Question 1

Which of the following is not a result we would expect to result from a tariff on leather shoes?

Accepted Answer

Tariffs on imported goods like leather shoes typically make these goods more expensive, which can lead to an increase in the price of leather shoes in the domestic market (A), a decline in the amount of shoes imported (B), and potentially fewer pairs of shoes being sold overall due to higher prices (C). However, domestic producers might actually sell more shoes at the higher prices because the tariff makes imported shoes less competitive, contradicting option (D).

Question 2

With free trade and imports:

Accepted Answer

The answer of With free trade and imports:
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Question 3

Economically speaking, tariffs:

Accepted Answer

Tariffs limit voluntary exchanges by making imported goods more expensive and therefore less attractive to consumers. This can lead to a decrease in international trade, which can harm both domestic and foreign producers. While tariffs may provide some protection to domestic producers, this is not the primary purpose of tariffs and their overall impact on the economy is often negative.

Question 4

If an exporter's supply curve of a commodity is upward sloping, and if a change in import demands in other countries leads them to increase their exports, other things equal, we would expect

Accepted Answer

If import demand in other countries increases, the exporter will supply more to meet this demand, leading to a higher domestic price due to the upward-sloping supply curve.

Question 5

After the U.S.introduces of a tariff in the market for widgets, the price of widgets in the U.S.will

Accepted Answer

When a tariff is introduced, it makes imports more expensive. In this case, since widgets are being imported to the U.S. market, the tariff will increase the price of widgets in the U.S. market. This is done to promote the sale of domestically produced goods as they become a relatively cheaper option.

Question 6

Which of the following would be expected if the tariff on foreign-produced automobiles was increased?

Accepted Answer

When the tariff on foreign-produced automobiles is increased, the cost of importing these automobiles into the domestic market will increase, making them more expensive compared to domestically produced automobiles. As a result, the demand for foreign automobiles may decrease, reducing the supply of foreign-produced automobiles to the domestic market, which causes the price of cars to rise.

Question 7

If opening up international trade resulted in the U.S.becoming a wheat exporter, relative to the prior no-trade situation, the U.S.domestic price of wheat:

Accepted Answer

When a country becomes an exporter of a good, it means that the domestic price of that good was lower than the world price before trade. Opening up to international trade allows the country to sell the good at the higher world price, which increases the domestic price. As the domestic price rises, producers are incentivized to increase output to take advantage of the higher prices, leading to an increase in both the domestic price and output of wheat.

Question 8

Restrictions on the importation of tomatoes reduce the supply available to the U.S.domestic market.Studies indicate that the demand for tomatoes is elastic.Compared to a free-trade situation, the import restrictions cause

Accepted Answer

When the supply of tomatoes is reduced due to import restrictions, the prices of tomatoes tend to increase. Since the demand for tomatoes is elastic, consumers tend to reduce their expenditure on tomatoes as the prices increase. Therefore, both the price of tomatoes and consumer expenditure on tomatoes increase due to import restrictions. Hence, option D is the correct answer.

Question 9

A tariff can be defined simply as a

Accepted Answer

A tariff is a tax that is imposed on imported goods, often for the purpose of protecting domestic industries or raising revenue for the government. It is not a tax on exports or a legal limit on imports or exports.

Question 10

If opening up international trade resulted in the U.S.importing ballpoint pens, what would tend to happen to the U.S.price of ballpoint pens?

Accepted Answer

When the U.S. imports ballpoint pens, it means that other countries are able to produce and sell them at a lower cost. This would result in increased competition for domestic producers, causing them to lower their prices in order to remain competitive. As a result, the domestic price of ballpoint pens would likely fall.

Question 11

Relative to a no-international-trade initial situation, if the United States exported wine, the U.S.domestic price of wine:

Accepted Answer

When the U.S. exports wine, the increased demand from international markets leads to a rise in the domestic price of wine. As a result, domestic producers are incentivized to increase their output to meet both domestic and international demand.

Question 12

The world price of a commodity will settle at the level where

Accepted Answer

The world price of a commodity will settle where the excess demand of the importing country is equal to the excess supply of the exporting country. This is because in order for trade to occur, there needs to be a willing seller and a willing buyer, and the price at which they are willing to trade is where the excess demand and excess supply intersect. This ensures that both parties benefit from the trade and that the market is efficient.

Question 13

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

Accepted Answer

A tariff is a tax on imported goods. Option D is the only choice that fits this definition. Choices A and C describe subsidies and do not involve taxes or limits on imports. Choice B describes a limit or quota, which is also not a tariff.

Question 14

Compared to the no-trade situation, when a country exports a good:

Accepted Answer

When a country exports a good, domestic producers will benefit as they are able to sell their goods at a higher price in the world market. However, domestic consumers will have to pay a higher price for the good. The gains to producers will outweigh the losses to consumers, resulting in an overall net gain for the country.

Question 15

The difference between the price the consumer is willing to pay for a good or service and what he would have to pay for that unit is called:

Accepted Answer

This difference is called consumer surplus, as it represents the benefit or surplus that consumers receive from being able to purchase a good or service at a lower price than they would be willing to pay. Options A, B, and D do not accurately describe this specific concept.

Question 16

The supply and demand mechanism will bring an international market into equilibrium

Accepted Answer

The supply and demand mechanism will bring an international market into equilibrium when the quantity of exports supplied by the exporters beyond their domestic consumption is equal to the quantity of imports demanded by the importers. This will happen when the price of the product is acceptable for both exporting and importing countries, and the market is balanced in terms of supply and demand. Therefore, option D is the correct answer. Options A, B, and C do not provide an accurate description of the equilibrium reached by the supply and demand mechanism in an international market.

Question 17

Relative to a no-international-trade initial situation, if the United States imported wine, the U.S.domestic price of wine:

Accepted Answer

When the U.S. imports wine, the increased supply from international markets leads to a decrease in the domestic price of wine. As a result, domestic producers may reduce their output due to the lower price and increased competition from imports.

Question 18

A tax levied on imported goods is called a(n)

Accepted Answer

A tax levied on imported goods is called a tariff. An excise tax is a tax on specific goods or services, a quota is a limit on the quantity of a certain item that can be imported, and a foreign profits tax is a tax on the profits of foreign companies doing business within a country.

Question 19

Compared to the no-trade situation, when a country imports a good:

Accepted Answer

When a country imports a good, domestic consumers gain access to a larger variety of goods at a lower price, resulting in a welfare gain. On the other hand, domestic producers may lose out to foreign competitors, resulting in job losses and a decrease in domestic production. However, the gains from lower prices usually outweigh the losses from decreased production. Thus, domestic consumers gain, domestic producers lose, and the gains outweigh the losses.

Question 20

The United States is the world's leading grain-producing nation.Exporting grain causes the:

Accepted Answer

Exporting grain to foreign markets increases the overall demand for grain. This added demand from abroad competes with domestic demand, leading to higher prices for domestic consumers as the supply available to them is effectively reduced.

Quiz 18: International Economics