Question 1

Several arguments for restricting trade have been advanced.Those arguments do not include

Accepted Answer

The other three arguments listed have been used to support restricting trade. The jobs argument asserts that trade restrictions can protect domestic jobs by making it more difficult for foreign firms to compete with domestic firms. The protection-as-a-bargaining-chip argument suggests that trade restrictions can be used as negotiation tools to gain advantages in other areas of trade or foreign policy. The infant-industry argument maintains that nascent industries in developing countries may require protection in order to grow and become competitive. However, the no-deadweight-loss argument is not a commonly used argument for restricting trade. In economics, deadweight loss refers to the loss of economic efficiency that occurs when equilibrium for a good or service is not achieved or is distorted by a market intervention such as a tax or subsidy. The no-deadweight-loss argument would suggest that trade restrictions do not cause any significant inefficiencies or losses, which is not a widely held view in economics.

Question 2

At present,the United States uses a system of quotas to limit the amount of sugar imported into the country.Which of the following statements is most likely true?

Accepted Answer

The fact that the United States uses quotas to limit the amount of sugar imported into the country is an indication that the quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. This is because the quotas limit the amount of foreign sugar that can be sold in the United States market, effectively increasing the market power of U.S. sugar producers and allowing them to charge higher prices for their sugar. As a result, U.S. producers benefit from higher producer surplus, while U.S. consumers lose out on the lower prices that would have been available if the market were more competitive. Foreign sugar producers also lose out on the potential market opportunities in the United States market.

Question 3

Congresswoman Gaga represents a state in which several firms manufacture furniture.She wants to impose tariffs on all imported furniture.Which of the following is the least likely consequence of such tariffs?

Accepted Answer

Imposing tariffs on imported furniture may protect domestic furniture producers from foreign competition, but it is unlikely to lead to a higher rate of technological advance. In fact, it may have the opposite effect by reducing the incentives for domestic firms to innovate and improve production methods.

Question 4

Which of the following is not a commonly-advanced argument for trade restrictions?

Accepted Answer

The efficiency argument is actually in favor of free trade and argues that removing trade barriers can lead to increased efficiency and lower prices for consumers. The other three arguments are commonly advanced in support of trade restrictions. The jobs argument argues that trade can lead to job losses in certain industries, the national-security argument suggests that reliance on foreign goods can be a threat to national security, and the infant-industry argument proposes that certain industries need protection when they are just starting out in order to become competitive in the global market.

Question 5

Which of the following arguments for trade restrictions is often advanced?

Accepted Answer

Trade restrictions, such as tariffs and quotas, are sometimes employed by governments to protect national security interests. For example, certain military technologies or weapons components may be subject to trade restrictions to prevent them from falling into the wrong hands. Another example is the use of trade restrictions to limit the flow of strategic resources, such as oil or rare earth metals, to rival nations or hostile regimes. While trade restrictions can have economic costs, they may be deemed necessary to ensure national security.

Question 6

Workers displaced by trade eventually find jobs in

Accepted Answer

Workers displaced by trade are likely to find employment in industries in which the country has a comparative advantage, as these industries are more competitive and productive. The government sector may not have enough job opportunities, and relocating to another country might not be feasible for all workers. Finding a job in a different company in the same industry may also be difficult, especially if the whole industry is facing challenges.

Question 7

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Accepted Answer

The answer of About what percent of total world trade...

Question 8

Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany

Accepted Answer

The answer of Suppose France subsidizes French wheat farmers,while Germany...

Question 9

Scenario 9-2
For a small country called Boxland, the equation of the domestic demand curve for cardboard is  
where  represents the domestic quantity of cardboard demanded, in tons, and 
  represents the price of a ton of cardboard.
For Boxland, the equation of the domestic supply curve for cardboard is  
where  represents the domestic quantity of cardboard supplied, in tons, and  again represents the price of a ton of cardboard.
-Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard

Accepted Answer

When the world price of cardboard is $60, Boxland would be able to import cardboard at a lower price than its domestic suppliers. Therefore, Boxland would import cardboard.

To find out the volume of cardboard that Boxland can import at a world price of $60, we can equate the world price with the domestic supply curve:

60 = -0.25Qs + 25
0.25Qs = 35
Qs = 140

Therefore, Boxland can supply 140 tons of cardboard at a world price of $60.

To calculate the effects of trade, we need to compare the no-trade situation with the situation when trade occurs.

Before trade:
Domestic price of cardboard = $25
Domestic quantity demanded = 100 - 2.5($25) = 37.5
Domestic quantity supplied = -0.25($25) + 25 = 18.75
Domestic consumer surplus = 0.5($25 - $0)(37.5) = $468.75
Domestic producer surplus = 0.5($25 - $0)(18.75) = $234.38

After trade:
Domestic price of cardboard = $60
Domestic quantity demanded = 100 - 2.5($60) = 55
Domestic quantity supplied = -0.25($60) + 25 = 10
Domestic consumer surplus = 0.5($60 - $25)(55) = $962.50
Domestic producer surplus = 0.5($60 - $25)(10) + 0.5($60 - $10)(140 - 10) = $1098.44

The change in consumer surplus is -$493.75 ($468.75 - $962.50) and the change in producer surplus is $864.06 ($1098.44 - $234.38). Therefore, Boxlandian consumers are worse off by $493.75 and Boxlandian producers are better off by $864.06.

