic market achieves equilibrium.
E)the government revenue will equal the area represented by the triangle ABH.
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27
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Which of the following would result from a tariff?
A)An increase in government budget deficit
B)An increase in domestic production
C)A greater volume of international trade
D)Increased domestic consumption
E)Decrease in prices of the imported goods
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Which of the following would result from a tariff?
A)An increase in government budget deficit
B)An increase in domestic production
C)A greater volume of international trade
D)Increased domestic consumption
E)Decrease in prices of the imported goods
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28
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 while the international price is P1, the dollar value of the tariff is equal to:
A)P3 - P1.
B)P2 - P3.
C)P2 - P1.
D)P1 - P2.
E)P1 - P3.
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 while the international price is P1, the dollar value of the tariff is equal to:
A)P3 - P1.
B)P2 - P3.
C)P2 - P1.
D)P1 - P2.
E)P1 - P3.
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29
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following tools of commercial policy yields a revenue to the government?
A)Quota
B)Tariff
C)Export subsidy
D)Government procurement policy
E)Health and safety standards
Which of the following tools of commercial policy yields a revenue to the government?
A)Quota
B)Tariff
C)Export subsidy
D)Government procurement policy
E)Health and safety standards
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30
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Proponents of strategic trade policy contend that:
A)government should tax domestic firms to generate greater revenues.
B)government should encourage imports to prevent monopoly in the domestic market.
C)government should provide subsidies to domestic firms with decreasing costs.
D)government should discourage domestic firms with decreasing costs from continuing production.
E)government should tax domestic import competing firms.
Proponents of strategic trade policy contend that:
A)government should tax domestic firms to generate greater revenues.
B)government should encourage imports to prevent monopoly in the domestic market.
C)government should provide subsidies to domestic firms with decreasing costs.
D)government should discourage domestic firms with decreasing costs from continuing production.
E)government should tax domestic import competing firms.
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31
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
According to strategic trade policy, international trade largely involves firms that:
A)enjoy monopolistic power in the domestic market.
B)have a high initial cost of production.
C)pursue economies of scale.
D)have high opportunity costs.
E)generate adequate employment in the domestic economy.
According to strategic trade policy, international trade largely involves firms that:
A)enjoy monopolistic power in the domestic market.
B)have a high initial cost of production.
C)pursue economies of scale.
D)have high opportunity costs.
E)generate adequate employment in the domestic economy.
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32
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. However, a government subsidy allows Flettner to enter the helicopter market and Cicare incurs a loss of $4 million due to its entry. Eventually, Flettner evolves as the monopoly supplier of helicopters while Cicare is forced to shut down. This conclusion rests on which of the following assumptions?
A)The German government is experiencing a budget surplus.
B)There is low demand for Cicare automobiles in the world market.
C)The German government is able to forecast accurately the subsidy required to induce helicopter production.
D)The quality of Flettner's helicopters are inferior compared to that of Cicare's.
E)The Argentine government is not a proponent of "fair trade," hence does not retaliate by subsidizing Cicare.
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. However, a government subsidy allows Flettner to enter the helicopter market and Cicare incurs a loss of $4 million due to its entry. Eventually, Flettner evolves as the monopoly supplier of helicopters while Cicare is forced to shut down. This conclusion rests on which of the following assumptions?
A)The German government is experiencing a budget surplus.
B)There is low demand for Cicare automobiles in the world market.
C)The German government is able to forecast accurately the subsidy required to induce helicopter production.
D)The quality of Flettner's helicopters are inferior compared to that of Cicare's.
E)The Argentine government is not a proponent of "fair trade," hence does not retaliate by subsidizing Cicare.
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33
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
According to economists, which of the following acts was partially responsible for the Great Depression of the 1930s?
A)The Robinson-Patman Act
B)The National Recovery Act
C)The Smoot-Hawley Tariff Act
D)The Sarbanes-Oxley Act
E)The Sherman Antitrust Act
According to economists, which of the following acts was partially responsible for the Great Depression of the 1930s?
