Deck 15: International Trade Policy

Question 1

Refer to the table below to answer the following questions.
Table 15.1.1
Table 15.1.1 shows Glazeland's doughnut market before international trade.Glazeland opens up to international trade.If the world price is $0.40 a doughnut, then Glazeland will produce _______ doughnuts and will _______ doughnuts.

A)3 million; export 3 million
B)4 million; export 1 million
C)4 million; import 1 million
D)6 million; export 3 million
E)3 million; import 3 million

Answer 1

3 million; import 3 million

Question 2

The fundamental force that drives international trade is

A)importation duties.
B)comparative advantage.
C)export advantage.
D)absolute advantage.
E)the advantage of execution.

Answer 2

comparative advantage.

Question 3

Compared to the situation before international trade, after Canada imports a good, production in Canada _______ and consumption in Canada _______.

A)does not change; increases
B)decreases; increases
C)increases; decreases
D)decreases; decreases
E)increases; increases

Answer 3

decreases; increases

Question 4

Refer to the table below to answer the following questions.
Table 15.1.1
Table 15.1.1 shows Glazeland's doughnut market before international trade.Glazeland opens up to international trade.If the world price is $0.60 a doughnut, then Glazeland will produce _______ doughnuts and will _______ doughnuts.

A)5 million; export 3 million
B)4 million; import 1 million
C)4 million; export 1 million
D)2 million; import 3 million
E)5 million; import 3 million

Question 5

Which of the following statements about Canada's international trade in 2016 is correct?

A)The value of Canada's imports exceeded the value of Canada's exports.
B)Canada exported only goods.
C)Canada was the world's second largest trader.
D)Canada imported only goods.
E)The value of Canada's exports was about 45 percent of the value of total expenditure in Canada.

Question 6

Goods and services that we buy from other countries are our

A)exports.
B)terms of trade.
C)comparative goods and services.
D)balance of payments.
E)imports.

Question 7

A market is open to international trade.At the world price, the quantity demanded is 150 units and the quantity supplied is 200 units.This country will

A)import 150 units.
B)import 200 units.
C)export 50 units.
D)import 50 units.
E)export 200 units.

Question 8

Canada has a comparative advantage in producing hardwood if the Canadian price of hardwood before international trade is _______ the world price.

A)at most double
B)less than
C)greater than
D)at least double
E)equal to

Question 9

Which of the following is a Canadian service export?

A)A Canadian buys a clock made in Switzerland.
B)A Canadian buys a Canadian computer in Switzerland.
C)A Canadian buys dinner while travelling in Switzerland.
D)A Swiss buys a computer made in Canada.
E)A Swiss buys dinner while travelling in Canada.

Question 10

Canada has a comparative advantage in producing airplanes if

A)it can produce a larger quantity than another country.
B)it can produce them at a lower dollar cost than another country.
C)it can produce them at a higher opportunity cost than another country.
D)it can produce them at a lower opportunity cost than another country.
E)it has a larger quantity of skilled workers than another country.

Question 11

Canada produces both lumber and wine.Canada exports lumber and imports wine.The rest of the world imports Canadian lumber and exports wine to Canada.Canada has a comparative advantage in producing _______.The rest of the world has a comparative advantage in producing _______.

A)wine; wine
B)wine; lumber
C)lumber; lumber
D)a good other than lumber or wine; wine
E)lumber; wine

Question 12

Refer to the table below to answer the following questions.
Table 15.1.2
Refer to Table 15.1.2.The table shows a country's demand and supply schedules.At what world price would the country import?

A)a price below $8 a unit
B)any price above $8 a unit
C)a price of $20 a unit
D)a price of $10 a unit
E)at exactly $8 a unit

Question 13

Compared to the situation before international trade, after Canada exports a good, production in Canada _______ and consumption in Canada _______.

A)decreases; increases
B)increases; does not change
C)increases; increases
D)decreases; decreases
E)increases; decreases

Question 14

Refer to the table below to answer the following questions.
Table 15.1.2
Refer to Table 15.1.2.The table shows a country's demand and supply schedules.Suppose the world price is $4 a unit.The country

A)exports 20 units.
B)imports 30 units.
C)imports 20 units.
D)imports 10 units.
E)exports 10 units.

Question 15

The goods and services we sell to people in other countries are our

A)exports.
B)quotas.
C)imports.
D)tariffs.
E)investment goods and services.

