Question 1

The difference between the effects of an import quota and a tariff is that _____

Accepted Answer

Both import quotas and tariffs can lead to higher domestic prices and reduce the quantity of imports. However, the key difference lies in the distribution of the decrease in consumer surplus. Under a quota, the limited import licenses can create additional profits for foreign producers who receive them, allowing them to capture part of the consumer surplus. In contrast, a tariff generates revenue for the domestic government through the taxes collected on imported goods, redistributing part of the consumer surplus to the government instead of foreign producers.

Question 2

Exhibit 17.6
 
-Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then _____

Accepted Answer

The answer of Exhibit 17.6
 
-Refer to Exhibit 17.6, which...

Question 3

Which of the following is not a type of trade restriction?

Accepted Answer

Economies of scale refer to the cost advantages a company gains by producing on a large scale, and they are not a type of trade restriction. The other options listed involve government intervention in trade, either through offering incentives or implementing regulations that restrict imports or exports.

Question 4

If quota rights accrue to foreigners, then _____

Accepted Answer

Quota rights that accrue to foreigners limit the quantity of imports by foreign producers. This, in turn, creates an artificial shortage in the domestic market, which allows domestic producers to increase their prices as they have less competition from foreign producers. As a result, the domestic economy is worse off with a quota than with a tariff since tariffs result in revenue for the government and create no shortage in the domestic market. Therefore, choice B is correct.

Question 5

The international treaty established to negotiate lower trade restrictions is known as the _____

Accepted Answer

The international treaty established to negotiate lower trade restrictions is known as the General Agreement on Tariffs and Trade (GATT). The other choices are not accurate names of international treaties or organizations related to free trade.

Question 6

Which of the following is a type of trade restriction?

Accepted Answer

Domestic content requirements mandate that a certain percentage of a product's components must be made domestically, thereby restricting foreign competition.

Question 7

Recent research on the cost of protectionism indicates that international trade barriers _____

Accepted Answer

Recent research shows that protectionist policies can slow down the introduction of new goods and technologies. When countries protect their domestic industries with trade barriers, it reduces competition and can discourage innovation, resulting in slower advancements in technology.

Answer: E  
 When trade barriers are implemented, the opportunity cost of production increases because domestic producers have to use more of their resources to produce goods that could have been obtained at a lower cost from foreign producers if trade barriers were not in place. As a result, the cost of production goes up, and this increased expense is passed on to consumers, leading to higher prices.

Question 8

Which of the following is not correct about quotas?

Accepted Answer

Quotas often lead to lobbying by various interest groups, including domestic producers and foreign exporters, to maintain or adjust the quotas to their benefit. However, the statement that lobbying efforts are vigorously fought by domestic consumers is not accurate. In many cases, the general public, or domestic consumers, may not be as organized or vocal in lobbying efforts compared to industry groups, making this statement incorrect.

Question 9

Exhibit 17.6
 
-Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the decrease in consumer surplus can be represented by area(s) _____

Accepted Answer

The answer of Exhibit 17.6
 
-Refer to Exhibit 17.6, which...

Question 10

Which of the following is a type of trade restriction?

Accepted Answer

Export subsidies are a type of trade restriction as they provide an advantage to domestic producers by encouraging them to export their goods. This can create an unfair advantage over foreign producers and limit competition in the global market.

Question 11

Suppose the U.S. government is considering imposing either a tariff that would result in imports falling to 5 million units per year or an import quota of 5 million units per year. Which of the following would be true in such a case?

Accepted Answer

The tariff revenue would indeed go to the U.S. government, providing it with additional income. In contrast, the benefits of quotas, such as increased prices, may accrue to foreign producers who receive the limited licenses to export to the U.S. market.

Question 12

Trade restrictions _____

Accepted Answer

Trade restrictions slow economic progress by limiting access to foreign markets and increasing the cost of imports. They can lead to retaliation from trading partners, reducing overall economic growth and potentially leading to a trade war. Additionally, trade restrictions limit competition, leading to decreased efficiency in production and higher prices for consumers.

Question 13

Exhibit 17.6
 
-Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, the welfare loss resulting from higher domestic production costs is represented by area(s) _____

Accepted Answer

The answer of Exhibit 17.6
 
-Refer to Exhibit 17.6, which...

Question 14

A trade agreement reached among more than two countries is _____

Accepted Answer

A trade agreement reached among more than two countries is called a multilateral agreement.

Question 15

Which of the following is not a type of trade restriction?

Accepted Answer

All of the other options represent types of trade restrictions - A is an import ban, B is a requirement for technology transfer, C is a regulatory barrier, and D is a health-based import ban. E, on the other hand, represents the opposite - allowing imports rather than restricting them.

Question 16

Which of the following is a type of trade restriction?

Accepted Answer

Health, safety or technical standards are a type of trade restriction as they place regulations on imports in order to protect domestic industries and consumers.

Question 17

Which of the following is a type of trade restriction?

Accepted Answer

Low-interest loans to foreign buyers are a form of trade restriction known as export financing. This involves providing financing to foreign buyers, making it easier for them to purchase goods from the exporting country while making it harder for their domestic industries to compete.

Question 18

A trade agreement between two countries is known as _____

Accepted Answer

A trade agreement between two countries is known as a bilateral agreement.

Question 19

Which of the following is true of an export subsidy?

Accepted Answer

Export subsidies limit free trade by artificially lowering the price of goods for foreign buyers, giving domestic producers an unfair advantage over international competitors.

Question 20

Exhibit 17.6
 
-Refer to Exhibit 17.6, which shows the demand for and the domestic supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the gain of the foreign exporters with quota rights is represented by area(s) _____

Accepted Answer

The gain of foreign exporters with quota rights is represented by the difference between the world price ($2.00) and the domestic price with the quota ($2.50). This difference is shown by the area between points d and c, which is represented by areas c and d in Exhibit 17.6. Thus, the gain is represented by choice E.

Quiz 17: International Trade.

The difference between the effects of an import quota and a tariff is that _____

Exhibit 17.6 -Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then _____

Which of the following is not a type of trade restriction?

If quota rights accrue to foreigners, then _____

The international treaty established to negotiate lower trade restrictions is known as the _____

Which of the following is a type of trade restriction?

Recent research on the cost of protectionism indicates that international trade barriers _____

Which of the following is not correct about quotas?

Exhibit 17.6 -Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the decrease in consumer surplus can be represented by area(s) _____

Which of the following is a type of trade restriction?

Suppose the U.S. government is considering imposing either a tariff that would result in imports falling to 5 million units per year or an import quota of 5 million units per year. Which of the following would be true in such a case?

Trade restrictions _____

A trade agreement reached among more than two countries is _____

Which of the following is not a type of trade restriction?

Which of the following is a type of trade restriction?

Which of the following is a type of trade restriction?

A trade agreement between two countries is known as _____

Which of the following is true of an export subsidy?