Question 1

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.With the tariff in place,the United States

Accepted Answer

With the $0.75 per pound tariff, the world price of coffee rises from $1.50 to $2.25. At this new price, the quantity demanded in the United States falls from 36 million pounds to 24 million pounds, while the quantity supplied domestically increases from 24 million pounds to 36 million pounds. The difference between domestic supply and demand (12 million pounds) must be imported, and with the tariff in place, the effective price of imported coffee is $2.25 per pound. Thus, the United States imports 12 million pounds of coffee.

Question 2

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.Without the tariff in place,the United States consumes

Accepted Answer

The answer of Figure 7-2  Suppose the U.S.government imposes...

Question 3

A tariff

Accepted Answer

A tariff is a tax on imported goods, which makes them more expensive for domestic consumers. This may lead to an increase in demand for domestically produced goods, making domestic producers better off. However, it also raises prices for domestic consumers, making them worse off. It may also lead to retaliatory tariffs by other countries, reducing overall trade and making everyone worse off. Therefore, while a tariff may benefit domestic producers in the short run, it is not an optimal policy for the overall economy.

Question 4

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.The tariff revenue collected by the government equals

Accepted Answer

The answer of Figure 7-2  Suppose the U.S.government imposes...

Question 5

In order to avoid the imposition of other types of trade barriers,foreign producers will sometimes agree to limit their exports to a country.What are these types of agreements called?

Accepted Answer

These types of agreements are called voluntary export restraints. They are agreements made between countries where the exporting country agrees to limit its exports to the importing country voluntarily. This is often done to avoid the imposition of other types of trade barriers, such as tariffs or quotas.

Question 6

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.With the tariff in place,the United States consumes

Accepted Answer

The correct answer is based on the information provided in Figure 7-2, which indicates that with the tariff in place, the United States consumes 36 million pounds of coffee.

Question 7

A quota

Accepted Answer

A quota restricts the quantity of imports, which reduces competition in the domestic market. This results in higher prices for consumers and a decreased variety of goods to choose from, making them worse off. However, domestic producers may benefit since they face less competition and can sell their goods at higher prices.

Question 8

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.With the tariff in place,the United States produces

Accepted Answer

With the tariff in place, the world price of coffee increases from $1.00 to $1.50 per pound. This makes it profitable for domestic producers to enter the market with a cost of $1.25 per pound. At this price level, domestic producers will supply 24 million pounds of coffee, which is the amount at which the domestic supply curve intersects the world price line.

Question 9

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.Without the tariff in place,the United States produces

Accepted Answer

Without the tariff, the United States would produce at the point where domestic supply meets domestic demand, which is at 15 million pounds of coffee.

Question 10

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.The tariff causes domestic consumption of coffee

Accepted Answer

The tariff causes the domestic price of coffee to increase, which leads to a decrease in domestic consumption. The decrease in consumption is shown as a movement along the demand curve, which is a shift to the left by 9 million pounds. Therefore, the correct answer is B, to fall by 9 million pounds.

Question 11

A voluntary export restraint is an agreement negotiated by two countries that places ________ that can be imported by one country from another country.

Accepted Answer

A voluntary export restraint places a numerical limit on the quantity of a good that can be imported by one country from another country.

Question 12

Which of the following is the best example of a voluntary export restraint?

Accepted Answer

A voluntary export restraint is a limit voluntarily placed by the exporting country on the quantity of goods it will export to another country, usually to avoid trade restrictions or higher tariffs. In this case, Japan is limiting the number of sports utility vehicles it exports to the United States. The other options do not fit the definition of a voluntary export restraint.

Question 13

Which of the following is the best example of a tariff?

Accepted Answer

A tariff is a tax or duty to be paid on a particular class of imports or exports. Option C, a $150 fee imposed on all imported residential air conditioners, directly fits the definition of a tariff as it is a specific charge levied on imported goods.

Question 14

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods,effectively acting as a quota of zero imports when stimulus money was being spent.The "Buy American" provision would ________ consumer surplus and ________ producer surplus for industries that produced protected products in the United States.

Accepted Answer

The Buy American provision would decrease consumer surplus because it limits choice and competition, meaning consumers would have to pay higher prices for American-made goods. It would increase producer surplus for industries that produced protected products in the United States because they would have less competition and be able to charge higher prices, resulting in more profit.

Question 15

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.If the tariff was replaced by a quota which limited coffee imports to 12 million pounds,the amount of revenue received by coffee importers would equal

Accepted Answer

From Figure 7-2, we can see that with the $0.75 per pound tariff, the quantity of coffee imported is reduced to 12 million pounds. If this quantity was limited by a quota, the price of coffee would increase to $3, and the revenue received by coffee importers would be $3 × 12 million = $36 million. Therefore, the correct answer is choice C.

Question 16

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.The loss in domestic consumer surplus as a result of the tariff is equal to

Accepted Answer

The answer of Figure 7-2  Suppose the U.S.government imposes...

Question 17

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.The increase in domestic producer surplus as a result of the tariff is equal to

Accepted Answer

The increase in domestic producer surplus due to a tariff is represented by the area above the domestic supply curve and below the new price level after the tariff is imposed, up to the quantity produced domestically after the tariff. This area typically includes the gains producers make because they can sell their goods at a higher price due to the reduced competition from imports. Without seeing Figure 7-2, the exact calculation cannot be visualized here, but based on the given options, if A is identified as correct, it means that this area's monetary value is $14.625 million.

Question 18

Which of the following is the best example of a tariff?

Accepted Answer

A tariff is a tax imposed on imported goods to make them more expensive than domestic goods, thus protecting domestic industries. Option D, a $5,000 per-car fee on imported sports utility vehicles, is a clear example of a tariff. Options A, B, and C do not fit the definition of a tariff as they do not involve taxes or fees imposed specifically on imported goods.

Question 19

In the 1980s,Japan agreed to limit the quantity of automobiles it would export to the United States.Why did the Japanese government agree to this trade restriction?

Accepted Answer

The Japanese government agreed to limit automobile exports to the United States because they feared that the alternative would be a tariff or quota imposed by the U.S. government. By voluntarily limiting their exports, they hoped to avoid a more restrictive trade barrier from the United States.

Question 20

Figure 7-2  Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.As a result of the tariff,domestic producers increase their quantity supplied by

Accepted Answer

The tariff increases the price of imported coffee, making domestic coffee relatively cheaper. This results in an increase in the quantity supplied by domestic producers by 9 million pounds of coffee, as shown in the diagram where the domestic supply curve shifts to the right by this amount.

Quiz 7: Comparative Advantage and the Gains From International Trade

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.With the tariff in place,the United States

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.Without the tariff in place,the United States consumes

A tariff

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.The tariff revenue collected by the government equals

In order to avoid the imposition of other types of trade barriers,foreign producers will sometimes agree to limit their exports to a country.What are these types of agreements called?

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.With the tariff in place,the United States consumes

A quota

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.With the tariff in place,the United States produces

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.Without the tariff in place,the United States produces

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.The tariff causes domestic consumption of coffee

A voluntary export restraint is an agreement negotiated by two countries that places ________ that can be imported by one country from another country.

Which of the following is the best example of a voluntary export restraint?

Which of the following is the best example of a tariff?

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.The loss in domestic consumer surplus as a result of the tariff is equal to

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.The increase in domestic producer surplus as a result of the tariff is equal to

Which of the following is the best example of a tariff?

In the 1980s,Japan agreed to limit the quantity of automobiles it would export to the United States.Why did the Japanese government agree to this trade restriction?

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.As a result of the tariff,domestic producers increase their quantity supplied by