Question 1

The WTO and GATT promote trade by:

Accepted Answer

The WTO and GATT promote trade by reducing tariffs, which in turn makes it easier for countries to trade with each other. While they do have some influence over trade policy, they do not set prices or direct trade in the same way that a government might. Therefore, the most accurate choice is A, reducing tariffs.

Question 2

Figure 18.5
-For the good in Figure 18.5 ,with the tariff, the people in the country will produce:

Accepted Answer

With the tariff, domestic producers will increase production to Q2 as they are protected by the tariff, which raises the domestic price and allows them to compete with imports.

Question 3

Recall Application 1, "The Impact of Tariffs on the Poor," to answer the following questions:
-Because U.S. tariffs are higher on textiles, footwear and apparel items, U.S. tariffs fall relatively most heavily on:

Accepted Answer

The article specifically states that U.S. tariffs fall relatively most heavily on textiles, footwear and apparel items. These are items that are typically purchased more by lower-income households, therefore the poor are most affected by these tariffs.

Question 4

Recall Application 3, "Are They Really Dumping?" to answer the following questions:
-Based on what you learned from the application, how will the "constructed value" method used by the Department of Commerce affect the number of cases that it will deem as dumping?

Accepted Answer

The "constructed value" method often results in higher calculated costs, leading to more cases being identified as dumping.

Question 5

During the 1980s, firms from _______ were accused of dumping VCRs in Europe.

Accepted Answer

The answer of During the 1980s, firms from _______ were...

Question 6

Voluntary export restraints:

Accepted Answer

The answer of Voluntary export restraints:
...

Question 7

Figure 18.1
-Refer to Figure 18.1. In autarky, the maximum amount of sunglasses that Duckland can produce is:

Accepted Answer

From the production possibilities frontier (PPF) in autarky, the maximum amount of sunglasses that Duckland can produce is 120 at point A, where all resources are fully allocated to the production of sunglasses. Choosing any point inside the PPF would mean underutilizing resources and producing less than the maximum capacity, while choosing any point outside the PPF would require importing sunglasses and sacrificing the production of other goods. Therefore, choosing point A is the best option in autarky for producing sunglasses.

Question 8

The phenomenon that occurs when an infant industry becomes better and more efficient as it produces more of a good is called:

Accepted Answer

Learning by doing refers to the improvement in efficiency and productivity that occurs as a result of gaining experience and expertise in producing a good or service. This often occurs in new or infant industries as firms learn from trial and error and the adoption of new technologies and processes. This can lead to lower costs and prices over time, benefiting consumers and allowing the industry to thrive.

Question 9

-Refer to Table 18.1. The opportunity cost of a bagpipe in Poland is:

Accepted Answer

The opportunity cost of producing one good is the amount of another good that must be given up. If Poland gives up 2 accordions to produce 1 bagpipe, the opportunity cost of a bagpipe is 2 accordions.

Question 10

Figure 18.4
-Refer to Figure 18.4. With a tariff or quota, what is the equilibrium quantity of artichokes in Duckland?

Accepted Answer

With the imposition of a tariff or quota, the domestic price in Duckland rises to Pw+t. This means that domestic producers increase their output to QD and importers reduce their imports to Qw'. The new equilibrium quantity is the sum of domestic production and imports, which is 75. Therefore, the answer is C.

Question 11

Suppose nation A produces only two goods, apples and oranges . If nation A produces only apples, it can make 20 apples per day. If nation A produces only oranges, it can make 15 oranges per day. If the country has a constant production trade- off between apples and oranges, then the opportunity cost of one apple in nation A is:

Accepted Answer

The answer of Suppose nation A produces only two goods,...

Question 12

Figure 18.4
-Refer to Figure 18.4. With a tariff or quota, what is the equilibrium price of artichokes in Duckland?

Accepted Answer

With a tariff or quota, the equilibrium price of artichokes in Duckland is $4. This is because the tariff or quota will restrict the supply of artichokes, which will cause the price to rise.

Question 13

Which of the following situations will arise in the domestic market following the imposition of a voluntary export restraint?

Accepted Answer

When a voluntary export restraint is imposed, imports decrease as a result of the restriction on the production of goods in the exporting country. This reduction in imports results in an increase in domestic production which could potentially lead to an increase in prices due to the decrease in competition. Therefore, option A is the correct answer.