Question 16

Prior to international trade, if the price of good X is lower in country A than in country B,

A)country B has an absolute advantage in the production of good X.
B)country B should stop producing good A.
C)country A has a comparative advantage in the production of good X.
D)country B has a comparative advantage in the production of good X.
E)country A has an absolute advantage in the production of good X.

Question 17

Refer to the table below to answer the following question.
Table 15.1.3
Refer to Table 15.1.3.The table shows a country's demand and supply schedules.At what world price would the country export?

A)a price of $6 a unit
B)any price below $8
C)a price of $4 a unit
D)any price above $8 a unit
E)at only $8 a unit

Question 18

A country

A)imports goods produced in countries with lower wage rates.
B)exports those goods in which it has a comparative advantage.
C)exports goods produced by domestic industries with low wages relative to its trading partners.
D)imports those goods in which it has a comparative advantage.
E)B and D are correct.

Question 19

The fundamental force that drives international trade is

A)unemployment of factors of production.
B)comparative advantage.
C)a country's desire to increase its trade surplus.
D)absolute advantage.
E)cheap labour in countries like China and India.

Question 20

Canada produces both lumber and wine.Canada exports lumber and imports wine.The rest of the world imports Canadian lumber and exports wine to Canada.If Canada did not trade with the rest of the world, then the equilibrium price of lumber would be _______ in Canada than the rest of the world, and the equilibrium price of wine would be _______ in Canada than the rest of the world.

A)lower; lower
B)higher; higher
C)higher; lower
D)lower; higher
E)the same or lower; the same or higher

Question 21

Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.
Figure 15.1.1
In Figure 15.1.1, with international trade Canada _______million shirts per year.

A)exports 16
B)imports 32
C)imports 16
D)imports 48
E)exports 32

Question 22

In one year, Brazil exported more than 1.8 billion kilograms of coffee to the rest of the world.We can conclude that

A)Brazil's government loses from this trade.
B)coffee producers in the rest of the world gain from this trade.
C)Brazil's coffee producers lose from this trade.
D)Brazil's coffee consumers lose from this trade.
E)coffee consumers in the rest of the world lose from this trade.

Question 23

In a market that moves from a situation of no trade to a situation where a good is exported, the price of the good _______ and the quantity produced by the domestic industry _______ .

A)does not change; decreases
B)rises; increases
C)does not change; increases
D)falls; decreases
E)rises; does not change

Question 24

In a market that moves from a situation of no trade to a situation where a good is imported, the price of the good _______ and the quantity produced by the domestic industry _______.

A)does not change; increases
B)falls; decreases
C)rises; increases
D)rises; does not change
E)does not change; decreases

Question 25

Refer to the figure below to answer the following questions.
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve.Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
Figure 15.1.2
In Figure 15.1.2, with international trade Canadian firms buy _______ helicopters per year.

A)720
B)360
C)480
D)600
E)240

Question 26

Choose the correct statement.

A)Exports include goods and services.
B)Exports include services but not goods.
C)Imports include goods but not services.
D)Imports include services but not goods.
E)Exports include goods but not services.

Question 27

A country opens up to trade.In an export industry,

A)domestic producers lose and the government wins.
B)the government loses and domestic consumers win.
C)domestic producers lose and domestic consumers win.
D)domestic consumers lose and domestic producers win.
E)none of the above

Question 28

Consider a country that sells some of its goods as exports.Who does not benefit?

A)domestic consumers
B)workers in the industry
C)domestic producers
D)foreign consumers
E)Everyone benefits.

Question 29

A country opens up to trade.In an import industry,

A)domestic producers lose and the government gains.
B)the government loses and domestic consumers gain.
C)domestic producers lose and domestic consumers gain.
D)domestic consumers lose and domestic producers gain.
E)none of the above

Question 30

Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.
Figure 15.1.1
In Figure 15.1.1, with international trade Canadians buy _______ million shirts per year.

A)32
B)48
C)56
D)16
E)24

Question 31

Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.
Figure 15.1.1
In Figure 15.1.1, with international trade _______ million shirts per year are produced in Canada.

A)56
B)32
C)16
D)20
E)48

Question 32

Suppose that the world price of eggs is $1 a dozen, Canada does not trade internationally, and the equilibrium price of eggs in Canada is $3 a dozen.Then Canada begins to trade internationally.Canadian farmers produce _______eggs.Canada _______ eggs.

