31
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28) The above figure shows the U.S. market for wheat. With international trade, consumer
surplus is equal to ________.
A) area A + area B + area C
B) area E + area F
C) area B + area C + area D
D) area A + area B + area C + area D
E) area A
Skill: Level 3: Using models
Section: Checkpoint 9.2
Author: KG
AACSB: Analytical reasoning
29) The above figure shows the U.S. market for wheat. Without international trade, producer
surplus is equal to ________.
A) area B + area C + area E + area F
B) area A
C) area B + area C +area D + area E + area F
D) area E + area F
E) area A + area B + area C + area D
Skill: Level 3: Using models
Section: Checkpoint 9.2
Author: KG
AACSB: Analytical reasoning
30) The above figure shows the U.S. market for wheat. With international trade, the gain in total
surplus is equal to ________.
A) area A
B) area B + area C
C) area D
D) area C + area F
E) area C + area D + area F
Skill: Level 3: Using models
Section: Checkpoint 9.2
Author: KG
AACSB: Analytical reasoning
32
Copyright © 2011 Pearson Education, Inc.
31) The above figure shows the U.S. market for wheat. With no international trade, consumer
surplus is equal to ________ and producer surplus is equal to ________.
A) area A; area B + area C + area E + area F
B) area A + area B + area C; area E + area F
C) area E + area F; area A
D) area B + area C + area D; area E + area F
E) area A + area B + area C + area D; area E + area F
Skill: Level 3: Using models
Section: Checkpoint 9.2
Author: KG
AACSB: Analytical reasoning
32) The above figure shows the U.S. market for wheat. With international trade, ________ is the
transfer of surplus from consumers to producers.
A) area B + area C
B) area D
C) area C + area F
D) area C + area D
E) area B + area C + area D
Skill: Level 3: Using models
Section: Checkpoint 9.2
Author: KG
AACSB: Analytical reasoning
33) When a nation exports a good, its total surplus ________, and when it imports a good, its
total surplus ________.
A) increases; increases
B) decreases; decreases
C) increases; decreases
D) decreases; increases
E) does not change; does not change
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: MR
AACSB: Analytical reasoning
33
Copyright © 2011 Pearson Education, Inc.
34) When a nation exports a good, its ________ surplus increases, and when it imports a good,
its ________ surplus increases.
A) total; total
B) consumer; consumer
C) producer; producer
D) producer; consumer
E) total; consumer
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: MR
AACSB: Analytical reasoning
35) When a nation exports a good, its ________ surplus increases, and when it imports a good,
its ________ surplus increases.
A) consumer; total
B) consumer; consumer
C) producer; producer
D) producer; consumer
E) total; consumer
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: MR
AACSB: Analytical reasoning
36) When a nation exports a good, its ________ surplus increases, and when it imports a good,
its ________ surplus increases.
A) consumer; producer
B) consumer; consumer
C) producer; producer
D) producer; consumer
E) total; consumer
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: MR
AACSB: Analytical reasoning
34
Copyright © 2011 Pearson Education, Inc.
37) When a nation exports a good, its ________ surplus decreases, and when it imports a good,
its ________ surplus decreases.
A) consumer; producer
B) consumer; consumer
C) producer; producer
D) producer; consumer
E) total; consumer
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: MR
AACSB: Analytical reasoning
38) International trade is definitely in the social interest if
A) consumer surplus increases.
B) producer surplus increases.
C) consumer surplus does not decreases.
D) producer surplus does not decreases.
E) total surplus increases.
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: STUDY GUIDE
AACSB: Reflective thinking
39) Imports ________ consumer surplus, ________ producer surplus, and ________ total
surplus.
A) decrease; decrease; decrease
B) increase; increase; increase
C) increase; decrease; decrease
D) increase; decrease; increase
E) decrease; increase; increase
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: STUDY GUIDE
AACSB: Analytical reasoning
35
Copyright © 2011 Pearson Education, Inc.
40) When a country imports a good, the ________ in consumer surplus is ________ the
________ in producer surplus.
A) decrease; larger than; increase
B) decrease; smaller than; increase
C) increase; smaller than; decrease
D) increase; equal to; decrease
E) increase; larger than; decrease
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: STUDY GUIDE
AACSB: Analytical reasoning
41) When a country exports a good, the country’s producer surplus ________, consumer surplus
________, and the country ________ from the trade.
A) increases; increases; gains
B) decreases; increases; gains
C) increases; decreases; gains
D) decreases; decreases; loses
E) increases; decreases; loses
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: STUDY GUIDE
AACSB: Analytical reasoning
42) Which of the following is correct?
i. U.S. total surplus decreases when the United States exports a good.
ii. U.S. total surplus decreases when the United States imports a good.
iii. U.S. total surplus increases when the United States imports a good and when it exports a
good.
A) i only
B) iii only
C) i and ii
D) ii only
E) None of the above because the U.S. total surplus does not change as a result of trade
Skill: Level 2: Using definitions
Section: Checkpoint 9.2
Author: STUDY GUIDE
AACSB: Reflective thinking
36
Copyright © 2011 Pearson Education, Inc.
9.3 International Trade Restrictions
1) A tariff is
A) a tax imposed on imports.
B) any non-tax action used to restrict trade.
C) a tax imposed on exports.
D) any non-subsidy used to increase trade.
E) a subsidy granted to imports.
Skill: Level 1: Definition
Section: Checkpoint 9.3
Author: WM
AACSB: Reflective thinking
2) A tariff is a tax
A) on an exported good.
B) on an imported good.
C) imposed on all traded goods.
D) imposed on people’s income.