A)The Robinson-Patman Act
B)The National Recovery Act
C)The Smoot-Hawley Tariff Act
D)The Sarbanes-Oxley Act
E)The Sherman Antitrust Act
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34
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, the tariff revenue earned by the domestic government is equal to the:
A)area ABEFH.
B)area FEQ4Q2.
C)area ABH.
D)area HFP1P2.
E)area BEFH
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
According to Figure 21.1, the tariff revenue earned by the domestic government is equal to the:
A)area ABEFH.
B)area FEQ4Q2.
C)area ABH.
D)area HFP1P2.
E)area BEFH
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35
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
One important unintended consequence of the Smoot-Hawley Tariff Act was to:
A)lessen the severity of the Great Depression by increasing exports.
B)provide the federal government with an effective tool for exercising monetary policy.
C)decrease the efficiency of domestic automobile production.
D)cause other countries to retaliate and thus leading to a decline in exports.
E)increase the U.S. government budget deficit by $15 million.
One important unintended consequence of the Smoot-Hawley Tariff Act was to:
A)lessen the severity of the Great Depression by increasing exports.
B)provide the federal government with an effective tool for exercising monetary policy.
C)decrease the efficiency of domestic automobile production.
D)cause other countries to retaliate and thus leading to a decline in exports.
E)increase the U.S. government budget deficit by $15 million.
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36
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following is true of a tariff?
A)It is a tax levied by the government on domestic production of goods and services.
B)It is a quantitative restriction on imports imposed by the government.
C)It is a monetary benefit received by exporters from the government.
D)It is a monetary benefit received by importers from the government.
E)It is a tax on import and export levied by the government.
Which of the following is true of a tariff?
A)It is a tax levied by the government on domestic production of goods and services.
B)It is a quantitative restriction on imports imposed by the government.
C)It is a monetary benefit received by exporters from the government.
D)It is a monetary benefit received by importers from the government.
E)It is a tax on import and export levied by the government.
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37
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. Although a government subsidy allows Flettner to enter the helicopter market, the company is unable to reap profits in the long run. Which of the following could have led to this outcome?
A)Flettner experienced high production costs due to inadequate supply of inputs.
B)New firms entered the helicopter industry.
C)The German government ran a balance of payment deficit.
D)The Argentine government retaliated by subsidizing Cicare.
E)There was very low investment in research and development in this industry.
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. Although a government subsidy allows Flettner to enter the helicopter market, the company is unable to reap profits in the long run. Which of the following could have led to this outcome?
A)Flettner experienced high production costs due to inadequate supply of inputs.
B)New firms entered the helicopter industry.
C)The German government ran a balance of payment deficit.
D)The Argentine government retaliated by subsidizing Cicare.
E)There was very low investment in research and development in this industry.
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38
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
The abbreviation GATT stands for:
A)General Analysis of Taxes and Transfers.
B)General Agreement on Tariffs and Trade.
C)Government Agency for Trade and Transportation.
D)Government Agency for Treaties and Taxes.
E)General Agreement on Terms of Trade.
The abbreviation GATT stands for:
A)General Analysis of Taxes and Transfers.
B)General Agreement on Tariffs and Trade.
C)Government Agency for Trade and Transportation.
D)Government Agency for Treaties and Taxes.
E)General Agreement on Terms of Trade.
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39
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
If average costs of production decline with increases in output for a particular large firm in an industry:
A)many small firms will be more efficient than the single large firm in the industry.
B)the single large firm will be more efficient than many small firms in the industry.
C)product diversification will be necessary for the firm to spread its overhead.
D)diseconomies of scale become significant as its output increases.
E)its variable cost of production will exceed its fixed costs.
If average costs of production decline with increases in output for a particular large firm in an industry:
A)many small firms will be more efficient than the single large firm in the industry.
B)the single large firm will be more efficient than many small firms in the industry.
C)product diversification will be necessary for the firm to spread its overhead.
D)diseconomies of scale become significant as its output increases.
