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Chapter 9 - Microeconomics
Microeconomics - UEH
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Chapter 9
Application: International Trade
MULTIPLE CHOICE
When goods that are produced in the United States are sold to China, the goods are a. exported by the United States and imported by China. b. imported by the United States and exported by China. c. exported by the United States and exported by China. d. imported by the United States and imported by China. ANSWER: a. exported by the United States and imported by China. TYPE: M SECTION: 0 DIFFICULTY: 2
When the United States engages in international trade with China, a. China reaps economic benefits and the United States loses. b. both China and the United States reap economic benefits. c. it is an equal tradeoff so neither country benefits nor loses. d. China loses and the United States reaps economic benefits. ANSWER: b. both China and the United States reap economic benefits. TYPE: M SECTION: 0 DIFFICULTY: 2
When Ford and General Motors import automobile parts from Mexico at prices below those they must pay in the United States, a. workers who assemble Ford and General Motors vehicles become worse off. b. United States consumers, taken as a group, become worse off. c. Mexican consumers, taken as a group, become worse off. d. American companies that manufacture automobile parts become worse off. ANSWER: d. American companies that manufacture automobile parts become worse off. TYPE: M SECTION: 0 DIFFICULTY: 2
An industry that was a major part of the U. economy a century ago but is not now is the a. agriculture industry. b. textile and clothing industry. c. coal mining industry. d. automobile industry. ANSWER: b. textile and clothing industry. TYPE: M SECTION: 0 DIFFICULTY: 1
One reason for the decline in the U. textile industry was a. foreign competition. b. an increase in raw material prices. c. a decrease in U. demand for clothing. d. the enactment of the U. minimum wage law. ANSWER: a. foreign competition. TYPE: M SECTION: 0 DIFFICULTY: 1
Countries usually impose restrictions on free foreign trade to protect a. foreign producers. b. foreign consumers. c. domestic producers. d. domestic consumers. ANSWER: c. domestic producers.
If a country allows trade and the domestic price of a good is higher than the world price, a. the country will become an exporter of the good. b. the country will become an importer of the good. c. the country will neither export nor import the good. d. additional information about demand is needed to determine whether the country will export or import the good. ANSWER: b. the country will become an importer of the good. TYPE: M SECTION: 1 DIFFICULTY: 2
If a country allows trade and the domestic price of a good is lower than the world price, a. the country will become an exporter of the good. b. the country will become an importer of the good. c. the country will neither export nor import the good. d. additional information about demand is needed to determine whether the country will export or import the good. ANSWER: a. the country will become an exporter of the good. TYPE: M SECTION: 1 DIFFICULTY: 2
For any country, if the world price of computers is higher than the domestic price of computers, that country should a. export computers, since that country has a comparative advantage in computers. b. import computers, since that country has a comparative advantage in computers. c. not trade computers, since that country cannot gain from trade. d. not trade, since they already produce computers cheaper than other countries. ANSWER: a. export computers, since that country has a comparative advantage in computers. TYPE: M SECTION: 1 DIFFICULTY: 2
If the world price of a product is higher than a country’s domestic price we know that country a. should import that product. b. should no longer produce that product. c. has a comparative advantage in that product. d. could benefit by imposing a tariff on that product. ANSWER: c. has a comparative advantage in that product. TYPE: M KEY1: D SECTION: 1 DIFFICULTY: 2
If the United States exports cars to France and imports cheese from Switzerland, a. the United States has a comparative advantage in producing cars, and Switzerland has a comparative advantage in producing cheese. b. the United States has a comparative advantage in producing cheese, and Switzerland has a comparative advantage in producing cars. c. the United States and France would both be better off if they each produced cars and cheese. d. Comparative advantage cannot be determined without knowing absolute prices. ANSWER: a. the United States has a comparative advantage in producing cars, and Switzerland has a comparative advantage in producing cheese. TYPE: M SECTION: 1 DIFFICULTY: 3
Trade among nations is ultimately based on a. absolute advantage. b. political advantage. c. comparative advantage. d. technical advantage. ANSWER: c. comparative advantage. TYPE: M SECTION: 1 DIFFICULTY: 1
A country has a comparative advantage in a product if the world price is a. lower than its domestic price. b. higher than its domestic price. c. equal to its domestic price. d. None of the above are correct. ANSWER: b. higher than its domestic price.
