Question 1

Which of the following is a valid counterargument to a call for higher tariffs "to save U.S. jobs"?

Accepted Answer

The counterargument that imports may eliminate some jobs but also create others suggests that higher tariffs may not necessarily be effective in saving U.S. jobs. Additionally, higher tariffs may lead to retaliation from other countries, which could harm U.S. businesses and workers.

Question 2

Accepted Answer

The demand curve for this product is downward sloping, which means that as the price increases, the quantity demanded decreases. Based on the given information, the highest price that will result in any units being sold is $8. And among the answer choices that offer a price of $8, Option B provides the highest quantity demanded of 70 units. Therefore, B is the best choice.

Question 3

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Accepted Answer

The Smoot-Hawley Tariff Act of 1930 raised U.S. tariffs on over 20,000 imported goods, triggering a global trade war as other countries retaliated. This escalated the Great Depression by reducing international trade and worsening economic conditions worldwide.

Question 4

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity Demanded } \
\text { Domestically }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity Supplied } \
\text { Domestically }
\end{array} \
\hline 1,400 & \$ 10 & 2,200 \
\hline 1,600 & 9 & 2,000 \
\hline 1,800 & 8 & 1,800 \
\hline 2,000 & 7 & 1,600 \
\hline 2,200 & 6 & 1,400 \
\hline 2,400 & 5 & 1,200 \
\hline
\end{array}$$ Refer to the accompanying table for a certain product's market in Econland. Assume that the world price of the product is $6. What would be the difference in the total revenue received by foreign
Producers after a quota of 400 units is imposed, compared against the total revenue received by
Foreign producers when a $1 per unit tariff is paid?

Accepted Answer

With a world price of $6, without any trade barriers, Econland would demand 2,200 units but only supply 1,400 units domestically, leading to an import of 800 units. With a quota limiting imports to 400 units, foreign producers can sell 400 units at the world price of $6, generating $2,400 in revenue. With a $1 tariff, the domestic price rises to $7, leading to a demand of 2,000 units and a domestic supply of 1,600 units, resulting in 400 units imported. However, the revenue for foreign producers is still $6 per unit (world price) for 400 units, totaling $2,400, but they also pay $400 in tariffs ($1 per unit for 400 units), making their net revenue without considering the tariff payment. The difference in revenue is not directly due to the tariff payment itself but rather how the quota can potentially allow for a price increase above the world price due to limited supply, which is not captured in the given scenario. Thus, the explanation provided does not accurately reflect a direct comparison based on the given data and assumptions. The correct analysis should focus on the impact of the quota and tariff on quantities and prices directly provided or implied by the scenario.

Question 5

From an economic perspective, studies of the costs of trade barriers show that they

Accepted Answer

Multiple economic studies have consistently found that the costs of trade barriers, such as tariffs and quotas, far exceed their benefits for society as a whole. This is because trade barriers not only raise prices for consumers but also reduce overall economic efficiency by limiting competition and reducing the incentives for innovation and specialization. Additionally, retaliatory trade barriers from other countries can harm domestic producers that rely on exports.

Question 6

The basic difference in the economic effects of a tariff compared with a quota is that a

Accepted Answer

A tariff allows for the possibility of increased imports if there is an increase in demand, as it is a tax on imports that can be surpassed if consumers are willing to pay the higher price. In contrast, a quota sets a hard limit on the amount that can be imported, regardless of demand changes.

Question 7

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American ﬁrms." This quotation would be most closely associated with
Which protectionist argument?

Accepted Answer

The quotation talks about preventing foreign countries from selling their goods in our nation at a cost lower than their cost price, which is known as dumping. This is a key argument made by protectionists who advocate for protection against dumping in order to save domestic firms.

Question 8

Which is a valid counterargument to the infant industry argument for protective tariffs?

Accepted Answer

The counterargument states that it is difficult to determine which infant industries will become mature industries with a comparative advantage. Therefore, protective tariffs may end up protecting industries that may not become competitive in the future, resulting in more harm than good for the economy.