E)its variable cost of production will exceed its fixed costs.
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40
The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5
Which of the following statements about an increasing-returns-to-scale industry is not true?
A)It will tend to concentrate production in the hands of a very few large firms.
B)Firms in the industry face higher costs per unit of production as their level of output increases.
C)Opportunity costs may rise with the level of output in such industries.
D)Tariffs can be used to stimulate production by a domestic industry capable of achieving increasing returns to scale.
E)The costs of producing a unit of output fall as more output is produced in such industries.
Which of the following statements about an increasing-returns-to-scale industry is not true?
A)It will tend to concentrate production in the hands of a very few large firms.
B)Firms in the industry face higher costs per unit of production as their level of output increases.
C)Opportunity costs may rise with the level of output in such industries.
D)Tariffs can be used to stimulate production by a domestic industry capable of achieving increasing returns to scale.
E)The costs of producing a unit of output fall as more output is produced in such industries.
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41
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
According to Figure 21.2, if the world price of wheat is $25, and a tariff of $25 is imposed by the domestic government, the total tariff revenue collected by the government is:
A)$2,000.
B)$0.
C)$200.
D)$100.
E)$4,000
According to Figure 21.2, if the world price of wheat is $25, and a tariff of $25 is imposed by the domestic government, the total tariff revenue collected by the government is:
A)$2,000.
B)$0.
C)$200.
D)$100.
E)$4,000
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42
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium quantity demanded?
A)35 gallons
B)50 gallons
C)20 gallons
D)65 gallons
E)5 gallons
In Figure 21.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium quantity demanded?
A)35 gallons
B)50 gallons
C)20 gallons
D)65 gallons
E)5 gallons
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43
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price of wheat is $25 and a $10 tariff is imposed:
A)imports will decrease from 300 to 200 bushels of wheat.
B)imports will increase from 200 to 400 bushels of wheat.
C)imports will remain unchanged.
D)domestic production will decrease from 200 to 150 bushels of wheat.
E)domestic production will remain unchanged.
In Figure 21.2, if the world price of wheat is $25 and a $10 tariff is imposed:
A)imports will decrease from 300 to 200 bushels of wheat.
B)imports will increase from 200 to 400 bushels of wheat.
C)imports will remain unchanged.
D)domestic production will decrease from 200 to 150 bushels of wheat.
E)domestic production will remain unchanged.
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44
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Which of the following countries is forbidden to impose export tariff by its constitution?
A)The United States
B)Brazil
C)The United Kingdom
D)Japan
E)Mexico
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
Which of the following countries is forbidden to impose export tariff by its constitution?
A)The United States
B)Brazil
C)The United Kingdom
D)Japan
E)Mexico
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45
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
According to Figure 21.2, if the world price per bushel of wheat is $25, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
According to Figure 21.2, if the world price per bushel of wheat is $25, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
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46
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
By restricting the amount of a good that may be imported:
A)quotas, increase prices, thus causing domestic producers to sell less than they would with free trade.
B)tariffs lower prices, thus allowing domestic producers to sell more than they would with free trade.
C)quotas increase prices, thus allowing domestic producers to sell more at higher prices than they would with free trade.
D)tariffs lower prices, thus causing domestic producers to realize lower total revenue.
E)quotas simply replace foreign production with domestic production.
By restricting the amount of a good that may be imported:
A)quotas, increase prices, thus causing domestic producers to sell less than they would with free trade.
B)tariffs lower prices, thus allowing domestic producers to sell more than they would with free trade.
C)quotas increase prices, thus allowing domestic producers to sell more at higher prices than they would with free trade.
D)tariffs lower prices, thus causing domestic producers to realize lower total revenue.
E)quotas simply replace foreign production with domestic production.
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47
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:
A)cause foreign producers to be better off, because the price they charge is now higher by $1 per box.
B)cause domestic producers to be worse off by $5 per box.
C)make domestic consumers worse off as they would be paying $1 more than the domestic price.
