Question 1

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the area that represents revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?
A) I + J
B) E + I + J + M
C) I + J + K+ L
D) G + H + I + J

Accepted Answer

The area that represents revenue to foreign producers who are granted permission to sell in the U.S. market when there is a quota is the sum of the areas I, J, K, and L.

Question 2

Figure 9-4
  
Suppose the U.S. government imposes a $0.50 per pound tariff on sugar imports. Figure 9-4 shows the demand and supply curves for sugar and the impact of this tariff.
-Use Figure 9-4 to answer questions a-i.
a.Following the imposition of the tariff,what is the price that domestic consumers must now pay and what is the quantity purchased?
b.Calculate the value of consumer surplus with the tariff in place.
c.What is the quantity supplied by domestic sugar producers with the tariff in place?
d.Calculate the value of producer surplus received by U.S.sugar producers with the tariff in place.
e.What is the quantity of sugar imported with the tariff in place?
f.What is the amount of tariff revenue collected by the government?
g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff.
h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government?
i.Calculate the deadweight loss due to the tariff.

Accepted Answer

The answer of Figure 9-4
  
Suppose the U.S. government...

Question 3

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by domestic producers?
A) Domestic consumption equals 28 million pounds of which 18 million pounds are produced by domestic producers.
B) Domestic consumption equals 40 million pounds of which 22 million pounds are produced by domestic producers.
C) Domestic consumption equals 34 million pounds of which 16 million pounds are produced by domestic producers.
D) Domestic consumption equals 34 million pounds of which 18 million pounds are produced by domestic producers.

Accepted Answer

The intersection point of the domestic supply curve and the demand curve indicates the quantity consumed in the domestic market, which is 34 million pounds. The vertical distance between the supply curve and the quota line (18 million pounds) represents the amount produced by domestic producers. Therefore, the portion of domestic consumption supplied by domestic producers is 18 million out of 34 million pounds. Thus, the answer is D.

Question 4

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the area of domestic producer surplus without a quota?
A) C
B) C + B
C) A + B + C
D) A + B + C + D

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 5

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the area of consumer surplus after the imposition of the quota?
A) A + G + H
B) G + H + E + I+ J + M
C) G + H
D) A

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 6

A tariff is a numerical limit on the quantity of a good that can be imported.

Accepted Answer

A tariff is a tax on imported goods, not a limit on the quantity that can be imported.

Question 7

In order to avoid the imposition of other types of trade barriers,foreign producers will sometimes agree to voluntary export restraints.With voluntary export restraints,foreign producers
A) agree to meet specific quality standards required by the importing country.
B) limit their exports to a country.
C) pay a tax on all products they export.
D) must agree to import an equal quantity of products that they export.

Accepted Answer

Voluntary export restraints require foreign producers to limit the amount of exports to a specific country in order to avoid the imposition of other trade barriers such as tariffs or quotas. They are not required to meet specific quality standards, pay a tax, or agree to import an equal quantity of products.

Question 8

Distinguish between a voluntary export restraint and a quota.

Accepted Answer

The answer of Distinguish between a voluntary export restraint and...

Question 9

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the area of domestic producer surplus after the imposition of a quota?
A) B
B) B + C
C) B + E + I + J + M
D) E + I + J + M

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 10

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.If there was no quota,how many pounds of peanuts would domestic consumers purchase and what quantity would be imported?
A) 28 million pounds of which 18 million pounds would be imported
B) 40 million pounds of which 12 million pounds would be imported
C) 40 million pounds of which 30 million pounds would be imported
D) 40 million pounds all of which would be imported

Accepted Answer

Without the quota, domestic consumers would purchase 40 million pounds of peanuts, which is the quantity where the domestic demand curve intersects with the world supply curve. At this quantity, the price would be $0.20 per pound, which is the same price as with the quota. However, in the absence of the quota, the quantity imported would be 30 million pounds, which is the difference between the domestic demand and domestic supply at the world price of $0.20 per pound.

Question 11

Which of the following is the best example of a quota?
A) a limit imposed on the number of sport utility vehicles that the United States can import from Japan
B) a subsidy granted by the U.S. government to domestic garment manufacturers so they can compete more effectively with foreign garment manufacturers
C) a tax placed on all sport utility vehicles sold in the domestic market
D) a $5,000 per-car fee imposed on all sport utility vehicles imported into the United States

Accepted Answer

A quota is a limit on the quantity of goods that can be imported into a country. In this case, the limit is on the number of sport utility vehicles that can be imported from Japan, making A the best example of a quota. Options B, C, and D are not examples of quotas - B is a subsidy, C is a tax, and D is a specific fee imposed on imported cars.

Question 12

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called
A) a non-tariff trade barrier.
B) an export quota.
C) an import quota.
D) a voluntary export restraint.

Accepted Answer

The answer of An agreement negotiated by two countries that...

Question 13

The main purpose of most tariffs and quotas is to
A) raise revenue for the government.
B) reduce the prices consumers pay for goods and services.
C) reduce the foreign competition that domestic firms face.
D) improve the quality of goods and services imported into the country.

