Question 1

Free trade refers to trade between countries without government restrictions.

Accepted Answer

Free trade involves the absence of government-imposed restrictions and tariffs on trade between countries.

Question 2

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 be imported?

Accepted Answer

As shown in Figure 9-3, the point where the demand curve intersects the world supply curve (without the quota) is at a quantity of 30 million pounds of peanuts. Therefore, if there was no quota, 30 million pounds of peanuts would be imported.

Question 3

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.In the market for steel,the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

Accepted Answer

The "Buy American" provision would increase the price of steel in the United States because it would limit the supply of steel available for purchase, giving domestic steel producers more pricing power. At the same time, the provision would decrease the quantity of steel demanded in the United States because the higher price of domestic steel would make it less attractive to consumers and businesses, who would likely look for cheaper alternatives, including imported steel. Therefore, the correct answer is B - increase the price of steel in the United States and decrease the quantity of steel demanded in the United States.

Question 4

A quota is the same as a voluntary export restraint.

Accepted Answer

The answer of A quota is the same as a...

Question 5

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 6

Distinguish between a voluntary export restraint and a quota.

Accepted Answer

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

Question 7

As a result of the tariff on Chinese tires,U.S.consumers are estimated to have spent ________ on imported tires and ________ on U.S.-produced tires.

Accepted Answer

The answer of As a result of the tariff on...

Question 8

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, it is not a limit on the quantity that can be imported. A quantitative limit on imports is called an import quota.

Question 9

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

The elimination of tariffs and quotas would allow for increased competition, lower prices for consumers, and increased efficiency in production, which would benefit the US economy regardless of whether other countries follow suit.

Question 10

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

Accepted Answer

With voluntary export restraints, foreign producers agree to limit their exports to a country in order to avoid other types of trade barriers. This is often a measure used by exporting countries to maintain a good relationship with an importing country, and to avoid the imposition of more restrictive trade measures such as quotas or tariffs.

Question 11

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?

Accepted Answer

The point where the domestic supply and demand curves intersect is at a quantity of 34 million pounds, which is the amount consumed in the domestic market with the quota in place.

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.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?

Accepted Answer

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

Question 13

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 supplied by domestic producers?

Accepted Answer

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

Question 14

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?

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 areas I, J, K, and L. This is because these areas represent the quantity of imports that are allowed into the U.S. under the quota, and the price that foreign producers receive for those imports. Therefore, the correct choice is C, which includes all four of these areas.

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 consumer surplus after the imposition of the quota?

Accepted Answer

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

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 of domestic producer surplus without a quota?

Accepted Answer

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

Question 17

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?

Accepted Answer

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

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.If there was no quota,how many pounds of peanuts would domestic consumers purchase?

Accepted Answer

Without the quota, domestic consumers would purchase 40 million pounds of peanuts, as shown by the demand curve intersecting with the world supply curve at point A.

Question 19

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.In the U.S.steel market,a "Buy American" provision in the 2009 stimulus package would

Accepted Answer

The answer of The "Buy American" provision in the 2009...

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.What is the area that represents the deadweight loss as a result of the quota?

Accepted Answer

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

Quiz 9: Comparative Advantage and the Gains From International Trade

Free trade refers to trade between countries without government restrictions.

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 be imported?

A quota is the same as a voluntary export restraint.

Distinguish between a voluntary export restraint and a quota.

As a result of the tariff on Chinese tires,U.S.consumers are estimated to have spent on imported tires and on U.S.-produced tires.

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

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

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

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?

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 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 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.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 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 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?

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.In the U.S.steel market,a "Buy American" provision in the 2009 stimulus package would

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?