D)make domestic consumers pay $1 more than the free trade price, but still $1 less than the domestic price.
E)cause domestic producers to be worse off by $10 per box.
Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:
A)cause foreign producers to be better off, because the price they charge is now higher by $1 per box.
B)cause domestic producers to be worse off by $5 per box.
C)make domestic consumers worse off as they would be paying $1 more than the domestic price.
D)make domestic consumers pay $1 more than the free trade price, but still $1 less than the domestic price.
E)cause domestic producers to be worse off by $10 per box.
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48
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price per bushel of wheat is $25, and a tariff of $10 is imposed, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
In Figure 21.2, if the world price per bushel of wheat is $25, and a tariff of $10 is imposed, what is the domestic production?
A)300 bushels
B)450 bushels
C)400 bushels
D)150 bushels
E)200 bushels
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49
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price per bushel of wheat is $25, how much wheat will be imported?
A)450 bushels
B)350 bushels
C)200 bushels
D)150 bushels
E)300 bushels
In Figure 21.2, if the world price per bushel of wheat is $25, how much wheat will be imported?
A)450 bushels
B)350 bushels
C)200 bushels
D)150 bushels
E)300 bushels
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50
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
According to Figure 21.2, if the world price per bushel of wheat is $25, how much is the domestic demand?
A)400 bushels
B)450 bushels
C)200 bushels
D)300 bushels
E)150 bushels
According to Figure 21.2, if the world price per bushel of wheat is $25, how much is the domestic demand?
A)400 bushels
B)450 bushels
C)200 bushels
D)300 bushels
E)150 bushels
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51
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, what are the equilibrium price and quantity in the absence of trade?
A)$8, 50 gallons
B)$12, 35 gallons
C)$8, 35 gallons
D)$4, 20 gallons
E)$16, 50 gallons
In Figure 21.3, what are the equilibrium price and quantity in the absence of trade?
A)$8, 50 gallons
B)$12, 35 gallons
C)$8, 35 gallons
D)$4, 20 gallons
E)$16, 50 gallons
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52
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, if the world price per gallon is $8, then without quotas:
A)50 gallons of corn syrup will be imported.
B)35 gallons of corn syrup will be imported.
C)30 gallons of corn syrup will be imported.
D)20 gallons of corn syrup will be imported.
E)45 gallons of corn syrup will be imported.
In Figure 21.3, if the world price per gallon is $8, then without quotas:
A)50 gallons of corn syrup will be imported.
B)35 gallons of corn syrup will be imported.
C)30 gallons of corn syrup will be imported.
D)20 gallons of corn syrup will be imported.
E)45 gallons of corn syrup will be imported.
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53
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
According to Figure 21.2, if the world price of wheat is $25, and a tariff of $10 is imposed by the domestic government, the total tariff revenue collected by the government is:
A)$5,000.
B)$4,000.
C)$2,000.
D)$1,000.
E)$0.
According to Figure 21.2, if the world price of wheat is $25, and a tariff of $10 is imposed by the domestic government, the total tariff revenue collected by the government is:
A)$5,000.
B)$4,000.
C)$2,000.
D)$1,000.
E)$0.
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54
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price of wheat is $35 and a $15 tariff is imposed:
A)domestic consumption will decrease from 400 to 350 bushels of wheat.
B)the government will collect $200 in revenue from the tariff.
C)domestic consumption will increase from 150 to 200 bushels of wheat.
D)there will be no trade, and the domestic equilibrium quantity will prevail.
E)domestic price for wheat will be higher than its world price.
In Figure 21.2, if the world price of wheat is $35 and a $15 tariff is imposed:
A)domestic consumption will decrease from 400 to 350 bushels of wheat.
B)the government will collect $200 in revenue from the tariff.
C)domestic consumption will increase from 150 to 200 bushels of wheat.
D)there will be no trade, and the domestic equilibrium quantity will prevail.
E)domestic price for wheat will be higher than its world price.
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55
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?
A)$4
B)$6
C)$8
D)$10
E)$12
In Figure 21.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?