E) imposed on the difference between the value of the goods a firm imports and the value of the
goods it exports.
Skill: Level 1: Definition
Section: Checkpoint 9.3
Author: NAU
AACSB: Reflective thinking
3) A tax on a good that is imposed by the importing country is called a
A) tariff.
B) nontariff barrier.
C) quantitative restriction.
D) licensing regulation.
E) trade constraint.
Skill: Level 1: Definition
Section: Checkpoint 9.3
Author: SB
AACSB: Reflective thinking
37
Copyright © 2011 Pearson Education, Inc.
4) A tariff is
A) the domestic price charged by an exporting firm.
B) a tax on an imported good imposed by the importing country.
C) a licensing regulation that limits imports.
D) price dumping by a firm engaging in international trade.
E) the world price of a good or service.
Skill: Level 1: Definition
Section: Checkpoint 9.3
Author: TS
AACSB: Reflective thinking
5) Since the mid-1970s, the average U.S. tariff rate is
A) less than 5 percent.
B) between 6 percent and 15 percent.
C) between 16 percent and 25 percent.
D) between 26 percent and 35 percent.
E) larger than 36 percent.
Skill: Level 1: Definition
Section: Checkpoint 9.3
Author: NAU
AACSB: Reflective thinking
6) Looking at the average tariff rate in the United States since 1930, we see that
A) at first tariffs declined, but have recently risen.
B) tariffs have trended downward for most of the period.
C) tariff levels have remained high, at over 50 percent throughout the period.
D) while we talk about free trade, tariff levels have risen over the last 30 years.
E) tariffs were made illegal in the United States in 1955.
Skill: Level 1: Definition
Section: Checkpoint 9.3
Author: WM
AACSB: Reflective thinking
38
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7) During the past 70 years, the peak average tariff rate in the United States stemmed from the
A) creation of GATT in the middle of the 1940s.
B) Kennedy Administration in the early 1960s.
C) Uruguay round of GATT in the 1980s.
D) Smoot-Hawley Tariff Act in the early 1930s.
E) Clinton-Bush tariff of 2000-2001.
Skill: Level 1: Definition
Section: Checkpoint 9.3
Author: JC
AACSB: Reflective thinking
8) The agreement between the United States, Mexico, and Canada that sought to lower trade
barriers is known as
A) the General Agreement on Tariffs and Trade.
B) the North American Free Trade Agreement.
C) the World Trade Organization.
D) the Smoot-Hawley Tariff Act.
E) the New World Free Trade Agreement.
Skill: Level 1: Definition
Section: Checkpoint 9.3
Author: JC
AACSB: Reflective thinking
9) In the wake of worsening relations with China, some Americans called for an increase in
tariffs on Chinese products coming into America. If higher tariffs are imposed on clothing
produced in China, the price of clothing in America would
A) decrease.
B) increase.
C) not change.
D) first increase then decrease.
E) first decrease then increase.
Skill: Level 2: Using definitions
Section: Checkpoint 9.3
Author: JC
AACSB: Reflective thinking
39
Copyright © 2011 Pearson Education, Inc.
10) After a tariff is imposed on a good, the price of the good
A) does not change.
B) falls.
C) rises.
D) rises only if the domestic demand for the good does not change.
E) might rise, fall, or not change depending on whether the government did or did not
simultaneously impose a quota.
Skill: Level 2: Using definitions
Section: Checkpoint 9.3
Author: TS
AACSB: Reflective thinking
11) After a tariff is imposed, consumers must pay a price equal to the
A) world market price.
B) domestic equilibrium price when there is no trade.
C) world market price plus the tariff.
D) world market price less the tariff.
E) domestic equilibrium price when there is no trade plus the tariff.
Skill: Level 2: Using definitions
Section: Checkpoint 9.3
Author: SB
AACSB: Reflective thinking
12) Suppose the world price of widgets is $5 each. If a widget-importing country imposed a $2
per widget tariff, what price would that country’s consumers pay for widgets?
A) $10
B) $7
C) $5
D) $3
E) A price that is greater than $5 and less than $7
Skill: Level 2: Using definitions
Section: Checkpoint 9.3
Author: SB
AACSB: Analytical reasoning
40
Copyright © 2011 Pearson Education, Inc.
13) Which of the following chain of events occurs when a tariff is imposed on a good?
A) Domestic prices rise, shifting the domestic supply curve rightward.
B) Domestic prices fall, shifting the demand curve rightward, and consumers buy more of the
good.
C) Domestic prices fall, decreasing the domestic quantity supplied and increasing the quantity
demanded.
D) Domestic prices rise, decreasing the quantity demanded and increasing the domestic quantity
supplied.
E) Domestic prices rise, shifting the demand curve leftward and the domestic supply curve
rightward.
Skill: Level 2: Using definitions
Section: Checkpoint 9.3
Author: SB
AACSB: Reflective thinking
14) The imposition of tariffs on Korean steel has led to ________ in imports of Korean steel to
the United States and ________ the price of steel in the United States.
A) no change; raised
B) a decrease; raised
C) an increase; lowered
D) a decrease; no change in
E) an increase; raised
Skill: Level 2: Using definitions
Section: Checkpoint 9.3
Author: JC
AACSB: Reflective thinking
15) As a result of U.S. tariffs imposed on wool from New Zealand, the quantity of this wool that
is imported has
A) decreased.
B) increased a little.
C) not changed.
D) increased a lot.
E) changed but whether it has increased or decreased is ambiguous.
Skill: Level 2: Using definitions
Section: Checkpoint 9.3
Author: JC
AACSB: Reflective thinking