Question 1

Trade makes people better off when preferences are the same.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   trade quota.
B)   embargo.
C)   trade settlement.
D)   market hanger.E) All of the above
F) None of the above

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

If the world price of cotton is less than the price that would occur domestically without trade, then a country will:

Accepted Answer

A)   decrease its demand for cotton, and increase its demand for cotton substitutes.
B)   increase its demand for cotton, and decrease its demand for cotton substitutes.
C)   import cotton.
D)   export cotton.E) A) and B)
F) All of the above

Question 5

Some goods generate spillover benefits from production, but it is:

Accepted Answer

A)   difficult to know in advance which goods those are.
B)   in the government's interest to hear such arguments.
C)   not possible to encourage the production of those goods.
D)   not possible that the spillover benefits are very large.E) B) and C)
F) A) and D)

Question 6

Use the following to answer questions: Figure: Bananas 
-(Figure: Bananas)  Refer to the figure. If there is a $3 tariff on bananas, domestic consumers buy ______ fewer bananas and domestic producers grow ______ additional bananas.

Accepted Answer

A)   50,000; 10,000
B)   75,000; 10,000
C)   50,000; 20,000
D)   75,000; 20,000E) A) and B)
F) All of the above

Question 7

A tariff is a:

Accepted Answer

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

Question 8

Which of the following is NOT an argument against international trade?

Accepted Answer

A)   It is wrong to trade with nations that use child labor.
B)   International trade reduces the number of jobs in the United States.
C)   International trade leads to lower prices for domestic consumers.
D)   Certain key industries should remain at "home" for the interest of national security.E) None of the above
F) All of the above

Question 9

If a tariff decreases domestic consumption of a good from 230 million units to 150 million units and raises the domestic price by $1.50, given a linear domestic demand curve and a perfectly elastic world supply curve, what is the value of the unexploited gains from trade caused by decreased domestic consumption?

Accepted Answer

A)   $45 million
B)   $60 million
C)   $80 million
D)   $120 millionE) A) and B)
F) A) and C)

Question 10

Which of the following decreases the volume of international trade?

Accepted Answer

A)   increasing tariffs
B)   decreasing quotas
C)   lower transportation costs
D)   stable monetary conditionsE) A) and B)
F) B) and C)

Question 11

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

Accepted Answer

A)   Consumers are harmed while some suppliers benefit.
B)   Consumers benefit while some suppliers are harmed.
C)   Everyone benefits.
D)   Everyone is harmed.E) A) and B)
F) C) and D)

Question 12

According to the supply and demand framework in the text, an increase in import trade tends to ______ domestic production of a good.

Accepted Answer

A)   increase
B)   decrease
C)   hold constant
D)   have an indeterminate effect onE) None of the above
F) A) and B)

Question 13

The economics of international trade is substantially different from that of ordinary trade.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions: Figure: World Imports 
-(Figure: World Imports)  Refer to the figure. An imposition of extreme trade restrictions that eliminated all trade in that market, would generate wasted resources of:

Accepted Answer

A)   $70.
B)   $530.
C)   $90.
D)   $160.E) A) and B)
F) None of the above

Question 15

Protectionism protects domestic industries from the competitive forces exerted by foreign firms.

Accepted Answer

A) True 
 B)False

Question 16

Economists consider tariffs to be:

Accepted Answer

A)   necessary.
B)   beneficial to domestic consumers.
C)   harmful to domestic producers.
D)   obstacles that reduce gains from trade.E) C) and D)
F) A) and B)

Question 17

Use the following to answer questions: Figure: Foreign Trade 
-(Figure: Foreign Trade)  Refer to the figure. What quantity would be traded in a free-trade environment?

Accepted Answer

A)   600
B)   1,400
C)   1,000
D)   800E) B) and D)
F) None of the above

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Use the following to answer questions: Figure: International Trade 2 
-(Figure: International Trade 2)  Refer to the figure. With the tariff in this figure, the domestic quantity demanded is ______, and the quantity supplied domestically is ______.