A)$4
B)$6
C)$8
D)$10
E)$12
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56
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The effect of an import quota on the domestic market is to shift the:
A)demand curve to the right by the amount of the quota.
B)demand curve to the left by the amount of the quota.
C)supply curve to the right by the amount of the quota.
D)supply curve to the left by the amount of the quota.
E)consumers' marginal utility curves if they prefer foreign goods to domestic goods.
The effect of an import quota on the domestic market is to shift the:
A)demand curve to the right by the amount of the quota.
B)demand curve to the left by the amount of the quota.
C)supply curve to the right by the amount of the quota.
D)supply curve to the left by the amount of the quota.
E)consumers' marginal utility curves if they prefer foreign goods to domestic goods.
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57
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In Figure 21.3, suppose an import quota of 30 gallons of corn syrup is imposed. If the world price per gallon is $4:
A)there will be an excess domestic demand of 30 gallons.
B)the domestic market will be in equilibrium.
C)there will be an excess domestic demand for 10 gallons.
D)there will be an excess supply of 20 gallons.
E)there will be an excess domestic demand for 20 gallons.
In Figure 21.3, suppose an import quota of 30 gallons of corn syrup is imposed. If the world price per gallon is $4:
A)there will be an excess domestic demand of 30 gallons.
B)the domestic market will be in equilibrium.
C)there will be an excess domestic demand for 10 gallons.
D)there will be an excess supply of 20 gallons.
E)there will be an excess domestic demand for 20 gallons.
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58
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
Refer to Figure 21.2. In the absence of international trade, what are the domestic equilibrium price and quantity?
A)$30 and 200 bushels
B)$50 and 400 bushels
C)$30 and 400 bushels
D)$50 and 300 bushels
E)$25 and 150 bushels
Refer to Figure 21.2. In the absence of international trade, what are the domestic equilibrium price and quantity?
A)$30 and 200 bushels
B)$50 and 400 bushels
C)$30 and 400 bushels
D)$50 and 300 bushels
E)$25 and 150 bushels
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59
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
In Figure 21.2, if the world price per bushel of wheat is $25, and a tariff of $10 is imposed by the domestic government, what is the domestic demand?
A)400 bushels
B)450 bushels
C)200 bushels
D)300 bushels
E)150 bushels
In Figure 21.2, if the world price per bushel of wheat is $25, and a tariff of $10 is imposed by the domestic government, what is the domestic demand?
A)400 bushels
B)450 bushels
C)200 bushels
D)300 bushels
E)150 bushels
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60
The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.Figure 21.2
Which of the following tools of commercial policy acts as a quantitative restriction on imports?
A)Tariff
B)Subsidy
C)Health and Safety regulations
D)Quota
E)Government procurement
Which of the following tools of commercial policy acts as a quantitative restriction on imports?
A)Tariff
B)Subsidy
C)Health and Safety regulations
D)Quota
E)Government procurement
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61
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
Refer to Figure 21.4. If cocoa sells for $6 per pound in the world market, determine the volume of U.S. cocoa imports.
A)250 pounds
B)350 pounds
C)300 pounds
D)150 pounds
E)200 pounds
Refer to Figure 21.4. If cocoa sells for $6 per pound in the world market, determine the volume of U.S. cocoa imports.
A)250 pounds
B)350 pounds
C)300 pounds
D)150 pounds
E)200 pounds
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62
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Which of the following can be considered as a cultural barrier to trade?
A)Prohibition on Zimbabwean aircrafts from flying over or landing in Canada
B)Restriction on the export of luxury goods to the Democratic Peoples Republic of Korea from Canada
C)An arms embargo imposed on China by the U.K. government
D)Japanese law requiring a new retail firm to receive permission from other retailers in the area in order to open a business
E)Restriction on the export of strategic goods to Ghana imposed by the government of U.K
Which of the following can be considered as a cultural barrier to trade?