Trade raises the economic well-being of a nation in the sense that a. the gains of the winners exceed the losses of the losers. b. everyone in an economy gains from trade. c. since countries can choose what products to trade, they will pick those products that are most beneficial to society. d. trade increases a country’s gross domestic product (GDP). ANSWER: a. the gains of the winners exceeds the losses of the losers. TYPE: M SECTION: 1 DIFFICULTY: 2
When a country allows trade and becomes an exporter of a good, a. everyone in the country benefits. b. everyone in the country loses. c. the gains of the winners exceed the losses of the losers. d. the losses of the losers exceed the gains of the winners. ANSWER: c. the gains of the winners exceed the losses of the losers. TYPE: M SECTION: 2 DIFFICULTY: 2
When a country allows trade and becomes an exporter of a good, which of the following would NOT be true? a. The price paid by domestic consumers of the good increases. b. The price received by domestic producers of the good increases. c. The losses of domestic consumers exceed the gains of domestic producers. d. The gains of domestic producers exceed the losses of domestic consumers. ANSWER: c. The losses of domestic consumers exceed the gains of domestic producers. TYPE: M SECTION: 2 DIFFICULTY: 3
When a country allows trade and becomes an importer of a good, which of the following would NOT be true? a. The gains of domestic consumers exceed the losses of domestic producers. b. The losses of domestic producers exceed the gains of domestic consumers. c. The price paid by domestic consumers of the good decreases. d. The price received by domestic producers of the good decreases. ANSWER: b. The losses of domestic producers exceed the gains of domestic consumers. TYPE: M SECTION: 2 DIFFICULTY: 3
When a country allows trade and becomes an exporter of a good consumer surplus a. and producer surplus will increase. b. and producer surplus will decrease. c. will increase and producer surplus will decrease. d. will decrease and producer surplus will increase. ANSWER: d. will decrease and producer surplus will increase. TYPE: M SECTION: 2 DIFFICULTY: 3
When a country allows trade and becomes an importer of a good consumer surplus a. and producer surplus will increase. b. and producer surplus will decrease. c. will increase and producer surplus will decrease. d. will decrease and producer surplus will increase. ANSWER: c. will increase and producer surplus will decrease. TYPE: M SECTION: 2 DIFFICULTY: 3
When a country allows free trade, a. the domestic price will be greater than the world price. b. the domestic price will be lower than the world price. c. the domestic price will equal the world price. d. it does not matter what the world price is; the domestic price is the prevailing price. ANSWER: c. the domestic price will equal the world price.
