Question 1

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.With a quota in place,what is the quantity supplied by domestic producers?

Accepted Answer

Looking at the intersection of the domestic supply curve and the quota line, we can see that the quantity supplied by domestic producers with the quota is 18 million pounds.

Question 2

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.Without the quota,the domestic price of peanuts equals the world price which is $2.00 per pound.What is the quantity of peanuts demanded by domestic consumers in the absence of a quota?

Accepted Answer

In the absence of a quota, the domestic price aligns with the world price of $2.00 per pound. At this price, domestic consumers demand 40 million pounds of peanuts.

Question 3

A voluntary export restraint is an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country.

Accepted Answer

A voluntary export restraint is indeed an agreement between two countries that limits the quantity of a good that one country can import from the other country.

Question 4

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.What is the value of domestic producer surplus after the imposition of a quota?

Accepted Answer

The answer of Figure 7-3  Since 1953 the United...

Question 5

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.What is the value of domestic producer surplus without a quota?

Accepted Answer

The answer of Figure 7-3  Since 1953 the United...

Question 6

Members of Congress promising to support each other's legislation is known as

Accepted Answer

Promising to support each other's legislation in Congress is known as logrolling. This practice involves exchanging political favors or support for separate bills or measures, often resulting in the passage of legislation that might not have succeeded on its own merits.

Question 7

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Accepted Answer

The answer of Figure 7-3  Since 1953 the United...

Question 8

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

Accepted Answer

A quota is a restriction on the quantity of a good that can be imported, usually enforced through a numerical limit.

Question 9

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.What is the value of the deadweight loss as a result of the quota?

Accepted Answer

The answer of Figure 7-3  Since 1953 the United...

Question 10

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.What is the value of revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

Accepted Answer

The answer of Figure 7-3  Since 1953 the United...

Question 11

The United States 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 in the United States would lower prices for consumers, increase competition, and boost economic growth as businesses can access cheaper raw materials and intermediate goods. This in turn would create new job opportunities and increase exports. Even if other countries do not reciprocate by reducing their tariffs and quotas, the United States would still benefit from such measures.

Question 12

Which of the following statements is true?

Accepted Answer

Economic efficiency would be increased if the United States eliminates tariffs and quotas even if other countries do not reduce their trade restrictions. By reducing tariffs and quotas, the United States can increase imports, which will force domestic industries to become more competitive and more efficient, thus leading to overall economic growth. While eliminating trade restrictions unilaterally may reduce the leverage it has to persuade other countries to reduce theirs, the economic benefits of eliminating tariffs and quotas outweigh this potential disadvantage. Therefore, option D is the correct answer.

Question 13

A tariff is the same as a quota.

Accepted Answer

A tariff is a tax on imported goods, while a quota is a limit on the quantity of a particular good that can be imported. They are two different instruments of trade policy.

Question 14

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.What is the reduction in value of consumer surplus after the imposition of the quota?

Accepted Answer

The answer of Figure 7-3  Since 1953 the United...

Question 15

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.If there was no quota,how many pounds of peanuts would domestic producers supply?

Accepted Answer

The answer of Figure 7-3  Since 1953 the United...

Question 16

Figure 7-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.If there was no quota,how many pounds of peanuts would be imported?

Accepted Answer

The quota is 20 million pounds. Without a quota, the equilibrium quantity would be 30 million pounds.

Question 17

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods,effectively acting as a quota of zero imports when stimulus money was being spent.For the U.S.steel industry,a "Buy American" provision would create gains for all of the following except

Accepted Answer

The "Buy American" provision would require that stimulus money be spent only on U.S.-made goods, which would benefit U.S. steel companies and workers. However, it may not necessarily benefit U.S. taxpayers as U.S.-made goods may be more expensive than imports, resulting in higher costs for the government and potentially higher taxes for taxpayers. Therefore, not all parties would gain from the provision.

Question 18

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports.Which of the following counter-arguments is made by economists who oppose trade restrictions?

Accepted Answer

Economists who oppose trade restrictions argue that while these restrictions may save some domestic jobs, consumers end up paying a higher cost for the goods they purchase because of higher prices resulting from the restrictions. This can lead to reduced consumer spending and eventually, job losses in other sectors. Therefore, the cost of preserving a few jobs through trade restrictions is not worth the overall economic cost to society.

Question 19

Which of the following is common to both tariffs and quotas?

Accepted Answer

Both tariffs and quotas are protectionist measures used to reduce the amount of foreign competition faced by domestic firms. Tariffs increase the price of imports, while quotas limit the amount of imports that can enter a country. Both measures are designed to protect domestic industries from foreign competition, but can also lead to higher prices for consumers and reduced trade. Option A is incorrect, as only tariffs are used to increase government revenue. Option B is incorrect, as quotas may actually decrease economic efficiency by limiting the availability of goods and services. Option D is incorrect, as voluntary export restraints are a type of quota imposed by the exporting country, rather than the importing country.

Question 20

Governments sometimes erect barriers to trade other than tariffs and quotas.Which of the following is not an example of this type of trade barrier?

Accepted Answer

Requiring employees to pay income taxes does not directly affect international trade, whereas the other options all involve regulations that affect the import or export of goods and services.

Quiz 7: Comparative Advantage and the Gains From International Trade

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.With a quota in place,what is the quantity supplied by domestic producers?

A voluntary export restraint is an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country.

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the value of domestic producer surplus after the imposition of a quota?

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the value of domestic producer surplus without a quota?

Members of Congress promising to support each other's legislation is known as

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

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

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the value of the deadweight loss as a result of the quota?

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the value of revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

The United States would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Which of the following statements is true?

A tariff is the same as a quota.

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the reduction in value of consumer surplus after the imposition of the quota?

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.If there was no quota,how many pounds of peanuts would domestic producers supply?

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.If there was no quota,how many pounds of peanuts would be imported?

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports.Which of the following counter-arguments is made by economists who oppose trade restrictions?

Which of the following is common to both tariffs and quotas?

Governments sometimes erect barriers to trade other than tariffs and quotas.Which of the following is not an example of this type of trade barrier?