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40-61
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Analyze
Diff ic ul ty : 03 Hard
Learning Objective: 40-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I
T o p ic : Trade Barriers and Export Subsidies
96. The accompanying table gives domestic supply and demand schedules for a product.
Suppose that the world price of the product is $1.
Quantity
Supplied
(Domestic)
Price
Quantity
Demanded
(Domestic)
12
$5
2
10
4
4
7
3
7
4
2
11
1
1
16
If the economy was opened to free trade and the world price of $1 prevailed, the price and
quantity sold of this product would be
97. The accompanying table gives domestic supply and demand schedules for a product.
Suppose that the world price of the product is $1.
Quantity
Supplied
(Domestic)
Price
Quantity
Demanded
(Domestic)
12
$5
2
10
4
4
7
3
7
4
2
11
1
1
16
With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign
producers would be
98. The accompanying table gives domestic supply and demand schedules for a product.
Suppose that the world price of the product is $1.
Quantity
Supplied
(Domestic)
Price
Quantity
Demanded
(Domestic)
12
$5
2
10
4
4
7
3
7
4
2
11
1
1
16
With a $1-per-unit tariff, price and total quantity sold will be
40-63
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Analytical Thinking
Blooms: Analyze
Di f f i cu l t y :
03 Hard
Learning Objective: 40-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I
To pi c :
Trade Barriers and Export Subsidies
Type: Table
99. The accompanying table gives domestic supply and demand schedules for a product.
Suppose that the world price of the product is $1.
Quantity
Supplied
(Domestic)
Price
Quantity
Demanded
(Domestic)
12
$5
2
10
4
4
7
3
7
4
2
11
1
1
16
With a $1-per-unit tariff, the quantities sold by foreign and domestic producers,
respectively, will be
100. The accompanying table gives domestic supply and demand schedules for a product.
Suppose that the world price of the product is $1.
Quantity
Quantity
Supplied
(Domestic)
Price
Demanded
(Domestic)
12
$5
2
10
4
4
7
3
7
4
2
11
1
1
16
With a $1-per-unit tariff, prices (revenue per unit) received by domestic and foreign
producers respectively will be
101. The accompanying table gives domestic supply and demand schedules for a product.
Suppose that the world price of the product is $1.
Quantity
Supplied
(Domestic)
Price
Quantity
Demanded
(Domestic)
12
$5
2
10
4
4
7
3
7
4
2
11
1
1
16
The total amount of revenue collected from a $1-per-unit tariff on this product will be
40-65
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
D. $14.
102. A protective tariff will
103. Other things equal, a tariff is
104. In comparing a tariff and an import quota, we find that
105. Other things equal, economists would prefer
106.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product
and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. The size of the import quota
107.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product
and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. The effect of the import quota on domestic price and domestic
consumption is
108.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product
and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. Assuming there is no tariff, the import quota
109.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product
and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. A tariff of PcPt or an import quota of wy will have the same
effect on
110.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product
and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. A tariff of PcPt will
111.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product
and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. A quota of wy will
113. Graphical analysis of tariffs reveals that
114. Studies show that
115. Research studies indicate that
40-74
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
low-income groups.
C. the revenue from tariffs equals the total cost that tariffs impose on consumers.
D.
U.S. consumers lose more from tariffs than U.S. producers gain.
116. A high tariff on imported good X might reduce domestic employment in industry Y if
117. The increased-domestic-employment argument for tariff protection holds that
118. Which of the following arguments for trade protection contends that new domestic
industries need support to establish themselves and survive?
119. Which of the following arguments for trade protection is based on the premise that a
nation should have a wide enough range of domestic industries to be self-sufficient if
necessary?
120. Which of the following arguments contends that certain industries need to be protected
in the interest of national security?
40-76
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Analyze
Di ff ic ul ty : 03 Hard
Learning Objective: 40-05 Analyze the validity of the most frequently presented arguments for
protectionism.
Test Bank: I
T o p ic : The Case for Protection: A Critical Review
121. A major difficulty with the argument that trade barriers are necessary because foreign
workers are paid low wages is that
122. As it relates to international trade, dumping
123. Dumping of goods abroad
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written consent of McGraw-Hill Education.
C. may be part of a nation's strategy to rectify its trade deficit.
D. drives up prices of the dumped goods.
124. The World Trade Organization
125. The number of countries belonging to the World Trade Organization (WTO), as of
2015, is about
40-78
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
T o p ic : Multilateral Trade Agreements and Free-Trade Zones
126. The organization created to oversee the provisions of multilateral trade agreements,
resolve disputes under the international trade rules, and meet periodically to consider
further trade liberalization is called the
127. The World Trade Organization was established as a successor to
128. Which of the following was not one of the principles on which the General Agreement
on Tariffs and Trade (GATT) was established?
40-79
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Di f fi c u l t y : 01 Easy
Learning Objective: 40-06 Identify and explain the objectives of GATT, WTO, EU, eurozone,
and NAFTA, and discuss offshoring and trade adjustment assistance.
Test Bank: I
T o p ic : Multilateral Trade Agreements and Free-Trade Zones
129. The "eurozone"
130. As of 2015, how many European nations belonged to the European Union (EU)?
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written consent of McGraw-Hill Education.
A. All members of the EU use a common currency (the euro).
B.
The EU has abolished most trade barriers among participating countries and has
common tariffs applied to non-EU goods.
C. The EU has eliminated most barriers to the trade of goods and services among
participating nations but largely restricts the movement of labor and capital.
D. Trade within the EU is liberalized, but EU nations set most of their own policies with
regard to trade with non-EU nations.
132. "NAFTA" stands for
133. NAFTA
