Question 1

In 1995 ________,which was established in 1948,was replaced by ________.

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) was established in 1948 and was replaced by the World Trade Organization (WTO) in 1995. NAFTA (North American Free Trade Agreement) and the Smoot-Hawley Tariff are not relevant to this event.

Question 2

If the U.S.government implements a tariff on Chinese tire imports all of the following would be made worse off except

Accepted Answer

The answer of If the U.S.government implements a tariff on...

Question 3

A quota is a numerical limit on the quantity of a good that can be imported.

Accepted Answer

This statement is true.

Question 4

The World Trade Organization (WTO)promotes foreign trade and investment,or globalization.In recent years opposition to globalization has led to violent protests at meetings of the WTO.One reason for these anti-globalization protests is

Accepted Answer

Protesters believe that free trade destroys the distinctive cultures of many countries. Many believe that globalization leads to homogenization and loss of diversity in cultures as Western culture spreads throughout the world through foreign trade and investment. This has led to a backlash against globalization and protests at meetings of the WTO.

Question 5

In 1930,the U.S.government attempted to help domestic firms that were harmed by the Great Depression by

Accepted Answer

The U.S. government attempted to help domestic firms that were harmed by the Great Depression by passing the Smoot-Hawley Tariff in 1930. This tariff increased taxes on imported goods, making them more expensive and less competitive with domestic products. However, this move ultimately backfired as other countries retaliated with their own tariffs, leading to a global decrease in trade and worsened economic conditions.

Question 6

A voluntary export restraint is an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country.

Accepted Answer

A voluntary export restraint (VER) is indeed an agreement between two countries that restricts the quantity of a good that can be imported by one country from another. The exporting country voluntarily agrees to limit its exports to avoid the imposition of more stringent trade barriers by the importing country.

Question 7

A tariff is a numerical limit on the quantity of a good that can be imported.

Accepted Answer

A tariff is a tax on imported goods, not a limit on the quantity that can be imported.

Question 8

Figure 19-7
 
-Refer to Figure 19-7.Fenwick currently both produces and imports pistachios.The government of Fenwick decides to restrict international trade in pistachios by imposing a quota that allows imports of only 5 million pounds each year.Figure 19-7 shows the estimated demand and supply curves for pistachios in Fenwick and the results of imposing the quota.Answer questions a-j using the figure.
a.If there is no quota what is the domestic price of pistachios and what is the quantity of pistachios demanded by consumers?
b.If there is no quota how many pounds of pistachios would domestic producers supply and what quantity would be imported?
c.If there is no quota what is the dollar value of consumer surplus?
d.If there is no quota what is the dollar value of producer surplus received by producers in Fenwick?
e.If there is no quota what is the revenue received by foreign producers who supply pistachios to Fenwick?
f.With a quota in place what is the price that consumers of Fenwick must now pay and what is the quantity demanded?
g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off?
h.With a quota in place what is the dollar value of producer surplus received by producers in Fenwick? Are domestic producers better off?
i.Calculate the revenue to foreign producers who are granted permission to sell in Fenwick after the imposition of the quota.
j.Calculate the deadweight loss as a result of the quota.

Accepted Answer

The answer of Figure 19-7
 
-Refer to Figure 19-7.Fenwick currently...

Question 9

Free trade refers to trade between countries without government restrictions.

Accepted Answer

Free trade implies the absence of government-imposed barriers to trade, such as tariffs, quotas, and other restrictions.

Question 10

Figure 19-6
 
-Refer to Figure 19-6.Suppose the U.S.government imposes a $0.25 per pound tariff on rice imports.Figure 19-6 shows the demand and supply curves for rice and the impact of this tariff.Use the figure to answer questions a-i.
a.Following the imposition of the tariff,what is the price that domestic consumers must now pay and what is the quantity purchased?
b.Calculate the value of consumer surplus with the tariff in place.
c.What is the quantity supplied by domestic rice growers with the tariff in place?
d.Calculate the value of producer surplus received by U.S.rice growers with the tariff in place.
e.What is the quantity of rice imported with the tariff in place?
f.What is the amount of tariff revenue collected by the government?
g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff.
h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government?
i.Calculate the deadweight loss due to the tariff.

Accepted Answer

The answer of Figure 19-6
 
-Refer to Figure 19-6.Suppose the...