Question 9

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Accepted Answer

While tariffs or quotas may protect certain industries or jobs, they also have the potential to disrupt overall trade and alter the composition of domestic employment without necessarily increasing the overall level of domestic employment. This is because other countries may respond with their own trade barriers, leading to a decrease in exports and potentially causing a shift in employment from export-oriented industries to industries that serve the domestic market.

Question 10

Accepted Answer

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Question 11

Common arguments often raised to present the case for protectionism include the following, except

Accepted Answer

Protectionism aims to limit imports to protect domestic industries, which would result in an increase in the price of the product to consumers. It is not intended to reduce the price of the product. Instead, it is meant to shield domestic industries against competition from foreign products.

Question 12

Accepted Answer

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Question 13

Accepted Answer

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Question 14

Which of the following is a valid counterargument to the call for higher tariffs to save U.S. jobs?

Accepted Answer

This counterargument highlights the contradiction in wanting to increase tariffs to protect domestic jobs while also wanting to maintain export markets. It shows that protectionism is not sustainable in the long run, and instead, trade policies should be focused on mutual benefits and cooperation among nations. A, C, and D are not valid counterarguments as they either support protectionism or are unrelated to the topic.

Question 15

The following are commonly used arguments for protection against imports, except

Accepted Answer

Arguments for protection against imports typically include self-sufficiency and diversification for stability, protection against dumping, and infant industry protection. Price and profit maintenance, however, is not commonly cited as a justification for import protection in economic policy discussions. It is more related to internal market controls and anti-competitive practices rather than a rationale for trade barriers.

Question 16

The use of tariffs and quotas for trade protection results in

Accepted Answer

The use of tariffs and quotas for trade protection reduces competition and limits trade, which results in less efficiency in the economy. This can lead to higher prices for consumers and less revenue for the government due to decreased international trade. Additionally, it may result in an increase in rent-seeking activity as businesses seek protectionist policies to gain a competitive advantage.

Question 17

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Accepted Answer

Imposing tariffs to increase domestic employment may lead to retaliation from foreign nations in the form of their own tariffs, which could harm international trade and potentially lead to a trade war. A decrease in consumer prices is unlikely, as tariffs would make foreign goods more expensive and reduce competition, leading to higher prices. While tariffs may initially increase the number of jobs in some industries, it may also lead to job losses in other industries and overall economic inefficiencies. The tariff rates of foreign nations are unlikely to decrease in response to domestic tariffs.

Question 18

Accepted Answer

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Question 19

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Accepted Answer

Wage rates in a nation are largely determined by productivity, not trade tariffs. This means that if a nation can be more productive and efficient, its wages will increase regardless of trade tariffs, and if a nation is not productive and efficient, its wages will decrease regardless of trade tariffs. Therefore, using tariffs to protect high wages from cheap foreign labor might not be effective in the long term.

Question 20

Dumping is the sale of a product in a foreign market

Accepted Answer

Dumping refers to the practice of selling goods and services in a foreign market at a price below their domestic price or cost of production, which can harm domestic producers and lead to trade disputes. This practice is often seen as an unfair trade practice and is prohibited under international trade laws.

Quiz 20: International Trade

Which of the following is a valid counterargument to a call for higher tariffs "to save U.S. jobs"?

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

From an economic perspective, studies of the costs of trade barriers show that they

The basic difference in the economic effects of a tariff compared with a quota is that a

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American ﬁrms." This quotation would be most closely associated with Which protectionist argument?

Which is a valid counterargument to the infant industry argument for protective tariffs?

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Common arguments often raised to present the case for protectionism include the following, except

Which of the following is a valid counterargument to the call for higher tariffs to save U.S. jobs?

The following are commonly used arguments for protection against imports, except

The use of tariffs and quotas for trade protection results in

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Dumping is the sale of a product in a foreign market