Question 1

If the U.S.government were to impose a quota on shoes imported from Italy,the

Accepted Answer

Imposing a quota on shoes imported from Italy would reduce the total quantity of shoes purchased in the United States, as the supply of Italian shoes would be limited. This would subsequently increase the price of shoes in the United States, as demand would remain the same while supply decreases. Domestic shoe producers would benefit from the reduced competition, but consumers would face higher prices and limited options. This scenario is different from a tariff, which would generate revenue for the government from the imported shoes and would have a lesser impact on the total quantity purchased.

Question 2

The following question are based on the following graphs for men's shirts in South Korea and the United States. The exchange rate is 1,200 won equals $1.00.
 
-Under the market conditions shown in the graphs

Accepted Answer

In the graph, the supply curve for men's shirts in South Korea is to the left of the supply curve for men's shirts in the United States. This means that production costs are lower in South Korea, making it more efficient to produce men's shirts there. As a result, the United States tends to import men's shirts from South Korea rather than export to it. The price in the United States rises as it faces higher costs of importing, while the price in South Korea falls due to increased supply. Therefore, option E is the best choice.

Question 3

In general,tariffs,quotas,and other barriers to free trade

Accepted Answer

Tariffs, quotas, and other barriers to free trade protect specific interests, such as domestic producers, at the expense of overall consumer welfare. While it may create short-term benefits for protected firms and industries, in the long-run, it can decrease competitiveness and harm the economy as a whole. Therefore, these measures are generally not considered ideal trade policies.

Question 4

The windfall price increase of an imported good that results when a quota is imposed on that good accrues to

Accepted Answer

The importer who obtains the license to import the good benefits from the windfall price increase because they can sell the limited quantity at a higher price due to the restricted supply caused by the quota.

Question 5

The price of domestically produced wine in the United States is $15 per liter and the price of the same wine produced in Italy is 12 euros per liter.If the exchange rate is $.96 to the euro and no tariffs or quotas affect the good

Accepted Answer

The answer of The price of domestically produced wine in...

Question 6

Which of the following is considered the most effective barrier to trade?

Accepted Answer

Quotas limit the amount of a specific good that can be imported, making it the most effective barrier to trade as it directly limits competition from foreign producers. Tariffs, export subsidies, and licensing requirements also serve as barriers to trade, but they allow for some level of imports to enter the market. Product quality standards can also serve as a barrier to trade, but typically only affect certain industries or products rather than being a comprehensive barrier to all imports.

Question 7

The following question are based on the following graphs for men's shirts in South Korea and the United States. The exchange rate is 1,200 won equals $1.00.
 
-Under free trade,the price of men's shirts in South Korea tends toward ________ won.

Accepted Answer

Under free trade, the price in a country tends toward the world price or the price at which that good can be bought or sold internationally. Without specific data on costs, tariffs, or world prices, it's impossible to determine the exact price. However, if this question is based on a specific dataset or context where 36,000 won is identified as the equilibrium or world price for men's shirts in South Korea, then that would be the correct answer under free trade conditions.

Question 8

Under free trade,a country's producers can tell whether they have a comparative advantage in the production of a certain commodity by

Accepted Answer

Under free trade, if it is profitable for a country's producers to export a product, it indicates they have a comparative advantage in producing that commodity, as they can produce it at a lower opportunity cost compared to other countries.

Question 9

A quota is

Accepted Answer

A quota is a quantitative limit on the amount of a good that may be imported.

Question 10

For a country that uses them,the general result of tariffs and quotas is an increase in

Accepted Answer

Tariffs and quotas typically restrict the level of imports, which can lead to domestic prices increasing as domestic producers now face less competition from foreign producers.

Question 11

A tariff is a(n)

Accepted Answer

A tariff is a tax on imports that is used to raise revenue or protect domestic industries from foreign competition.

Question 12

If all tariffs were prohibitive

Accepted Answer

If all tariffs were prohibitive, it would mean that they are set so high as to effectively block imports of affected goods. This would result in the government receiving no revenue from tariffs, as no imports would be allowed. This would not result in domestic industries prospering or exports increasing, but instead would likely lead to reduced competition and higher prices for consumers.

Question 13

A secondary reason for a government to impose a tariff is to

Accepted Answer

One of the secondary reasons for a government to impose a tariff is to raise revenue. Tariffs are a form of taxation on imported goods, and the revenue generated from these tariffs can be used by the government to fund its programs and operations.

Question 14

The following question are based on the following graphs for men's shirts in South Korea and the United States. The exchange rate is 1,200 won equals $1.00.
 
-If the United States imposes a prohibitive tariff on men's shirts,the price of a man's shirt in the United States probably is

Accepted Answer

From the graph, we can see that the price of a man's shirt in the US is $40 when there is no tariff. If a prohibitive tariff is imposed, the price in the US would increase by about $14. This means the new price would be $54. Since this is above $40 and all the other answer choices, D is the best choice.

Question 15

When foreign trade is permitted,the eventual price of a given item will reflect the level where

Accepted Answer

When foreign trade is permitted, the eventual price of a given item will reflect the level where the amount one country wants to export equals the amount the other wants to import. The price will reach a point where the quantity of goods that the exporter wants to sell will be equal to the quantity of goods that the importer wants to buy, which is known as the equilibrium price.

Question 16

When a government puts a tax on an imported good that effectively stops all imports of that good,it is a(n)

Accepted Answer

A prohibitive tariff is a tax imposed on an imported good that is so high that it effectively stops all imports of that good. This can be used to protect domestic industries from foreign competition by making imported goods too expensive to be competitive in the domestic market.

Question 17

The effect of a tariff on a good in which the domestic industry does NOT have a comparative advantage is

Accepted Answer

If the domestic industry does not have a comparative advantage in producing a good, then the cost of producing that good domestically will be higher than the cost of importing it from a country where it has a comparative advantage. Placing a tariff on the imported good will increase the price for the consumers, reducing their purchasing power and lowering the nation's standard of living. It will not boost exports or create job opportunities in the domestic industry. The gains of the protected industry will just be offset by the loss of the consuming public. The presence of an absolute advantage does not affect the outcome.

Question 18

Taxes imposed on imports are called

Accepted Answer

Taxes imposed on imports are known as tariffs. Tariffs are used to increase the price of imported goods, making them less competitive and encouraging the consumption of domestically produced goods.

Question 19

The following question are based on the following graphs for men's shirts in South Korea and the United States. The exchange rate is 1,200 won equals $1.00.
 
-If the United States imposes a tariff on imported men's shirts,the price of a man's shirt in the United States probably is

Accepted Answer

The tariff will increase the cost of imported shirts, making them more expensive for consumers. As a result, the price of a man's shirt in the United States will likely increase to between $30 and $40.

Question 20

Cash rebates,tax exemptions,preferential financing,and insurance arrangements are all examples of

Accepted Answer

Cash rebates, tax exemptions, preferential financing, and insurance arrangements are all examples of export subsidies. These subsidies are provided by governments to domestic companies to help them compete in global markets by reducing their costs and/or increasing their revenues. Export subsidies are considered controversial by some because they can distort international trade and create unfair advantages for certain companies or industries.

Quiz 27: International Trade