A)Prohibition on Zimbabwean aircrafts from flying over or landing in Canada
B)Restriction on the export of luxury goods to the Democratic Peoples Republic of Korea from Canada
C)An arms embargo imposed on China by the U.K. government
D)Japanese law requiring a new retail firm to receive permission from other retailers in the area in order to open a business
E)Restriction on the export of strategic goods to Ghana imposed by the government of U.K
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63
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
In reality international trade is determined solely by comparative advantage and the free market forces of supply and demand.
In reality international trade is determined solely by comparative advantage and the free market forces of supply and demand.
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64
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
Refer to Figure 21.4. Assume that Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound. If the U.S. enters into a free trade agreement (FTA) with Ghana, what would be its total cocoa imports?
A)100 pounds
B)300 pounds
C)200 pounds
D)150 pounds
E)250 pounds
Refer to Figure 21.4. Assume that Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound. If the U.S. enters into a free trade agreement (FTA) with Ghana, what would be its total cocoa imports?
A)100 pounds
B)300 pounds
C)200 pounds
D)150 pounds
E)250 pounds
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65
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Suppose, in the United States, each farmer is given a federal agricultural subsidy worth $30,000. What will be the effect of such subsidy?
A)It discourages domestic agricultural production.
B)It allows U.S. farmers to sell their products for lower prices in foreign markets.
C)It gives foreign producers an unfair cost advantage.
D)It increases the amount of agricultural imports into the United States.
E)It reduces the prices of the primary products in the U.S. market.
Suppose, in the United States, each farmer is given a federal agricultural subsidy worth $30,000. What will be the effect of such subsidy?
A)It discourages domestic agricultural production.
B)It allows U.S. farmers to sell their products for lower prices in foreign markets.
C)It gives foreign producers an unfair cost advantage.
D)It increases the amount of agricultural imports into the United States.
E)It reduces the prices of the primary products in the U.S. market.
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66
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
One of the negative impacts of export subsidy is that:
A)the price of the domestic good increases in the world market.
B)the domestic supply of the goods increases more than proportionately than increase in demand.
C)the domestic cost of production of the exportable increase.
D)it results in a general deflation and hence the domestic producers incur losses.
E)it is financed by the taxes paid by domestic consumers and hence it harms them.
One of the negative impacts of export subsidy is that:
A)the price of the domestic good increases in the world market.
B)the domestic supply of the goods increases more than proportionately than increase in demand.
C)the domestic cost of production of the exportable increase.
D)it results in a general deflation and hence the domestic producers incur losses.
E)it is financed by the taxes paid by domestic consumers and hence it harms them.
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67
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
According to Figure 21.4, the no-trade equilibrium price and quantity of cocoa in the U.S. market are:
A)$8 and 150 pounds.
B)$10 and 250 pounds.
C)$4 and 200 pounds.
D)$10 and 200 pounds.
E)$6 and 300 pounds.
According to Figure 21.4, the no-trade equilibrium price and quantity of cocoa in the U.S. market are:
A)$8 and 150 pounds.
B)$10 and 250 pounds.
C)$4 and 200 pounds.
D)$10 and 200 pounds.
E)$6 and 300 pounds.
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68
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The trade-creation effect refers to:
A)the outcome of a preferential trade agreement that reduces economic efficiency by shifting production to a higher-cost producer.
B)the effect of an increase in the quantity of imports relative to the effect of a tariff applicable to all imports.
C)the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home.
D)the effect of a diversion of production to a country that has comparative advantage due to a free trade agreement.
E)the effect of a decrease in the quantity of exports relative to the effect of a subsidy applicable to all exports.
The trade-creation effect refers to:
A)the outcome of a preferential trade agreement that reduces economic efficiency by shifting production to a higher-cost producer.
B)the effect of an increase in the quantity of imports relative to the effect of a tariff applicable to all imports.
C)the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home.
D)the effect of a diversion of production to a country that has comparative advantage due to a free trade agreement.
E)the effect of a decrease in the quantity of exports relative to the effect of a subsidy applicable to all exports.