The domestic price of a product will equal the world price a. when the domestic supply of the product increases. b. when the country allows free trade. c. when trade restrictions are imposed on the product. d. if the country chooses to export and not import the product. ANSWER: b. when the country allows free trade. TYPE: M SECTION: 2 DIFFICULTY: 2
For any country which allows free trade, a. domestic quantity demanded must equal domestic quantity supplied at the world price. b. if the world price equals the domestic price for a product, the country can choose to either import or export the product. c. both producers and consumers in that country will gain from trade. d. the domestic price will equal the world price. ANSWER: d. the domestic price will equal the world price. TYPE: M SECTION: 1 DIFFICULTY: 2
Benefits from free trade include each of the following EXCEPT a. increased variety of goods. b. lower costs because of economies of scale. c. enhanced flow of ideas. d. reduced competition. ANSWER: d. reduced competition. TYPE: M SECTION: 1 DIFFICULTY: 1
Economies of scale exist when goods a. can be produced at low cost only if they are produced in large quantities. b. that are identical can be produced at a lower cost then diversified products. c. are produced by countries which have a comparative advantage in that product. d. are produced by the lowest cost firm. ANSWER: a. can be produced at low cost only if they are produced in large quantities. TYPE: M SECTION: 1 DIFFICULTY: 2
The world price of yo-yo’s is $4 each. The pre-trade price of yo-yo’s in Taiwan is $3 each. If Taiwan allows trade in yo-yo’s we know that Taiwan will a. import yo-yo’s and the price in Taiwan will be $4 each. b. import yo-yo’s and the price in Taiwan will be $3 each. c. export yo-yo’s and the price in Taiwan will be $4 each. d. export yo-yo’s and the price in Taiwan will be $3 each. ANSWER: c. export yo-yo’s and the price in Taiwan will be $4. TYPE: M SECTION: 2 DIFFICULTY: 3
The world price of yo-yo’s is $4 each. The pre-trade price of yo-yo’s in Taiwan is $3 each With free trade, in the yo-yo market in Taiwan consumers a. and producers will both lose. b. and producers will both benefit. c. will lose and producers will benefit. d. will benefit and producers will not be affected. ANSWER: c. will lose and producers will benefit. TYPE: M SECTION: 2 DIFFICULTY: 2
To correctly analyze the welfare effects of free trade on an economy, economists must assume that the country a. has a comparative advantage in the product. b. is the only producer of the product. c. is a price taker. d. has an absolute advantage in the product. ANSWER: c. is a price taker.
According to the graph for this country, at the world price, a. the domestic quantity demanded is greater than the domestic quantity supplied. b. the domestic quantity demanded is less than the domestic quantity supplied. c. the domestic quantity demanded equals the domestic quantity supplied. d. this country should raise the domestic price of baskets. ANSWER: b. the domestic quantity demanded is less than the domestic quantity supplied. TYPE: M SECTION: 1 DIFFICULTY: 2
According to the graph, this country a. has a comparative advantage in baskets. b. should import baskets. c. cannot be competitive in the world market. d. would be better off if the world price for baskets and its pre-trade price were equal. ANSWER: a. has a comparative advantage in baskets. TYPE: M SECTION: 1 DIFFICULTY: 2
According to the graph, the world price for baskets represents a. the demand for baskets from the rest of the world. b. the supply of baskets from the rest of the world. c. the level of inefficiency in the domestic market caused by trade. d. the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage. ANSWER: a. the demand for baskets from the rest of the world. TYPE: M SECTION: 1 DIFFICULTY: 2
According to the graph, at the world price a. the domestic quantity demanded is greater than the domestic quantity supplied. b. the basket market is in equilibrium. c. the demand curve is perfectly inelastic. d. both domestic producers and consumers will be better off. ANSWER: b. the basket market is in equilibrium. TYPE: M SECTION: 1 DIFFICULTY: 3
According to the graph, China will a. import 100 pencil sharpeners. b. import 250 pencil sharpeners. c. export 100 pencil sharpeners. d. export 250 pencil sharpeners. ANSWER: d. export 250 pencil sharpeners. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, producer surplus in China after trade is a. $800. b. $1,200. c. $1,800. d. $2,700. ANSWER: d. $2,700. TYPE: M SECTION: 2
According to the graph, the increase in total surplus in China because of trade is a. $500. b. $800. c. $1100. d. $1600. ANSWER: a. $500.
According to the graph, Jamaica would a. import 150 calculators. b. import 250 calculators. c. export 100 calculators. d. export 250 calculators. ANSWER: b. import 250 calculators. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, consumer surplus in Jamaica before trade is a. $375. b. $1,500. c. $2,250. d. $8,700. ANSWER: c. $2,250. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, the change in total surplus in Jamaica because of trade is a. $625. b. $865. c. $1,375. d. $1,500. ANSWER: a. $625. TYPE: M SECTION: 2 DIFFICULTY: 2
The before-trade domestic price of tomatoes in the United States is $500 per ton. The world price of tomatoes is $600 per ton. The U. is a price-taker in the tomatoes market.
If trade in tomatoes is allowed, the United States a. will become an importer of tomatoes. b. will become an exporter of tomatoes. c. may become either an importer or an exporter of tomatoes. d. It is impossible to determine whether the United States will become an importer of tomatoes or an exporter of tomatoes. ANSWER: b. will become an exporter of tomatoes. TYPE: M SECTION: 2 DIFFICULTY: 2
If trade in tomatoes is allowed, the price of tomatoes in the United States a. will increase. b. will decrease. c. will be unaffected. d. could increase or decrease. ANSWER: a. will increase. TYPE: M SECTION: 2 DIFFICULTY: 2
If trade in tomatoes is allowed, the price of tomatoes in the United States a. will be greater than the world price. b. will be equal to the world price. c. will be less than the world price. d. would be greater than, equal to, or less than the world price. ANSWER: b. will be equal to the world price. TYPE: M SECTION: 2 DIFFICULTY: 2
If trade in tomatoes is allowed, U. consumers of tomatoes a. will be better off. b. will be worse off. c. will be unaffected. d. could be helped or hurt. ANSWER: b. will be worse off.
According to the graph, if this country chooses to trade, the price of wagons in this country would be a. $8 and 70 wagons would be sold domestically. b. $5 and 40 wagons would be sold domestically. c. $5 and 70 wagons would be sold domestically. d. $5 and 90 wagons would be sold domestically. ANSWER: d. $5 and 90 wagons would be sold domestically. TYPE: M SECTION: 1 DIFFICULTY: 3
According to the graph, with free trade, consumer surplus would be a. $245. b. $362. c. $367. d. $607. ANSWER: d. $607. TYPE: M SECTION: 1 DIFFICULTY: 3
According to the graph, with free trade, producer surplus would be a. $80. b. $150. c. $210. d. $245. ANSWER: a. $80. TYPE: M SECTION: 1 DIFFICULTY: 3
According to the graph, with free trade, total surplus would be a. $245. b. $367. c. $607. d. $687. ANSWER: d. $687. TYPE: M SECTION: 1 DIFFICULTY: 3
According to the graph, with free trade, total surplus would increase by a. $60. b. $75. c. $135. d. $210. ANSWER: b. $75. TYPE: M SECTION: 1 DIFFICULTY: 3
According to the graph, the increase in total surplus resulting from trade is a. $60. Since producer surplus increases by $180 and consumer surplus falls by $240. b. $60. Since consumer surplus increases by $180 and producer surplus falls by $240. c. $75. Since producer surplus increases by $240 and consumer surplus falls by $165. d. $75. Since consumer surplus increases by $240 and producer surplus falls by $165. ANSWER: c. $75. Since consumer surplus increases by $240 and producer surplus falls by $165. TYPE: M SECTION: 1 DIFFICULTY: 3
According to the graph, if this country allows free trade in wagons, a. consumers will gain and producers will lose. b. consumers will lose and producers will gain. c. both consumers and producers will gain. d. both consumers and producers will lose. ANSWER: a. consumers will gain and producers will lose. TYPE: M SECTION: 1 DIFFICULTY: 2
According to the graph, if this country allows free trade in wagons, producers will a. lose by $210. b. lose by $165. c. gain by $45. d. gain by $210. ANSWER: b. lose by $165.
