Question 1

In 1845, French economist Frédéric Bastiat famously compared tariffs to blocking out the sun since both low-priced imports and free sunlight discourage domestic industry. What part of the trade diagram best describes the encouragement of domestic industry if Bastiat's "blockade" was taken seriously?

Accepted Answer

The answer of In 1845, French economist Frédéric Bastiat famously...

Question 2

Which of the following statements describes reasons why free trade is beneficial for the United States?

Accepted Answer

All of the statements are correct. Free trade increases competition, which leads to lower prices for consumers and greater efficiency for producers. By allowing businesses to specialize in certain products, they can become more efficient and productive, ultimately leading to lower costs and increased output. Additionally, free trade encourages innovation and investment, which can lead to economic growth and job creation. Overall, free trade can bring many benefits to the United States and its trading partners.

Question 3

Use the following to answer questions: Figure: International Trade 3 
-(Figure: International Trade 3) Refer to the figure. If the government in this diagram eliminates all imports with a tariff, the value of the lost gains from trade is:

Accepted Answer

The answer of Use the following to answer questions: Figure:...

Question 4

Which statement provides an explanation for tariffs decreasing market efficiency?

Accepted Answer

The answer of Which statement provides an explanation for tariffs...

Question 5

Who does protectionism hurt?

Accepted Answer

Protectionism hurts both international producers and domestic consumers. By imposing tariffs, quotas, and other barriers to trade, the price of imported goods increases, making them less competitive compared to domestic goods. This leads to higher profits for domestic producers but higher costs for domestic consumers, who have limited options to choose from. Moreover, protectionism can prompt retaliation from other countries, hurting international producers that rely on exports.

Question 6

Restricting the importation of foreign automobiles will:

Accepted Answer

Restricting the importation of foreign automobiles will reduce competition in the market, which leads to a higher price for both foreign and domestic automobiles. The domestic producers will have less pressure to keep their prices competitive since they will have a reduced market competition. Therefore, there will be an increase in prices for both domestic and foreign automobiles.

Question 7

Use the following to answer questions: Figure: International Trade 3 
-(Figure: International Trade 3) Refer to the figure. If the government in this diagram eliminates all imports with a tariff, the value of the wasted resources will be:

Accepted Answer

The answer of Use the following to answer questions: Figure:...

Question 8

The losses from trade protection include:

Accepted Answer

Trade protection causes both deadweight loss, as resources are not efficiently allocated, and wasted resources, as resources are diverted from more productive uses towards protected industries.

Question 9

The U.S. government's policies on foreign-made sugar:

Accepted Answer

The answer of The U.S. government's policies on foreign-made sugar:
...

Question 10

When the government increases tariffs:

Accepted Answer

When the government increases tariffs, production switches from low-cost foreign producers to high-cost domestic producers, causing resources to be wasted. This is because domestic producers may not be as efficient or have the same economies of scale as foreign producers, leading to higher production costs and lower overall productivity. This can lead to a reduction in trade and economic growth, and ultimately hurt both producers and consumers by raising prices and reducing competitiveness.

Question 11

______ have a similar effect upon domestic consumption levels.

Accepted Answer

Tariffs and quotas both restrict the amount of imported goods coming into a country, which can lead to an increase in domestic consumption levels as consumers turn to domestic producers for their goods. Subsidies, while also potentially impacting consumption levels, do not have as direct of an impact as tariffs and quotas. Therefore, tariffs and quotas have a more similar effect on domestic consumption levels compared to subsidies.

Question 12

According to the text, the sugar tariff wastes ______ worth of resources.

Accepted Answer

The text states that "Americans waste approximately $1.1 billion worth of resources annually because of the sugar tariff." Therefore, the correct answer is C.

Question 13

A trade quota on imports:

Accepted Answer

A trade quota on imports limits the amount of foreign goods that can enter a country, which reduces competition for domestic producers. As a result, domestic producers are able to charge higher prices for their goods, which benefits them but hurts domestic consumers who have to pay these higher prices. Therefore, a trade quota on imports benefits domestic producers and hurts domestic consumers.

Question 14

If a tariff decreases domestic consumption of a good from 230 million units to 150 million units and raises the domestic price by $1.50, given a linear domestic demand curve and a perfectly elastic world supply curve, what is the value of the unexploited gains from trade caused by decreased domestic consumption?