A)more; exports
B)less; imports
C)less; exports
D)the same quantity of; imports
E)more; imports

Question 33

Refer to the figure below to answer the following questions.
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve.Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
Figure 15.1.2
In Figure 15.1.2, with international trade _______ helicopters per year are produced in Canada.

A)360
B)720
C)240
D)480
E)600

Question 34

Who benefits from imports?

A)domestic workers in the industry
B)domestic producers
C)domestic consumers
D)foreign consumers
E)Everyone benefits.

Question 35

Suppose that the world price of eggs is $1 a dozen, Canada does not trade internationally, and the equilibrium price of eggs in Canada is $3 a dozen.Then Canada begins to trade internationally.The price of eggs in Canada _______.Canadian consumers buy _______ eggs.

A)rises; more
B)falls; more
C)rises; the same quantity of
D)falls; less
E)rises; less

Question 36

In one year, Brazil exported more than 1.8 billion kilograms of coffee to the rest of the world.We can conclude that

A)the rest of the world has an absolute advantage in coffee production.
B)the rest of the world has a comparative advantage in coffee production.
C)Brazil has comparative advantage in coffee production.
D)Brazil's government has placed a tariff on coffee.
E)Brazil has an absolute advantage in coffee production.

Question 37

Canada produces both lumber and wine.Canada exports lumber and imports wine.The rest of the world imports Canadian lumber and exports wine to Canada.When Canada exports lumber to the rest of the world and the rest of the world exports wine to Canada, _______ .

A)Canada's lumber producers gain
B)lumber producers in the rest of the world lose and wine producers in the rest of the world gain
C)Canada's wine producers lose
D)all of the above
E)none of the above

Question 38

International trade benefits the

A)government of the exporting country.
B)government of the importing country.
C)exporting country but not the importing country.
D)importing country but not the exporting country.
E)exporting country and the importing country.

Question 39

A tariff is a tax that is imposed by the _______ country when an _______ good crosses its international boundary.

A)exporting; exported
B)importing; imported
C)importing; exported
D)exporting; imported
E)importing or exporting; imported or exported

Question 40

Refer to the figure below to answer the following questions.
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve.Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
Figure 15.1.2
In Figure 15.1.2, Canada _______ helicopters per year.

A)imports 240
B)exports 480
C)imports 480
D)exports 240
E)exports 720

Question 41

A tariff is imposed on a good.This _______ the quantity supplied, _______ the quantity demanded, and _______ the price in the home country.

A)increases; does not change; does not change
B)increases; increases; raises
C)increases; decreases; raises
D)decreases; increases; lowers
E)increases; decreases; lowers

Question 42

Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand.As a result of the tariffs, the

A)price of beef in Mooland falls.
B)price of beef in Mooland does not change.
C)quantity of beef exported by Mooland increases.
D)quantity of beef imported by Mooland increases.
E)quantity of beef imported by Mooland decreases.

Question 43

If Canada imposes a tariff on imported steel, the tariff

A)raises the Canadian price of imported steel.
B)increases the total Canadian consumption of steel.
C)decreases the Canadian production of steel.
D)decreases employment in the Canadian steel industry.
E)all of the above

Question 44

If a country imposes a tariff on an imported good, the tariff _______ the price in the importing country and _______ the quantity of imports.

A)raises; does not change
B)raises; increases
C)raises; decreases
D)lowers; increases
E)lowers; does not change

Question 45

A tariff imposed by Canada on Japanese cars _______ the price of cars in Canada and _______ the quantity of Japanese cars imported into Canada.

A)raises; does not change
B)lowers; decreases
C)raises; decreases
D)lowers; increases
E)raises; increases

Question 46

If Canada imposes a tariff of $1 per imported shirt, the tariff

A)benefits Canadian shirt producers.
B)decreases imports of shirts into Canada.
C)raises the price of a shirt paid by Canadian consumers.
D)creates a social loss.
E)all of the above

Question 47

Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 15.3.1
Refer to Figure 15.3.1.With the tariff, Canadians buy _______ million shirts per year.

A)16
B)48
C)24
D)32
E)40

Question 48

Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 15.3.1
Refer to Figure 15.3.1.The tariff _______ Canada's imports of shirts by _______ million shirts per year.