Accepted Answer

Tariffs and quotas are usually imposed to protect domestic industries from foreign competition by making imported goods more expensive, therefore reducing their demand and giving an advantage to domestic producers. The main purpose is not to raise revenue or lower prices for consumers, and it does not necessarily directly relate to the quality of goods and services imported.

Question 14

Figure 9-5
  
Bragabong currently both produces and imports almonds. The government of Bragabong decides to restrict international trade in almonds by imposing a quota that allows imports of only 10 million kilos each year. Figure 9-5 shows the estimated demand and supply curves for almonds in Bragabong and the results of imposing the quota.
-Use Figure 9-5 to answer questions a-j .
a.If there is no quota what is the domestic price of almonds and what is the quantity of almonds demanded by consumers?
b.If there is no quota how many kilos of almonds would domestic producers supply and what quantity would be imported?
c.If there is no quota what is the dollar value of consumer surplus?
d.If there is no quota what is the dollar value of producer surplus received by producers in Bragabong?
e.If there is no quota what is the revenue received by foreign producers who supply almonds to Bragabong?
f.With a quota in place what is the price that consumers of Bragabong must now pay and what is the quantity demanded?
g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off?
h.With a quota in place what is the dollar value of producer surplus received by producers in Bragabong? Are domestic producers better off?
i.Calculate the revenue to foreign producers who are granted permission to sell in Bragabong after the imposition of the quota.
j.Calculate the deadweight loss as a result of the quota.

Accepted Answer

The answer of Figure 9-5
  
Bragabong currently both produces...

Question 15

Disagreements about whether the U.S.government should regulate international trade
A) began during the Great Depression.
B) began after World War I when government officials no longer believed in isolationism.
C) date back to the beginning of the country.
D) did not occur until the end of the Mexican War in 1848.

Accepted Answer

Disagreements about regulating international trade date back to the beginning of the country, with debates between Alexander Hamilton and Thomas Jefferson during the early years of the United States.

Question 16

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the area that represents the deadweight loss as a result of the quota?
A) G + H
B) G + H + I + J
C) E + I + J + M
D) E + M

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Question 17

Under trade agreements signed with other countries,the United States is allowed to impose tariffs on imports if foreign firms are selling products in the United States at below their production cost.This is exactly what occurred when the United States raised the tariff on wire hangers imported from China.This tariff
A) increased wages in the Chinese wire hanger industry and increased imports of Chinese wire hangers to the United States.
B) decreased imports of chinese wire hangers to the United States and increased exports of U.S. wire hangers to China.
C) saved some jobs in the U.S. wire hanger industry, but increased costs and possibly cost jobs in the U.S. dry cleaning industry.
D) increased costs in the Chinese wire hanger industry and decreased costs in the U.S. wire hanger industry.

Accepted Answer

The tariff on wire hangers imported from China saved some jobs in the U.S. wire hanger industry, but it increased costs and possibly cost jobs in the U.S. dry cleaning industry. This is because the increased cost of imported wire hangers would lead to higher prices for U.S. dry cleaners who rely on cheap imported hangers. Additionally, with decreased imports of Chinese wire hangers, U.S. consumers would have fewer options and may pay higher prices for hangers overall.

Question 18

________ raised average tariff rates by over 50 percent in the United States in 1930.
A) The GATT
B) The WTO
C) NAFTA
D) The Smoot-Hawley Tariff

Accepted Answer

The Smoot-Hawley Tariff, passed in 1930, raised average tariff rates by over 50 percent in the United States. The GATT and WTO are international organizations aimed at reducing trade barriers, while NAFTA is a trade agreement between the United States, Canada, and Mexico, and was not established until 1994.

Question 19

The U.S.economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Accepted Answer

Eliminating tariffs and quotas would reduce the costs of imported goods, lowering prices for consumers and businesses. This would increase demand for those goods, leading to increased production and employment in the U.S. Additionally, it would make U.S. exports more competitive in foreign markets, leading to increased sales and economic growth. Even if other countries do not reduce their tariffs and quotas, the U.S. economy would still benefit from this increased trade and economic activity.

Question 20

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.Without the quota,the domestic price of peanuts equals the world price which is $2.00 per pound.What is the quantity of peanuts supplied by domestic producers in the absence of a quota?
A) 10 million pounds
B) 28 million pounds
C) 30 million pounds
D) 40 million pounds

Accepted Answer

The answer of Figure 9-3
  
Since 1953 the United...

Quiz 7: Comparative Advantage and the Gains From International Trade

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area that represents revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by domestic producers?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area of domestic producer surplus without a quota?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area of consumer surplus after the imposition of the quota?

A tariff is a numerical limit on the quantity of a good that can be imported.

In order to avoid the imposition of other types of trade barriers,foreign producers will sometimes agree to voluntary export restraints.With voluntary export restraints,foreign producers

Distinguish between a voluntary export restraint and a quota.

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area of domestic producer surplus after the imposition of a quota?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.If there was no quota,how many pounds of peanuts would domestic consumers purchase and what quantity would be imported?

Which of the following is the best example of a quota?

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

The main purpose of most tariffs and quotas is to

Disagreements about whether the U.S.government should regulate international trade

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area that represents the deadweight loss as a result of the quota?

________ raised average tariff rates by over 50 percent in the United States in 1930.

The U.S.economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.