Question 14

Figure 18.2
-Refer to Figure 18.2. In autarky, the maximum amount of cheese that Pizzaland can produce is:

Accepted Answer

The answer of  Figure 18.2
-Refer to Figure 18.2. In...

Question 15

Recall Application 2, "Protection for Candle Makers," to answer the following questions:
-In the application, the French economist Bastiat petitioned for protection of French candle makers from unfair competition from:

Accepted Answer

In the application, Bastiat argues that the availability of sunlight during the day poses unfair competition to French candle makers.

Question 16

_______ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.

Accepted Answer

Predatory pricing occurs when a firm intentionally sets a price for its product below the cost of producing it, with the aim of driving competitors out of the market. This tactic can be anti-competitive and illegal under certain circumstances.

Question 17

According to the infant industry argument for trade protectionism:

Accepted Answer

The infant industry argument for trade protectionism suggests that new industries need to be sheltered in the early stages of learning by doing so they can build efficient economies of scale, acquire technological know-how, and reduce their costs to the level of international rivals. The rationale behind this is that once these industries have reached maturity, they can compete globally without government assistance.

Question 18

A possible reason to impose a protectionist policy such as a tariff is to:

Accepted Answer

The primary purpose of a protectionist policy like a tariff is to protect domestic workers from foreign competition. By imposing tariffs on imported goods, the price of those goods increases, making domestically produced goods relatively cheaper and more competitive. This leads to increased demand for domestically produced goods and, in turn, stimulates domestic production, creating more jobs and protecting workers from the negative effects of foreign competition.

Question 19

Figure 18.5
-For the good in Figure 18.5, with free trade, the people in the country will buy:

Accepted Answer

With free trade, the market will reach equilibrium at the world price, which is represented by point E. At point E, the quantity demanded is Q5, which is greater than the quantity supplied domestically at Q3. Therefore, the people in the country will buy Q5-Q3, which is equal to Q2-Q4. This is represented by the difference between the domestic supply and demand at point E. Therefore, the correct answer is C, Q5.

Question 20

The production possibilities curve represents the set of all:

Accepted Answer

The production possibilities curve is a graphical representation of a country's production capacity showing all possible combinations of two goods that can be produced with the given resources and technology, assuming that all resources are fully utilized. Therefore, the correct answer is D - feasible combinations of goods given that a nation's resources are fully employed. The other options are not correct as they do not accurately describe the production possibilities curve.

Quiz 18: International Trade and Public Policy

The WTO and GATT promote trade by:

Figure 18.5 -For the good in Figure 18.5 ,with the tariff, the people in the country will produce:

Recall Application 1, "The Impact of Tariffs on the Poor," to answer the following questions: -Because U.S. tariffs are higher on textiles, footwear and apparel items, U.S. tariffs fall relatively most heavily on:

Recall Application 3, "Are They Really Dumping?" to answer the following questions: -Based on what you learned from the application, how will the "constructed value" method used by the Department of Commerce affect the number of cases that it will deem as dumping?

During the 1980s, firms from _______ were accused of dumping VCRs in Europe.

Voluntary export restraints:

Figure 18.1 -Refer to Figure 18.1. In autarky, the maximum amount of sunglasses that Duckland can produce is:

The phenomenon that occurs when an infant industry becomes better and more efficient as it produces more of a good is called:

-Refer to Table 18.1. The opportunity cost of a bagpipe in Poland is:

Figure 18.4 -Refer to Figure 18.4. With a tariff or quota, what is the equilibrium quantity of artichokes in Duckland?

Figure 18.4 -Refer to Figure 18.4. With a tariff or quota, what is the equilibrium price of artichokes in Duckland?

Which of the following situations will arise in the domestic market following the imposition of a voluntary export restraint?

Figure 18.2 -Refer to Figure 18.2. In autarky, the maximum amount of cheese that Pizzaland can produce is:

Recall Application 2, "Protection for Candle Makers," to answer the following questions: -In the application, the French economist Bastiat petitioned for protection of French candle makers from unfair competition from:

_______ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.

According to the infant industry argument for trade protectionism:

A possible reason to impose a protectionist policy such as a tariff is to:

Figure 18.5 -For the good in Figure 18.5, with free trade, the people in the country will buy:

The production possibilities curve represents the set of all: