Question 1

Who benefits from an import quota on a good?

Accepted Answer

Domestic producers of the good benefit from an import quota because it limits the amount of foreign competition they face, potentially allowing them to charge higher prices and sell more of their product domestically.

Question 2

Lowering the tariff on imported ethanol

Accepted Answer

Lowering the tariff on imported ethanol makes it cheaper for importers to bring ethanol into the country, which typically leads to an increase in the quantity of ethanol imported. This is because the lower cost of importing ethanol makes it more competitive against domestically produced ethanol, assuming demand remains constant or increases.

Question 3

An Australian tariff on textiles would _______ Australian clothing prices and _______ jobs in the Australian textile industry.

Accepted Answer

A tariff on textiles would make imported textiles more expensive, leading to higher clothing prices. It would also protect the domestic textile industry from foreign competition, potentially increasing jobs.

Question 4

In poorer countries, free trade _______ the demand for labour in these countries and _______ the wages paid in these countries.

Accepted Answer

Free trade often leads to an increase in demand for labor in poorer countries as these countries can export goods in which they have a comparative advantage. This increased demand for labor typically leads to higher wages.

Question 5

An import quota is a

Accepted Answer

An import quota is a government-imposed restriction on the quantity of a specific good that can be imported. This is typically done to protect domestic industries and prevent foreign competition from flooding the market with cheaper goods. Quotas can be imposed on a specific country, or on all countries, and are often used in combination with other trade policies such as tariffs.

Question 6

A difference between a quota and a tariff is that

Accepted Answer

A tariff is a tax on imports, which generates revenue for the government. In contrast, a quota is a limit on the quantity of goods that can be imported, which does not directly generate revenue for the government.

Question 7

The figure above shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In the figure above, with international trade, _______ helicopters per year are produced in the United States.

Accepted Answer

The answer of  The figure above shows the market...

Question 8

Dumping occurs when a foreign firm

Accepted Answer

Dumping occurs when a foreign firm sells its exports at a lower price than its cost of production, often to gain market share in a foreign market.

Question 9

Who benefits from a tariff on a good?

Accepted Answer

Domestic producers of the good benefit from a tariff on a good because it makes foreign products more expensive, reducing competition and potentially increasing sales for domestic producers.

Question 10

A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will _______, producer surplus will _______, and total surplus will _______.

Accepted Answer

When a country opens up to trade and becomes an importer of a good like sugar, consumer surplus increases because consumers now have access to sugar at lower prices due to international competition. Producer surplus decreases because domestic producers face tougher competition from abroad, leading to lower prices and profits for them. Total surplus increases because the gains to consumers from lower prices and increased choices more than offset the losses to domestic producers, and the economy benefits from more efficient resource allocation.

Question 11

Increasing a tariff will _______ the domestic quantity consumed of the good, while _______ the domestic production of the good.

Accepted Answer

Increasing a tariff on an imported good makes the good more expensive for domestic consumers, which typically leads to a decrease in the quantity consumed domestically. At the same time, the higher price for the imported good can make domestically produced goods more competitive, leading to an increase in domestic production.

Question 12

Japan was accused of dumping in the steel industry within the United States when it

Accepted Answer

Dumping occurs when a country or company exports a product at a price lower than the price it normally charges in its home market or below its cost of production. In this case, Japan was accused of dumping because it sold steel in the United States at a price below its cost of production.

Question 13

When Australia exports a good, the amount of the _______ in Australian consumer surplus is _______
The amount of the _______ in Australian producer surplus.

Accepted Answer

When Australia exports a good, domestic consumers face higher prices, leading to a decrease in consumer surplus. However, producers benefit from higher prices and increased sales, resulting in an increase in producer surplus that is typically larger than the decrease in consumer surplus.

Question 14

When a firms "dumps" some of its products in another country, it

Accepted Answer

Dumping involves selling goods in a foreign market at a price lower than the cost of production, often to gain market share or eliminate surplus stock. This practice can harm domestic industries in the importing country.

Question 15

A tariff is

Accepted Answer

A tariff is essentially a tax imposed by a government on goods that are imported into a country. This is done to increase the cost of imported goods and thus make domestic products more competitive in comparison. Options A, C, and D describe other forms of trade barriers such as quotas and export limits, not tariffs.