According to the graph, if this country allows free trade in wagons, consumers will a. lose by $75. b. lose by $240. c. gain by $240. d. gain by $75. ANSWER: c. gain by $240. TYPE: M SECTION: 1 DIFFICULTY: 3
According to the graph, if this country allows free trade in wagons a. consumers will gain more than producers will lose. b. producers will gain more than consumers will lose. c. producers and consumers will both gain equally. d. producers and consumers will both lose equally. ANSWER: a. consumers will gain more than producers will lose. TYPE: M SECTION: 1 DIFFICULTY: 2
According to the graph, without trade, the equilibrium price of carnations would be a. $8 and equilibrium quantity would be 300. b. $6 and equilibrium quantity would be 200. c. $6 and equilibrium quantity would be 400. d. $4 and equilibrium quantity would be 500. ANSWER: a. $8 and equilibrium quantity would be 300. TYPE: M SECTION: 1 DIFFICULTY: 1
According to the graph, with free trade a. the domestic price will equal the world price. b. carnations will be sold at $8 in this market. c. this country will import 200 carnations. d. there will be a shortage of 400 carnations in this market. ANSWER: a. the domestic price will equal the world price. TYPE: M SECTION: 1 DIFFICULTY: 2
According to the graph, before the tariff is imposed, this country will a. import 200 carnations. b. import 400 carnations. c. export 200 carnations. d. export 400 carnations. ANSWER: b. import 400 carnations.
According to the graph, if trade in shoes is allowed, the price of shoes in Korea will be a. $12 per pair. b. $5 per pair. c. between $5 per pair and $12 per pair. d. higher than $12 per pair. ANSWER: b. $5 per pair. TYPE: M SECTION: 2 DIFFICULTY:
According to the graph, if trade in shoes is allowed, Korean shoe a. consumers and Korean shoe producers will gain. b. consumers and Korean shoe producers will lose. c. consumers will gain, and Korean shoe producers will lose. d. producers will gain, and Korean shoe consumers will lose. ANSWER: c. consumers will gain, and Korean shoe producers will lose. TYPE: M SECTION: 2 DIFFICULTY: 3
According to the graph, if trade in shoes is allowed in Korea, a. consumer surplus will increase and producer surplus will decrease. b. consumer surplus will decrease and producer surplus will increase. c. producer surplus and consumer surplus will increase. d. producer surplus and consumer surplus will be unaffected. ANSWER: a. consumer surplus will increase and producer surplus will decrease. TYPE: M SECTION: 2 DIFFICULTY: 3
The before-trade price of fish in Greece is $3 per pound. The world price of fish is $5 per pound. Greece is a price-taker in the fish market. If Greece allows trade in fish Greece will become an a. importer of fish and the price of fish in Greece will be $3. b. importer of fish and the price of fish in Greece will be $5. c. exporter of fish and the price of fish in Greece will be $3. d. exporter of fish and the price of fish in Greece will be $5. ANSWER: d. exporter of fish and the price of fish in Greece will be $5. TYPE: M SECTION: 2 DIFFICULTY: 3
The before-trade price of fish in Greece is $3 per pound. The world price of fish is $5 per pound. Greece is a price-taker in the fish market. If Greece allows trade in fish, its consumers of fish will be a. worse off and its producers of fish will be better off. b. better off and its producers of fish will be better off. c. worse off and its producers of fish will be worse off. d. worse off and its producers of fish will be unaffected. ANSWER: a. worse off and its producers of fish will be better off. TYPE: M SECTION: 2 DIFFICULTY: 3
According to the graph, the equilibrium price and the equilibrium quantity of cheese in Wales before trade would be a. P 1 , Q 2. b. P 1 , Q 1. c. P 0 , Q 0. d. P 3 , 0. ANSWER: c. P 0 , Q 0. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, the price and quantity demanded of cheese in Wales after trade would be a. P 1 , Q 2. b. P 1 , Q 1. c. P 0 , Q 0. d. P 3 , Q 1. ANSWER: b. P 1 , Q 1.
According to the graph, the quantity of cheese exported from Wales is a. Q 0 – Q 1. b. Q 2 – Q 1. c. Q 2 – Q 0. d. Q 0. ANSWER: b. Q 2 – Q 1. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, consumer surplus in this market before trade is a. A. b. A + B. c. A + B + D. d. C. ANSWER: b. A + B. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, consumer surplus in this market after trade is a. A. b. A + B. c. A + B + D. d. C. ANSWER: a. A. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, producer surplus in this market before trade is a. A. b. A + B. c. C + B + D. d. C. ANSWER: d. C. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, producer surplus in this market after trade is a. A. b. A + B. c. C + B + D. d. C. ANSWER: c. C + B + D. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, total surplus in this market before trade is a. A + B. b. A + B + C. c. A + B + C + D. d. B + C + D. ANSWER: b. A + B + C. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, total surplus in this market after trade is a. A + B. b. A + B + C. c. A + B + C + D. d. B + C + D. ANSWER: c. A + B + C + D.