A)increases; 16
B)increases; 8
C)increases; 4
D)decreases; 8
E)decreases; 16

Question 49

Canada imports cars from Japan.If Canada imposes a tariff on cars imported from Japan, Canadian

A)producers will lose and Japanese consumers will gain.
B)consumers will lose and Japanese producers will gain.
C)car manufacturers will gain revenue equal to the revenue lost by Japanese car manufacturers.
D)tariff revenue will equal the loss of Canadian consumers.
E)consumers will lose and Canadian producers will gain.

Question 50

Tariffs

A)generate revenue for consumers.
B)generate revenue for the government.
C)lower prices for consumers.
D)encourage domestic producers to produce less.
E)encourage domestic consumers to buy more imports.

Question 51

Reducing a tariff _______ the domestic production of the good and _______ the total domestic consumption of the good.

A)decreases; decreases
B)decreases; increases
C)increases; decreases
D)increases; increases
E)does not change; increases

Question 52

Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 15.3.1
Refer to Figure 15.3.1.With the tariff, Canada imports _______ million shirts per year.

A)24
B)16
C)40
D)8
E)32

Question 53

The winners from a tariff on imports are

A)domestic producers and government.
B)government only.
C)domestic producers only.
D)domestic consumers, domestic producers, and government.
E)domestic consumers only.

Question 54

A Canadian tariff imposed on items that can be produced more cheaply abroad

A)equalizes the cost of production between Canada and foreign producers.
B)benefits Canadians by making these goods cheaper.
C)creates a social loss.
D)makes the goods more expensive in foreign markets.
E)all of the above

Question 55

Tariffs and import quotas differ in that

A)one is a form of trade restriction, while the other is not.
B)one is legal, while the other is not.
C)one is a tax, while the other is a limit.
D)one is imposed by the government, while the other is imposed by the private sector.
E)one increases imports, while the other decreases imports.

Question 56

Increasing a tariff _______ the domestic quantity consumed of the good and _______ the domestic production of the good.

A)decreases; increases
B)decreases; decreases
C)increases; increases
D)increases; decreases
E)decreases; does not change

Question 57

Tariffs and import quotas both result in

A)lower levels of imports.
B)the domestic government gaining revenue.
C)higher levels of domestic consumption.
D)an increase in demand.
E)lower levels of domestic production.

Question 58

If Canada imposes a tariff on imported cars,

A)Canada's supply curve of cars shifts rightward.
B)Canada's demand curve for cars shifts leftward.
C)Canada's supply curve of cars shifts leftward.
D)Canada's demand curve for cars shifts rightward.
E)the price in Canada rises but neither Canada's demand curve nor Canada's supply curve shifts.

Question 59

Which of the following statements concerning tariffs is not true?

A)A tariff decreases international trade.
B)A tariff leaves the price of imports unchanged.
C)A tariff decreases domestic consumption.
D)A tariff creates revenue for the government.
E)A tariff increases domestic production.

Question 60

A tax that is imposed by the importing country when an imported good crosses its international boundary is called

A)a voluntary export restraint.
B)a sales tax.
C)dumping.
D)a tariff.
E)an import quota.

Question 61

A key difference between tariffs and import quotas is that

A)the government receives revenue with an import quota, but the importer makes a profit with a tariff.
B)domestic producers gain with a tariff and lose with an import quota.
C)consumers are hurt with import quotas but not with tariffs.
D)the government receives revenue with a tariff, but the importer makes a profit with an import quota.
E)consumers are hurt with tariffs but not with import quotas.

Question 62

Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 15.3.1
Refer to Figure 15.3.1.The Canadian government's revenue from the tariff is

A)$32 million.
B)$128 million.
C)$480 million.
D)$48 million.
E)$64 million.

Question 63

Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 15.3.1
Refer to Figure 15.3.1.The tariff _______ the domestic production of shirts in Canada by _______ per year.

A)increases; 24 million
B)increases; 8 million
C)decreases; 8 million
D)increases; 4 million
E)decreases; 16 million

Question 64

_______ specifies the maximum amount of a good that may be imported in a given period of time.

A)An import quota
B)An import subsidy
C)An import restriction
D)A legislative restriction
E)A trade restriction

Question 65

Refer to the table below to answer the following questions.