Overall, the trade harms Boxlandian consumers by $493.75 and benefits Boxlandian producers by $864.06. Thus, the correct answer is C.

Question 10

Scenario 9-2
For a small country called Boxland, the equation of the domestic demand curve for cardboard is  
where  represents the domestic quantity of cardboard demanded, in tons, and 
  represents the price of a ton of cardboard.
For Boxland, the equation of the domestic supply curve for cardboard is  
where  represents the domestic quantity of cardboard supplied, in tons, and  again represents the price of a ton of cardboard.
-Refer to Scenario 9-2.Suppose the world price of cardboard is $60 and international trade is allowed.Then Boxland's consumers demand

Accepted Answer

The answer of Scenario 9-2
For a small country called Boxland,...

Question 11

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies,the United States will be

Accepted Answer

The answer of If the United States threatens to impose...

Question 12

Countries that restrict foreign trade are likely to

Accepted Answer

The answer of Countries that restrict foreign trade are likely...

Question 13

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries.The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Accepted Answer

Congressman Smith's reasoning ignores the concept of comparative advantage, which states that countries should specialize in producing goods that they can produce relatively more efficiently than other countries, and trade those goods for goods that other countries can produce more efficiently. This results in overall efficiency gains for all countries involved and leads to increased economic growth and job creation. Restrictions on trade can actually limit job opportunities and economic growth.

Question 14

Scenario 9-2
For a small country called Boxland, the equation of the domestic demand curve for cardboard is  
where  represents the domestic quantity of cardboard demanded, in tons, and 
  represents the price of a ton of cardboard.
For Boxland, the equation of the domestic supply curve for cardboard is  
where  represents the domestic quantity of cardboard supplied, in tons, and  again represents the price of a ton of cardboard.
-Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland?

Accepted Answer

If the world price of cardboard is $60, which is higher than the domestic price, Boxland will start importing cardboard from other countries. As a result:
- Consumer surplus decreases because now consumers have to pay a higher price for cardboard.
- Producer surplus increases because now domestic producers can sell their cardboard at a higher price and also sell to the international market.
- Total surplus increases because the gains in producer surplus are more than the losses in consumer surplus. Some of the gain in producer surplus goes towards tax revenue or potentially welfare programs that can benefit the society as a whole.

Question 15

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

Accepted Answer

While it is true that free trade may cause temporary unemployment in import-competing industries, this effect is offset by the growth of other industries, particularly those that export goods to foreign countries. The long-term benefits of free trade, such as increased economic growth and consumer welfare, outweigh the short-term costs. Furthermore, protectionist policies such as tariffs and quotas often do more harm than good, as they can lead to retaliatory measures from other countries and limit the overall gains from trade.

Question 16

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Accepted Answer

The answer of One should be especially wary of the...

Question 17

Scenario 9-2
For a small country called Boxland, the equation of the domestic demand curve for cardboard is  
where  represents the domestic quantity of cardboard demanded, in tons, and 
  represents the price of a ton of cardboard.
For Boxland, the equation of the domestic supply curve for cardboard is  
where  represents the domestic quantity of cardboard supplied, in tons, and  again represents the price of a ton of cardboard.
-Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then Boxland's gains from international trade in cardboard amount to

Accepted Answer

The answer of Scenario 9-2
For a small country called Boxland,...

Question 18

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

Accepted Answer

The answer of Opponents of free trade often want the...

Question 19

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

Accepted Answer

The observation that owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run supports the infant-industry argument. This argument proposes that protectionist measures, such as tariffs or subsidies, should be implemented to help develop and protect new industries that are not yet competitive on their own. However, many economists are skeptical of this argument as it assumes that the government can correctly identify promising industries and that the temporary protectionist measures will actually lead to long-term success.

Question 20

The "unfair-competition" argument might be cited by an American who believes that

Accepted Answer

The answer of The "unfair-competition" argument might be cited by...

Quiz 9: Application: International Trade.

Several arguments for restricting trade have been advanced.Those arguments do not include

At present,the United States uses a system of quotas to limit the amount of sugar imported into the country.Which of the following statements is most likely true?

Congresswoman Gaga represents a state in which several firms manufacture furniture.She wants to impose tariffs on all imported furniture.Which of the following is the least likely consequence of such tariffs?

Which of the following is not a commonly-advanced argument for trade restrictions?

Which of the following arguments for trade restrictions is often advanced?

Workers displaced by trade eventually find jobs in

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies,the United States will be

Countries that restrict foreign trade are likely to

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries.The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

The "unfair-competition" argument might be cited by an American who believes that