According to the graph, producer surplus in this market after trade would be a. C. b. C + B. c. A + B + D. d. B + C + D. ANSWER: a. C. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, producer surplus plus consumer surplus in this market before trade is a. A + B. b. A + B + C. c. A + B + C + D. d. B + C + D. ANSWER: b. A + B + C. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, producer surplus plus consumer surplus in this market after trade is a. A + B. b. A + B + C. c. A + B + C + D. d. B + C + D. ANSWER: c. A + B + C + D. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, the change in total surplus in this market because of trade is a. A. b. B. c. C. d. D. ANSWER: d. D. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, equilibrium price and quantity before trade would be a. $18 and 400. b. $18 and 800. c. $14 and 400. d. $14 and 600. ANSWER: d. $14 and 600. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, the price and domestic quantity demanded after trade would be a. $18 and 400. b. $18 and 800. c. $14 and 400. d. $14 and 600. ANSWER: a. $18 and 400. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, after trade domestic production and domestic consumption, respectively, would be a. 600 and 400. b. 800 and 400. c. 400 and 600. d. 400 and 800. ANSWER: b. 800 and 400. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, consumer surplus before trade would be a. $1600. b. $2400. c. $3200. d. $3600. ANSWER: d. $3600.
According to the graph, consumer surplus after trade would be a. $1600. b. $2400. c. $3200. d. $3600. ANSWER: a. $1600. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, producer surplus before trade would be a. $3600. b. $4400. c. $5200. d. $6600. ANSWER: a. $3600. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, producer surplus after trade would be a. $4800. b. $5600. c. $6400. d. $7000. ANSWER: c. $6400. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, how many units of this product would be exported after trade is allowed? a. 200 b. 400 c. 600 d. 800 ANSWER: b. 400 TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, equilibrium price and quantity before trade would be a. $8 and 300. b. $8 and 900. c. $14 and 300. d. $14 and 600. ANSWER: d. $14 and 600. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, the price and domestic quantity demanded after trade would be a. $8 and 300. b. $8 and 900. c. $14 and 900. d. $14 and 600. ANSWER: b. $8 and 900. TYPE: M SECTION: 2 DIFFICULTY: 2
According to the graph, domestic production and domestic consumption respectively after trade would be a. 600 and 600. b. 600 and 300. c. 300 and 900. d. 600 and 900. ANSWER: c. 300 and 900.