Accepted Answer

A)   10; 8
B)   8; 8
C)   10; 10
D)   9; 7E) None of the above
F) C) and D)

Question 20

If the U.S. government wanted to use strategic trade protectionism for U.S.-produced fertilizer it would:

Accepted Answer

A)   place high taxes on foreign-made fertilizer.
B)   place a trade quota on foreign-made fertilizer.
C)   subsidize U.S. producers of fertilizer.
D)   place a tax or put a limit on the exports of U.S. fertilizer.E) C) and D)
F) A) and D)

Exam 9: International Trade

Some goods generate spillover benefits from production, but it is:

Correct Answer
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Trade makes people better off when preferences are the same.

Correct Answer
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Correct Answer
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Use the following to answer questions: Figure: Foreign Trade -(Figure: Foreign Trade) Refer to the figure. What quantity would be traded in a free-trade environment?

Correct Answer
verified

Use the following to answer questions: Figure: Bananas -(Figure: Bananas) Refer to the figure. If there is a $3 tariff on bananas, domestic consumers buy fewer bananas and domestic producers grow additional bananas.

Correct Answer
verified

If the U.S. government wanted to use strategic trade protectionism for U.S.-produced fertilizer it would:

Correct Answer
verified

Use the following to answer questions: Figure: International Trade 2 -(Figure: International Trade 2) Refer to the figure. With the tariff in this figure, the domestic quantity demanded is , and the quantity supplied domestically is .

Correct Answer
verified

If the world price of cotton is less than the price that would occur domestically without trade, then a country will:

Correct Answer
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Protectionism protects domestic industries from the competitive forces exerted by foreign firms.

Correct Answer
verified

According to the supply and demand framework in the text, an increase in import trade tends to ______ domestic production of a good.

Correct Answer
verified

Which of the following is NOT an argument against international trade?

Correct Answer
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Use the following to answer questions: Figure: World Imports -(Figure: World Imports) Refer to the figure. An imposition of extreme trade restrictions that eliminated all trade in that market, would generate wasted resources of:

Correct Answer
verified

A tariff is a:

Correct Answer
verified

Economists consider tariffs to be:

Correct Answer
verified

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

Correct Answer
verified

Which of the following decreases the volume of international trade?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The economics of international trade is substantially different from that of ordinary trade.

Correct Answer
verified

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

Correct Answer
verified

Exam 9: International Trade

Some goods generate spillover benefits from production, but it is:

Correct AnswerverifiedShow Answer

Trade makes people better off when preferences are the same.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Foreign Trade -(Figure: Foreign Trade) Refer to the figure. What quantity would be traded in a free-trade environment?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Bananas -(Figure: Bananas) Refer to the figure. If there is a $3 tariff on bananas, domestic consumers buy ______ fewer bananas and domestic producers grow ______ additional bananas.

Correct AnswerverifiedShow Answer

If the U.S. government wanted to use strategic trade protectionism for U.S.-produced fertilizer it would:

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: International Trade 2 -(Figure: International Trade 2) Refer to the figure. With the tariff in this figure, the domestic quantity demanded is ______, and the quantity supplied domestically is ______.

Correct AnswerverifiedShow Answer

If the world price of cotton is less than the price that would occur domestically without trade, then a country will:

Correct AnswerverifiedShow Answer

Protectionism protects domestic industries from the competitive forces exerted by foreign firms.

Correct AnswerverifiedShow Answer

According to the supply and demand framework in the text, an increase in import trade tends to ______ domestic production of a good.

Correct AnswerverifiedShow Answer

Which of the following is NOT an argument against international trade?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: World Imports -(Figure: World Imports) Refer to the figure. An imposition of extreme trade restrictions that eliminated all trade in that market, would generate wasted resources of:

Correct AnswerverifiedShow Answer

A tariff is a:

Correct AnswerverifiedShow Answer

Economists consider tariffs to be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following decreases the volume of international trade?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The economics of international trade is substantially different from that of ordinary trade.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Use the following to answer questions: Figure: Bananas -(Figure: Bananas) Refer to the figure. If there is a $3 tariff on bananas, domestic consumers buy fewer bananas and domestic producers grow additional bananas.

Correct Answer
verified

Correct Answer
verified

Use the following to answer questions: Figure: International Trade 2 -(Figure: International Trade 2) Refer to the figure. With the tariff in this figure, the domestic quantity demanded is , and the quantity supplied domestically is .

Correct Answer
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Correct Answer
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Correct Answer
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