Question 16

Consider a market that is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade, then in this market

Accepted Answer

When the country opens up to international trade and the world price is lower than the domestic equilibrium price, domestic consumers will prefer to buy the good at the cheaper world price. This leads to an increase in imports, a decrease in the domestic price to match the world price, and a decrease in the quantity supplied by domestic producers as they cannot compete with the lower world price.

Question 17

The figure above shows the market for shirts in Australia, where D is the Australian demand curve and S is the Australian supply curve. The world price is $20 per shirt. Australia imposes a tariff on imported shirts of $4 per shirt.
-In the figure above, with the tariff Australian consumers purchase _______ million shirts per year.

Accepted Answer

The answer of  The figure above shows the market...

Question 18

A tariff hurts

Accepted Answer

Tariffs are taxes on imported goods. While they can protect domestic industries from foreign competition, they primarily hurt consumers by increasing the prices of imported goods. This makes consumers pay more for certain products.

Question 19

The figure above shows the market for shirts in Australia, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt.
-In the figure above, with international trade Australian consumers buy _______ million shirts per year.

Accepted Answer

With international trade, Australian consumers will buy at the world price where their demand is highest. The quantity at the world price level indicates the total consumption, which is 48 million shirts per year.

Question 20

The winners from a Japanese tariff on imported cars are
I. Japanese car producers
II. Japanese car consumers
III. The Japanese government

Accepted Answer

Japanese car producers benefit from reduced competition, allowing them to potentially increase market share and prices. The Japanese government benefits from the revenue generated by the tariff. Japanese car consumers, however, face higher prices and reduced choices, making them losers in this scenario.

Quiz 7: Global Markets in Action

Who benefits from an import quota on a good?

Lowering the tariff on imported ethanol

An Australian tariff on textiles would _ Australian clothing prices and _ jobs in the Australian textile industry.

In poorer countries, free trade _ the demand for labour in these countries and _ the wages paid in these countries.

An import quota is a

A difference between a quota and a tariff is that

Dumping occurs when a foreign firm

Who benefits from a tariff on a good?

A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will ___, producer surplus will _, and total surplus will _____.

Increasing a tariff will _ the domestic quantity consumed of the good, while _ the domestic production of the good.

Japan was accused of dumping in the steel industry within the United States when it

When Australia exports a good, the amount of the ___ in Australian consumer surplus is _ The amount of the _____ in Australian producer surplus.

When a firms "dumps" some of its products in another country, it

A tariff is

Consider a market that is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade, then in this market

A tariff hurts

The figure above shows the market for shirts in Australia, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. -In the figure above, with international trade Australian consumers buy _______ million shirts per year.

The winners from a Japanese tariff on imported cars are I. Japanese car producers II. Japanese car consumers III. The Japanese government

Quiz 7: Global Markets in Action

Who benefits from an import quota on a good?

Lowering the tariff on imported ethanol

An Australian tariff on textiles would _______ Australian clothing prices and _______ jobs in the Australian textile industry.

In poorer countries, free trade _______ the demand for labour in these countries and _______ the wages paid in these countries.

An import quota is a

A difference between a quota and a tariff is that

Dumping occurs when a foreign firm

Who benefits from a tariff on a good?

A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will _______, producer surplus will _______, and total surplus will _______.

Increasing a tariff will _______ the domestic quantity consumed of the good, while _______ the domestic production of the good.

Japan was accused of dumping in the steel industry within the United States when it

When Australia exports a good, the amount of the _______ in Australian consumer surplus is _______ The amount of the _______ in Australian producer surplus.

When a firms "dumps" some of its products in another country, it

A tariff is

Consider a market that is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade, then in this market

A tariff hurts

The figure above shows the market for shirts in Australia, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. -In the figure above, with international trade Australian consumers buy _______ million shirts per year.

The winners from a Japanese tariff on imported cars are I. Japanese car producers II. Japanese car consumers III. The Japanese government

An Australian tariff on textiles would _ Australian clothing prices and _ jobs in the Australian textile industry.

In poorer countries, free trade _ the demand for labour in these countries and _ the wages paid in these countries.

A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will ___, producer surplus will _, and total surplus will _____.

Increasing a tariff will _ the domestic quantity consumed of the good, while _ the domestic production of the good.

When Australia exports a good, the amount of the ___ in Australian consumer surplus is _ The amount of the _____ in Australian producer surplus.