A tariff a. lowers the price of the exported good below the world price. b. keeps the price of the exported good the same as the world price. c. raises the price of the imported good above the world price. d. lowers the price of the imported good below the world price. ANSWER: c. raises the price of the imported good above the world price. TYPE: M SECTION: 2 DIFFICULTY: 2
When a country moves from a free trade position and imposes a tariff on imports, this causes a. a decrease in total surplus in the market. b. a decrease in producer surplus in the market. c. an increase in consumer surplus in the market. d. a decrease in revenue to the government. ANSWER: a. a decrease in total surplus in the market. TYPE: M SECTION: 2 DIFFICULTY: 2
When President Bush imposed a tariff on imported steel, economists estimated it would a. cause the price of steel to increase by as much as 10 percent. b. cause the price of steel to increase by as much as 25 percent. c. start trade wars with our trading partners. d. cause the United States to export more steel. ANSWER: a. cause the price of steel to increase by as much as 10 percent. TYPE: M SECTION: 2 DIFFICULTY: 1
Denmark is an importer of computer chips and is also a price-taker in the chip market. The world price of these computer chips is $12. If Denmark imposes a $5 tariff on chips, the result in Denmark would be that the price of computer chips will be a. $17 and the quantity purchased will fall. b. $12 and the quantity purchased will fall. c. $7 and the quantity purchased will increase. d. $17 and the quantity purchased will increase. ANSWER: a. $17 and the quantity purchased will fall. TYPE: M SECTION: 2 DIFFICULTY: 3
Denmark is an importer of computer chips and is also a price-taker in the chip market. The world price of these computer chips is $12. If Denmark imposes a $5 tariff on chips, the result in Denmark would be that consumers a. and producers will both gain. b. and producers will both lose. c. will gain and producers will lose. d. will lose and producers will gain. ANSWER: d. will lose and producers will gain. TYPE: M SECTION: 2 DIFFICULTY: 2
Turkey is an importer of goose down pillows. The world price of these pillows is $50. Turkey imposes a $7 tariff on pillows. Turkey is a price-taker in the pillow market. As a result of the tariff Turkey’s price of pillows will be a. $50 and the quantity of pillows purchased will decrease. b. $57 and the quantity of pillows purchased will decrease. c. $50 and the quantity of pillows purchased will increase. d. $57 and the quantity of pillows purchased will increase. ANSWER: b. $57 and the quantity of pillows purchased will decrease. TYPE: M SECTION: 2 DIFFICULTY: 3
Turkey is an importer of goose down pillows. The world price of these pillows is $50. Turkey imposes a $7 tariff on pillows. Turkey is a price-taker in the pillow market. As a result of the tariff Turkish consumers of pillows will a. gain and Turkish producers of pillows will lose. b. lose and Turkish producers of pillows will gain. c. gain and Turkish producers of pillows will gain. d. lose and Turkish producers of pillows will lose. ANSWER: b. lose and Turkish producers of pillows will gain.
In 2000, India raised the tariff on a. American chicken legs from 35 percent to 100 percent. b. American chicken legs from 25 percent to 50 percent. c. American steel from 50 percent to 100 percent. d. American steel from 25 percent to 50 percent. ANSWER: a. American chicken legs from 35 percent to 100 percent. TYPE: M SECTION: 2 DIFFICULTY: 1
Trade in chicken between the United States and India would be advantageous for both countries since a. Americans prefer the white meat and Indians prefer the dark meat. b. the United States has a comparative advantage in chicken and India has an absolute advantage in chicken. c. there are no trade barriers between the United States and India. d. the United States produces more chicken each year than is needed in the domestic chicken market. ANSWER: a. Americans prefer the white meat and Indians prefer the dark meat. TYPE: M SECTION: 2 DIFFICULTY: 2
In the figure shown, the free-trade price and domestic quantity demanded would be a. P 1 , Q 1. b. P 1 , Q 4. c. P 2 , Q 2. d. P 2 , Q 3. ANSWER: b. P 1 , Q 4. TYPE: M SECTION: 2 DIFFICULTY: 2
In the figure shown, the domestic price and domestic quantity demanded after the tariff would be a. P 1 , Q 1. b. P 1 , Q 4. c. P 2 , Q 2. d. P 2 , Q 3. ANSWER: d. P 2 , Q 3. TYPE: M SECTION: 2 DIFFICULTY: 2
In the figure shown, consumer surplus with free trade would be a. A. b. A + B. c. A + C + G. d. A + B + C + D + E + F. ANSWER: d. A + B + C + D + E + F. TYPE: M SECTION: 2 DIFFICULTY: 2
In the figure shown, producer surplus with free trade would be a. G. b. C + G. c. A + C + G. d. A + B + C + G. ANSWER: a. G. TYPE: M SECTION: 2 DIFFICULTY: 2
In the figure shown, consumer surplus after the tariff would be a. A. b. A + B. c. A + C + G. d. A + B + C + D +E + F. ANSWER: b. A + B.
Chapter 9 - Microeconomics
Course: Microeconomics - UEH
University: Trường Đại học Kinh tế Thành phố Hồ Chí Minh