Accepted Answer

The answer of If a tariff decreases domestic consumption of...

Question 15

A tariff results in a higher:
I. consumer surplus.
II. producer surplus.
III. government revenue.

Accepted Answer

A tariff imposes a tax on imported goods, which increases the price for consumers and decreases the quantity demanded. This results in a decrease in consumer surplus. However, it also increases the price received by domestic producers and increases their producer surplus. Additionally, the government revenue from the tariff represents a gain to society that can be used to fund public goods or other programs. Therefore, a tariff results in higher producer surplus (II) and government revenue (III), but lower consumer surplus (not listed as an option).

Question 16

Use the following to answer questions: Figure: International Trade 4 
-(Figure: International Trade 4) Refer to the figure. If, in this figure, the government allowed free trade, consumer surplus would:

Accepted Answer

The answer of Use the following to answer questions: Figure:...

Question 17

When the world price is below the domestic price, the elimination of a tariff decreases domestic production and provides a benefit because:

Accepted Answer

When the world price is below the domestic price, domestic producers may not be able to compete with foreign producers and may reduce their production. Tariff elimination in this situation can lead to decreased domestic production, but it also frees up resources that were previously being used to produce goods that were not competitive on the world market. These resources can then be used to produce other goods and services that are more in demand domestically or can be competitive on the world market. Therefore, the benefit of tariff elimination in this situation is that it frees up resources that can be used more efficiently, leading to greater overall economic growth.

Question 18

Although domestic consumers gain more from free trade than domestic producers lose, the matter may not be that simple. Why might domestic producers also gain from free trade policies over those that impose tariffs on all goods?

Accepted Answer

Domestic producers may also benefit from lower prices on imported goods, which they could then use in their own production processes. This could lead to increased efficiency and lower costs for domestic producers, ultimately making them more competitive in the global market. Additionally, lower prices on imported goods could also translate into lower prices for consumers, which could increase demand for domestic products and benefit domestic producers.

Question 19

Eliminating tariffs on imported sugar would:

Accepted Answer

Eliminating tariffs on imported sugar would lower the price of sugar for consumers, resulting in a shift in demand from domestic sugar to imported sugar. This would cause resources to be reallocated from sugar production to higher-valued uses, which would result in a more efficient allocation of resources. While it may harm domestic sugar producers, it would benefit consumers and other industries that use sugar as an input, leading to a net gain in economic welfare.

Question 20

As a result of tariffs, domestic producers tend to:

Accepted Answer

Tariffs increase the price of imported goods, which makes domestically produced goods more competitive. This often leads to domestic producers gaining more than domestic consumers lose, as consumers are forced to pay higher prices for both domestic and imported goods.

Quiz 9: International Trade

Which of the following statements describes reasons why free trade is beneficial for the United States?

Use the following to answer questions: Figure: International Trade 3 -(Figure: International Trade 3) Refer to the figure. If the government in this diagram eliminates all imports with a tariff, the value of the lost gains from trade is:

Which statement provides an explanation for tariffs decreasing market efficiency?

Who does protectionism hurt?

Restricting the importation of foreign automobiles will:

Use the following to answer questions: Figure: International Trade 3 -(Figure: International Trade 3) Refer to the figure. If the government in this diagram eliminates all imports with a tariff, the value of the wasted resources will be:

The losses from trade protection include:

The U.S. government's policies on foreign-made sugar:

When the government increases tariffs:

______ have a similar effect upon domestic consumption levels.

According to the text, the sugar tariff wastes ______ worth of resources.

A trade quota on imports:

A tariff results in a higher: I. consumer surplus. II. producer surplus. III. government revenue.

Use the following to answer questions: Figure: International Trade 4 -(Figure: International Trade 4) Refer to the figure. If, in this figure, the government allowed free trade, consumer surplus would:

When the world price is below the domestic price, the elimination of a tariff decreases domestic production and provides a benefit because:

Although domestic consumers gain more from free trade than domestic producers lose, the matter may not be that simple. Why might domestic producers also gain from free trade policies over those that impose tariffs on all goods?

Eliminating tariffs on imported sugar would:

As a result of tariffs, domestic producers tend to: