Chapter 20 – International Trade
98. The higher price of imported products due to trade barriers causes some consumers to
shift their purchases to a domestically-produced product which is now:
99. Refer to the above table for a certain product market in Econland. If Econland were
entirely closed to international trade, the equilibrium price and quantity would be:
Chapter 20 – International Trade
100. Refer to the above table for a certain product market in Econland. If the world price for
this product were $6, then Econland would import:
101. Refer to the above table for a certain product market in Econland. If the world price of
the product were $6 and a tariff of $1 per unit imported is imposed, then the quantity of output
that would be supplied domestically would be:
102. Refer to the above table for a certain product market in Econland. If the world price of
the product were $5 and a tariff of $2 per unit were applied to imports of product, then the
tariff would generate government revenues of:
Chapter 20 – International Trade
103. Refer to the above table for a certain product market in Econland. If the world price of
the product were $6 and a tariff of $1 per unit were applied to imports of the product, then the
total revenue (after tariff) going to domestic producers would be:
104. Refer to the above table for a certain product market in Econland. If the world price of
the product were $6 and an import quota of 400 units were imposed on the product, then the
equilibrium price in Econland would be:
105. Refer to the above table for a certain product market in Econland. Assume that the world
price of the product is $6. What would be the difference in the total revenue received by
foreign producers after a quota of 400 units is imposed, compared against the total revenue
received by foreign producers when a $1 per unit tariff is paid?
Chapter 20 – International Trade
106. The basic difference in the economic effects of a tariff compared with a quota is that a:
107. Refer to the above graph, where Sd and Dd are the domestic supply and demand curves
for a product. The world price of the product is $6. If this market were closed to international
trade, the total revenue that would go to domestic producers would be:
Chapter 20 – International Trade
108. Refer to the above graph, where Sd and Dd are the domestic supply and demand curves
for a product. The world price of the product is $6. If the market is open to international trade
but there is a tariff of $2 per unit imposed, the total government revenue generated by the
tariff would be:
109. Refer to the above graph, where Sd and Dd are the domestic supply and demand curves
for a product. The world price of the product is $6. If an import quota of 40 units were
imposed on the product, then the equilibrium price would be:
Chapter 20 – International Trade
110. Refer to the above graph, where Sd and Dd are the domestic supply and demand curves
for a product. The world price of the product is $6. If the economy is open to international
trade but a per unit tariff of $4 is imposed, then the total revenue going to domestic producers
would be:
111. Refer to the above graph, where Sd and Dd are the domestic supply and demand for a
product. The world price of the product is $6. What would be the difference in the total
revenue received by foreign producers after a quota of 20 units is imposed compared with the
total revenue received by foreign producers when a $4 per unit tariff is paid?
Chapter 20 – International Trade
112. From an economic perspective, studies of the costs of trade barriers show that they:
113. The use of tariffs and quotas for trade protection results in:
114. Common arguments often raised to present the case for protectionism included the
following, except:
Chapter 20 – International Trade
115. The statement that “tariffs are needed to protect American firms from foreign producers
which sell excess goods in the American market at less than cost” would be most closely
associated with which tariff argument?
116. Dumping is the sale of a product in a foreign market:
117. What is one of the major shortcomings of using tariffs or quotas to “save American
jobs”?
Chapter 20 – International Trade
118. Which is a valid counterargument to the call for higher tariffs to save U.S. jobs?
119. Which is a valid counterargument to the call for higher tariffs to save U.S. jobs?
120. Which is a likely result of imposing tariffs to increase domestic employment?
Chapter 20 – International Trade
121. Which is a valid counterargument to the infant industry argument for protective tariffs?
122. “The nation needs to prevent foreign nations from selling their excess goods in our
nation at a price below cost so we can save American firms.” This quotation would be most
closely associated with which protectionist argument?
123. Which is a valid counterargument to use tariffs to protect high wages from cheap foreign
labor?
Chapter 20 – International Trade
124. The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?
125. Which is not a commonly heard argument for protectionism?
126. A major goal of the World Trade Organization is to:
Chapter 20 – International Trade
127. The World Trade Organization is the successor to the:
128. Which organization meets regularly to establish rules and settle disputes related to
international trade?
129. About how many nations belonged to the World Trade Organization as of 2010?
Chapter 20 – International Trade
130. Major achievements of the European Union (EU) include the following, except:
131. The so-called Euro Zone refers to:
132. The NAFTA established a free-trade area and eliminated trade barriers between:
Chapter 20 – International Trade
133. The Trade Adjustment Assistance Act is focused mainly on assisting:
134. Globalization of resource markets has resulted in the business practice of offshoring,
which involves:
135. The main point of Frederic Bastiat’s satire is that:
Chapter 20 – International Trade
136. In terms of trade volume, China is the largest trading partner of the United States.
137. By 2008, more than 20% of the output (GDP) in United States was exported.
138. Among the principal exports of the United States are agricultural products.
139. The U.S. has a sizable trade deficit in goods as well as in services.
Chapter 20 – International Trade
140. One major factor that serves as an economic basis for world trade is the uneven
distribution of resources among nations.
141. If a nation’s labor can produce more of a good compared to labor in another nation, then
we say that the first nation has a comparative advantage in producing that good.
142. In a two-nation two-good world, it is possible for one nation to have the comparative
advantage in both goods.
143. If two nations specialize in their respective comparative advantage and then trade with
each other, both nations can consume output-combinations that are beyond their production
possibilities curves.
Chapter 20 – International Trade
144. In a two-nation two-good world, if one nation is more productive in producing both
goods than the other nation, then the more-productive nation cannot gain from trading with
the other nation.
145. The terms of trade will favor a larger nation over a smaller nation.
146. A nation will import a particular product if the world price is less than the domestic
price.
147. If a nation exports a product to the rest of the world, then the price of that product in the
exporting nation will increase.
Chapter 20 – International Trade
148. Import tariffs benefit the consumers of the product involved.
149. If demand for a product is increasing, an import tariff is less restrictive than an import
150. A voluntary export restraint (VER) is similar to an import quota; the only difference is in
who administers the quantity limits.
151. Trade protection in most instances transfer wealth from consumers to domestic
producers.
Chapter 20 – International Trade
152. Tariffs and import quotas meant to increase domestic employment also eliminate
domestic jobs in export industries.
153. Whenever a foreign producer is selling a product like steel at a lower price than domestic
producers, then dumping is being practiced and must be corrected.
154. The World Trade Organization was established by the United States to force other
nations to open their markets to U.S. goods.
155. NAFTA is a trade agreement that covers trade between the United States and the
European Union.