Table 15.3.1 shows the Canadian supply of and demand for widgets.Widgets are available on the world market for $7.If the Canadian government imposes a tariff of $1, the domestic selling price will be _______ and quantity bought will be _______.

A)$8; 40 million
B)$6; 48 million
C)$7; 44 million
D)$8; 24 million
E)$8; 16 million

Question 66

Import quotas

A)are not used by Canada.
B)set the minimum percentage of the value of a product that must consist of imported components.
C)benefit society.
D)are the same as tariffs.
E)set the maximum number of units of a good that can be imported in a given time period.

Question 67

When a tariff is imposed, the gap between the domestic price and the world price is captured by

A)foreign exporters.
B)the domestic producers of the good.
C)the government of the importing country.
D)the domestic importers of the good.
E)consumers in the importing country.

Question 68

When an import quota is imposed, the gap between the domestic price and the world price is captured by

A)the domestic producers of the good.
B)consumers in the importing country.
C)the importers of the good.
D)foreign exporters.
E)the government of the importing country.

Question 69

Refer to the table below to answer the following questions.

Table 15.3.1 shows the Canadian supply of and demand for widgets.Widgets are available on the world market for $7.Canadian widget producers convince the government to protect the domestic industry from cheap imports.If the Canadian government sets an import quota of 8 million widgets, the resulting price of a widget in Canada will be _______ , and domestic production will be _______.

A)$9; 28 million
B)$7; 36 million
C)$8; 32 million
D)$6; 40 million
E)$10; 32 million

Question 70

Refer to the table below to answer the following questions.

Table 15.3.1 shows the Canadian supply of and demand for widgets.Widgets are available on the world market for $7.If the Canadian government imposes a tariff of $1, how many widgets will Canada import?

A)40 million
B)24 million
C)32 million
D)28 million
E)16 million

Question 71

Import quotas _______ the price of imported goods and _______ the quantity consumed in the country imposing the quota.

A)raise; do not change
B)lower; increase
C)raise; increase
D)raise; decrease
E)lower; decrease

Question 72

A difference between a quota and a tariff is that

A)a tariff generates a greater reduction in exports than does an import quota.
B)the government collects revenue from a tariff but does not collect revenue from an import quota.
C)an import quota increases profits of domestic producers more than a tariff.
D)a tariff generates a higher price than does an import quota.
E)an import quota creates a social loss and a tariff does not.

Question 73

A tariff on watches which are imported by Atlantis _______the price of watches in Atlantis and _______.

A)lowers; watch production in Atlantis decreases
B)raises; watch production in Atlantis decreases
C)lowers; imports of watches increase
D)lowers; watch production in Atlantis increases
E)raises; watch production in Atlantis increases

Question 74

An import quota is a

A)tax in an international market.
B)market- imposed balancing factor that keeps prices of imports and exports in equilibrium.
C)law that prevents ecologically damaging goods from being imported into a country.
D)government- imposed restriction on the quantity of a specific good that can be imported.
E)tariff imposed on goods that are dumped in the country.

Question 75

An import quota directly restricts _______ and is designed to protect domestic _______.

A)exports; producers only
B)imports; producers and consumers
C)imports; producers only
D)imports; consumers only
E)exports; consumers only

Question 76

If a government imposes a quota on imports of a popular doll, the price of the doll in the country _______ and the quantity purchased in the country _______.

A)falls; increases
B)falls; decreases
C)rises; increases
D)rises; decreases
E)rises; does not change

Question 77

If Canada imposes a tariff of $1 per imported shirt, the tariff

A)creates a social loss.
B)benefits Canadian shirt producers.
C)decreases imports of shirts into Canada.
D)raises the price of a shirt to Canadian consumers.
E)all of the above

Question 78

An import quota is

A)a restriction that specifies the maximum amount of a good that may be imported.
B)a tariff that is a fixed percentage of the price of a good.
C)an agreed upon price for a good to be imported at a specified future date.
D)the same as an export subsidy.
E)a tariff that is a fixed dollar amount per unit of a good.

Question 79

A tariff _______ the domestic price of the good and an import quota _______ the domestic price of the good.

A)raises; lowers
B)lowers; raises
C)lowers; lowers
D)does not change; does not change
E)raises; raises

Question 80

Of the following, in which decade were Canada's tariffs at their lowest level?

A)1970s
B)1990s
C)1890s
D)1930s
E)1950s