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 revenue to foreign producers granted permission to sell in the U.S. market when there is a quota is represented by the combined area of I, J, K, and L.

Question 2

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 3

Distinguish between a voluntary export restraint and a quota.

Accepted Answer

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

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 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 area of consumer surplus after the imposition of the quota is equal to A + G + H, which represents the area between the demand curve and the price line under the quota. Option B includes areas that are not consumer surplus. Option C only includes a portion of the consumer surplus. Option D only includes a small portion of the total surplus.

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 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 6

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 7

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 8

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 9

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 10

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

By raising the tariff on wire hangers imported from China, the U.S. was able to save some jobs in the U.S. wire hanger industry. However, this also increased costs for consumers and businesses who needed to purchase wire hangers, potentially leading to job losses in the U.S. dry cleaning industry. There is no evidence to suggest that the tariff increased wages in the Chinese wire hanger industry or increased imports of Chinese wire hangers to the U.S. Similarly, there is no evidence to suggest that the tariff led to increased exports of U.S. wire hangers to China or decreased costs in the U.S. wire hanger industry.

Question 11

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 12

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 13

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

Question 14

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 used to limit foreign competition for domestic firms by either making foreign products more expensive or restricting the quantity of foreign products that can be imported. The goal is to protect domestic industries and jobs from being undercut by cheaper foreign competition.

Question 15

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 area of domestic producer surplus after the imposition of a quota is equal to area B, which represents the difference between the price paid by domestic consumers and the higher price received by domestic peanut producers. Areas C, E, I, J, and M represent consumer surplus lost due to the quota, and therefore are not included in the domestic producer surplus calculation.

Question 16

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 a certain product that can be imported or exported. In this case, the limit is imposed on the number of sport utility vehicles that can be imported from Japan to the United States.

Question 17

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 refer to when foreign producers limit their exports to a country. This is done in order to avoid the imposition of other types of trade barriers by the importing country. It is not related to meeting quality standards, paying taxes, or agreeing to import an equal quantity of products.

Question 18

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...

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

Even if other countries do not reduce their tariffs and quotas, the elimination of tariffs and quotas in the U.S. would still lead to increased competition, lower prices, and greater efficiency in the domestic market, benefiting both consumers and producers. This could also lead to increased exports as U.S. products become more competitive in international markets.

Question 20

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 whether the U.S. government should regulate international trade date back to the beginning of the country. The debate between free trade and protectionism has been ongoing since the founding of the United States, with Alexander Hamilton advocating for protectionist policies in the late 18th century and Thomas Jefferson advocating for free trade. The discussion continued through the 19th and 20th centuries, with fluctuations in policies depending on the political climate and economic conditions.

Quiz 9: 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?

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

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 consumer surplus after the imposition of the 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 that represents the deadweight loss as a result of the 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

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?

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.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by domestic producers?

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

The main purpose of most tariffs and quotas is to

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?

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

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

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

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