Question 11

Figure 19-9
  
Bragabong currently both produces and imports almonds.The government of Bragabong decides to restrict international trade in almonds by imposing a quota that allows imports of only 10 million kilos each year.Figure 19-9 shows the estimated demand and supply curves for almonds in Bragabong and the results of imposing the quota.
-Use Figure 19-9 to answer questions a-j.
a.If there is no quota what is the domestic price of almonds and what is the quantity of almonds demanded by consumers?
b.If there is no quota how many kilos of almonds would domestic producers supply and what quantity would be imported?
c.If there is no quota what is the dollar value of consumer surplus?
d.If there is no quota what is the dollar value of producer surplus received by producers in Bragabong?
e.If there is no quota what is the revenue received by foreign producers who supply almonds to Bragabong?
f.With a quota in place what is the price that consumers of Bragabong must now pay and what is the quantity demanded?
g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off?
h.With a quota in place what is the dollar value of producer surplus received by producers in Bragabong? Are domestic producers better off?
i.Calculate the revenue to foreign producers who are granted permission to sell in Bragabong after the imposition of the quota.
j.Calculate the deadweight loss as a result of the quota.

Accepted Answer

The answer of Figure 19-9
  
Bragabong currently both produces...

Question 12

If the U.S.government implements a tariff on Chinese tire imports,the price of Chinese-made tires will ________,the quantity demanded will ________,and consumer surplus will ________.

Accepted Answer

When a tariff is implemented on Chinese tire imports, the price of Chinese-made tires will increase due to the additional cost of the tariff. As a result, the quantity demanded will decrease as consumers will seek alternative, cheaper options. Consumer surplus will also decrease as consumers will no longer have access to the lower-priced Chinese tires.

Question 13

________ raised average tariff rates by over 50 percent in the United States in 1930.

Accepted Answer

The Smoot-Hawley Tariff, passed in 1930, raised average tariff rates by over 50 percent in the United States, making it the correct choice. The General Agreement on Tariffs and Trade (GATT), World Trade Organization (WTO), and North American Free Trade Agreement (NAFTA) were all created after 1930 and did not directly impact tariff rates at that time.

Question 14

Which of the following is common to both tariffs and quotas?

Accepted Answer

Tariffs and quotas are both protectionist measures often used to reduce foreign competition and protect domestic industries. Tariffs are taxes placed on imported goods, making them more expensive and therefore less competitive with domestically produced goods. Quotas, on the other hand, are limits on the quantity of a certain good that can be imported, creating an artificial scarcity that drives up prices and reduces competition from foreign producers. While they may have different effects on government revenue or economic efficiency, reducing foreign competition is a common goal of both tariffs and quotas. Voluntary export restraints, as mentioned in choice D, are a separate policy tool where a foreign government or producer voluntarily agrees to limit their exports to a particular country, and are not interchangeable with tariffs or quotas.

Question 15

Figure 19-8
  
Suppose the U.S.government imposes a $0.50 per pound tariff on sugar imports.Figure 19-8 shows the demand and supply curves for sugar and the impact of this tariff.
-Use Figure 19-8 to answer questions a-i.
a.Following the imposition of the tariff,what is the price that domestic consumers must now pay and what is the quantity purchased?
b.Calculate the value of consumer surplus with the tariff in place.
c.What is the quantity supplied by domestic sugar producers with the tariff in place?
d.Calculate the value of producer surplus received by U.S.sugar producers with the tariff in place.
e.What is the quantity of sugar imported with the tariff in place?
f.What is the amount of tariff revenue collected by the government?
g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff.
h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government?
i.Calculate the deadweight loss due to the tariff.

Accepted Answer

The answer of Figure 19-8
  
Suppose the U.S.government imposes...

Question 16

A quota is the same as a voluntary export restraint.

Accepted Answer

The answer of A quota is the same as a...

Question 17

A tariff is the same as a quota.

Accepted Answer

A tariff is a tax on imported goods, while a quota is a limit on the amount of imported goods allowed into a country. They are two different types of trade barriers.

Question 18

Disagreements about whether the U.S.government should regulate international trade

Accepted Answer

The answer of Disagreements about whether the U.S.government should regulate...

Question 19

a.Distinguish between a tariff and a quota.
b.In what ways are tariffs and quotas similar?
c.In what ways are tariffs and quotas different?
d.Why might a foreign producer prefer a quota rather than a tariff?

Accepted Answer

The answer of a.Distinguish between a tariff and a quota.
b.In...

Question 20

Distinguish between a voluntary export restraint and a quota.

Accepted Answer

The answer of Distinguish between a voluntary export restraint and...

Quiz 19: Comparative Advantage, international Trade, and Exchange Rates

In 1995 ,which was established in 1948,was replaced by .