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69
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Subsidies are payments made by the government of a country to:
A)foreign firms to encourage imports from the country in question.
B)foreign firms to boost their exports.
C)domestic firms to encourage exports.
D)domestic firms to encourage imports.
E)domestic consumers to encourage consumption of imported goods.
Subsidies are payments made by the government of a country to:
A)foreign firms to encourage imports from the country in question.
B)foreign firms to boost their exports.
C)domestic firms to encourage exports.
D)domestic firms to encourage imports.
E)domestic consumers to encourage consumption of imported goods.
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70
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
A customs union is an organization of nations whose members:
A)have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers.
B)have no trade barriers among themselves but impose common trade barriers on nonmembers.
C)have no trade barriers among themselves but each member country chooses its own trade policies with nonmember countries.
D)retaliate each other by raising reciprocal tariffs and calling for fair trade.
E)neither have trade barriers among themselves nor impose any restriction on the nonmember countries.
A customs union is an organization of nations whose members:
A)have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers.
B)have no trade barriers among themselves but impose common trade barriers on nonmembers.
C)have no trade barriers among themselves but each member country chooses its own trade policies with nonmember countries.
D)retaliate each other by raising reciprocal tariffs and calling for fair trade.
E)neither have trade barriers among themselves nor impose any restriction on the nonmember countries.
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71
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Agreements to abolish most barriers to trade among nations are known as:
A)collusive trade agreements.
B)discriminatory trade agreements.
C)neutral trade agreements.
D)preferential trade agreements.
E)retaliatory trade agreements.
Agreements to abolish most barriers to trade among nations are known as:
A)collusive trade agreements.
B)discriminatory trade agreements.
C)neutral trade agreements.
D)preferential trade agreements.
E)retaliatory trade agreements.
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72
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
From Figure 21.4, determine the total volume of U.S. cocoa imports if its government imposes tariff at the rate of $2 per pound on cocoa.
A)200 pounds
B)250 pounds
C)100 pounds
D)300 pounds
E)350 pounds
From Figure 21.4, determine the total volume of U.S. cocoa imports if its government imposes tariff at the rate of $2 per pound on cocoa.
A)200 pounds
B)250 pounds
C)100 pounds
D)300 pounds
E)350 pounds
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73
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
In 1992, the EEC was replaced by the EU with an agreement to:
A)erect strong trade barriers among the member countries.
B)reduce trade barriers against nonmember countries.
C)mutually restrict all imports from nonmember countries.
D)create a single market for goods and services in western Europe.
E)enable the countries of Western Europe to emerge as major world powers.
In 1992, the EEC was replaced by the EU with an agreement to:
A)erect strong trade barriers among the member countries.
B)reduce trade barriers against nonmember countries.
C)mutually restrict all imports from nonmember countries.
D)create a single market for goods and services in western Europe.
E)enable the countries of Western Europe to emerge as major world powers.
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74
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
As a result of the government procurement policy in the U.S.:
A)the domestic consumers are required to pay a higher price than the world price for the domestically produced goods.
B)the government wields the sole authority of importing goods from abroad.
C)the government wields the sole authority of exporting goods.
D)the domestic producers can charge the government a higher price for their products than they charge consumers.
E)the government is required to sponsor research and development for the domestic firms.
As a result of the government procurement policy in the U.S.:
A)the domestic consumers are required to pay a higher price than the world price for the domestically produced goods.
B)the government wields the sole authority of importing goods from abroad.
C)the government wields the sole authority of exporting goods.
D)the domestic producers can charge the government a higher price for their products than they charge consumers.
E)the government is required to sponsor research and development for the domestic firms.
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75
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The basic difference between a tariff and quota is that:
A)a quota can be imposed both on imports and exports, whereas a tariff can be imposed only on imports.
B)a quota yields revenue to the government, whereas a tariff does not yield any revenue.
C)a tariff reduces the import of the goods with greater certainty than quota as the amount of import restricted by quota depends on the price elasticity of demand for importable.
D)a tariff is a quantitative restriction on imports, whereas a quota is an import duty.
E)a tariff raises the price of the product only in the domestic market, whereas with a quota, both domestic and foreign producers receive a higher price.
The basic difference between a tariff and quota is that:
A)a quota can be imposed both on imports and exports, whereas a tariff can be imposed only on imports.
B)a quota yields revenue to the government, whereas a tariff does not yield any revenue.
C)a tariff reduces the import of the goods with greater certainty than quota as the amount of import restricted by quota depends on the price elasticity of demand for importable.
D)a tariff is a quantitative restriction on imports, whereas a quota is an import duty.
E)a tariff raises the price of the product only in the domestic market, whereas with a quota, both domestic and foreign producers receive a higher price.
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76
The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
International trade on the basis of comparative advantage maximizes world output and allows consumers to access better-quality products at lower prices than would be available in the domestic market alone.
International trade on the basis of comparative advantage maximizes world output and allows consumers to access better-quality products at lower prices than would be available in the domestic market alone.
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77
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
After the U.S. government had approved the feeding of hormones to U.S. beef cattle, several western European nations restricted the import of beef from the U.S. Which of the following tools of commercial policy had been put to use in this situation?
A)Tariff
B)Quota
C)Health and safety standards
D)Subsidy
E)Government procurement
After the U.S. government had approved the feeding of hormones to U.S. beef cattle, several western European nations restricted the import of beef from the U.S. Which of the following tools of commercial policy had been put to use in this situation?
A)Tariff
B)Quota
C)Health and safety standards
D)Subsidy
E)Government procurement
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78
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The European Economic Community was created in 1957 by:
A)France, the United Kingdom, Italy, Belgium, the Netherlands, and Luxembourg.
B)France, West Germany, Italy, Belgium, the Netherlands, and Luxemburg.
C)France, West Germany, Italy, Belgium, the Netherlands, and the United Kingdom.
D)France, West Germany, Italy, the United Kingdom, Belgium, the Netherlands, and Luxembourg.
E)France, West Germany, Italy, Belgium, the United Kingdom, and Luxembourg.
The European Economic Community was created in 1957 by:
A)France, the United Kingdom, Italy, Belgium, the Netherlands, and Luxembourg.
B)France, West Germany, Italy, Belgium, the Netherlands, and Luxemburg.
C)France, West Germany, Italy, Belgium, the Netherlands, and the United Kingdom.
D)France, West Germany, Italy, the United Kingdom, Belgium, the Netherlands, and Luxembourg.
E)France, West Germany, Italy, Belgium, the United Kingdom, and Luxembourg.
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79
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
The most successful free trade agreements achieve all of the following goals, except:
A)benefiting exporters by increasing exports to member countries.
B)increasing the volume of trade without changing the pattern of trade.
C)benefiting consumers by making a wider variety of goods available at a lower price.
D)stimulating trade creation to allow the benefits of trade to be realized.
E)protecting domestic industries from foreign competition.
The most successful free trade agreements achieve all of the following goals, except:
A)benefiting exporters by increasing exports to member countries.
B)increasing the volume of trade without changing the pattern of trade.
C)benefiting consumers by making a wider variety of goods available at a lower price.
D)stimulating trade creation to allow the benefits of trade to be realized.
E)protecting domestic industries from foreign competition.
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80
The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3
Trade diversion reduces worldwide efficiency, because:
A)production is diverted to the country with comparative advantage.
B)production is diverted away from the country with comparative advantage.
C)unnecessary trade restrictions are created in the economies.
D)consumption is diverted to the country having inadequate demand.
E)the cost of transhipment of the goods increases thus raising their prices in the world market.
Trade diversion reduces worldwide efficiency, because:
A)production is diverted to the country with comparative advantage.
B)production is diverted away from the country with comparative advantage.
C)unnecessary trade restrictions are created in the economies.
D)consumption is diverted to the country having inadequate demand.
E)the cost of transhipment of the goods increases thus raising their prices in the world market.
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