Question 1

-The above figure shows the U.S. market for replacement cell phone batteries. Area C is the
A)deadweight loss from tariff.
B)decrease in consumer surplus due to the tariff.
C)increase in producer surplus due to the tariff.
D)tariff revenue.
E)loss in total surplus because of the tariff.

Accepted Answer

The answer of 
-The above figure shows the U.S. market...

Question 2

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars per unit) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded Quantity supplied } \
\text { (units per day) }
\end{array} & \begin{array} { c } 
\text { (units per day) }
\end{array} \
\hline 40 & 22 & 14 \
50 & 21 & 15 \
60 & 20 & 16 \
70 & 19 & 17 \
80 & 18 & 18 \
90 & 17 & 19
\end{array}$$
-The table above gives the domestic demand and supply schedules for a good. Suppose the world price of the good is $40 and the government imposes a $20 per unit tariff. How much will the government collect as tariff revenue?
A)$160
B)$320
C)$80
D)$240
E)$360

Accepted Answer

The answer of \[\begin{array} { c c c } 
\begin{array}...

Question 3

A quota is
A)a tax on imports.
B)a specified minimum amount that must be imported.
C)a specified maximum amount that can be imported.
D)a tariff on exports.
E)the minimum amount that domestic firms can dump.

Accepted Answer

A quota is a limit on the quantity of a product that can be imported, rather than a tax or tariff. It sets a maximum amount that can be imported, often for the purpose of protecting domestic industries or controlling trade deficits. Option A, B, D, and E are incorrect as they describe different types of trade barriers.

Question 4

Of the following, who gains with a quota?
A)domestic buyers of the good or service
B)the importer of the good or service
C)the foreign exporter of the good or service
D)the government of the importing nation
E)the government of the exporting nation

Accepted Answer

The answer of Of the following, who gains with a...

Question 5

If the U.S. government imposes a tariff on imported steel, who else besides U.S. steel producers gains from the tariff?
A)U.S. steel consumers
B)the U.S. government
C)U.S. importers of steel
D)foreign exporters of steel
E)the foreign government

Accepted Answer

The U.S. government gains from the tariff by collecting revenue from the imported steel.

Question 6

Which type of policy raises the most revenue for the government?
A)tariff
B)quota
C)voluntary export restraints
D)If they are set at the same level, all of the above raise the same amount of revenue.
E)None of the above answers is correct because none of the policies raise revenue for the government.

Accepted Answer

Tariffs directly generate revenue for the government by imposing a tax on imports, whereas quotas and voluntary export restraints limit the quantity of imports but do not generate revenue directly.

Question 7

Of the following, who gains with a tariff?
A)domestic buyers of the good or service
B)the importer of the good or service
C)the foreign exporter of the good or service
D)the government of the importing nation
E)the government of the exporting nation

Accepted Answer

When a tariff is imposed, the government of the importing nation gains revenue from the tariffs collected. Additionally, the government may argue that tariffs protect domestic industries from foreign competition, which can lead to the growth of the industry and the creation of jobs. However, the cost of the tariff is ultimately borne by domestic consumers and businesses, who must pay higher prices for the goods or services. Foreign exporters may also be negatively impacted if the tariff reduces their ability to compete in the importing nation's market.

Question 8

A quota is a
A)quantitative restriction on an import imposed by the importing country.
B)quantitative restriction on an import imposed by the exporting country.
C)restriction on how much a customer can buy of a scarce good imposed by the seller.
D)tax that is imposed on a good when it crosses an international boundary.
E)trade barrier that does not harm domestic consumers of the good or service.

Accepted Answer

A quota is a quantitative restriction on an import imposed by the importing country. This means that the country sets a limit on how much of a certain product can be imported into the country. This is often used as a trade barrier to protect domestic industries from foreign competition.

Question 9

-The above figure shows the U.S. market for replacement cell phone batteries. Area B + area D is the
A)tariff revenue.
B)decrease in consumer surplus due to the tariff.
C)deadweight loss from tariff.
D)increase in producer surplus due to the tariff.
E)gain in total surplus due to the tariff.

Accepted Answer

The answer of 
-The above figure shows the U.S. market...

Question 10

The imposition of a quota ________ domestic production, ________ imports, and ________ domestic purchases.
A)increases; decreases; decreases
B)increases; decreases; increases
C)decreases; increases; decreases
D)decreases; decreases; decreases
E)increases; increases; increases

Accepted Answer

Quotas limit the amount of goods that can be imported, which encourages domestic production (increases it), reduces the volume of imports (decreases them), and as a result, may decrease domestic purchases since fewer imported goods might lead to higher prices or less choice, discouraging consumption.

Question 11

-The above figure shows the U.S. market for replacement cell phone batteries. With free trade, U.S. production is equal to ________ batteries per year. When a $2 tariff is in place, U.S. production is equal to ________ batteries per year.
A)100,000; 300,000
B)100,000; 500,000
C)300,000; 100,000
D)300,000; 500,000
E)900,000; 700,000

Accepted Answer

With free trade, U.S. production is lower due to international competition, resulting in 100,000 batteries produced domestically. When a $2 tariff is imposed, domestic production increases to 300,000 batteries per year as the tariff makes imported batteries more expensive, encouraging consumers to buy domestically produced batteries.

Question 12

-The above figure shows the U.S. market for replacement cell phone batteries. Area A + area E is the
A)consumer surplus when there is a tariff.
B)producer surplus when there is a tariff.
C)tariff revenue.
D)increase in producer surplus due to the tariff.
E)gain in total surplus due to the tariff.

Accepted Answer

Area A + area E represents the increase in producer surplus when a tariff is imposed. This is because the tariff increases the price of imported goods, allowing domestic producers to raise their prices and earn more on each unit sold.

Question 13

-The above figure shows the U.S. market for replacement cell phone batteries. The U.S. government collects tariff revenue of ________ on each battery imported.
A)$4
B)$14
C)$12
D)$6
E)$2

Accepted Answer

The answer of 
-The above figure shows the U.S. market...

Question 14

When governments specify the maximum amount of a good that may be imported in a given period of time, they are establishing a
A)tariff.
B)quota.
C)dynamic tariff.
D)tax.
E)dumping limit.

Accepted Answer

When governments specify the maximum amount of a good that may be imported in a given period of time, they are establishing a quota. This is different from a tariff, which is a tax on imported goods.

Question 15

-The above figure shows the U.S. market for replacement cell phone batteries. Area E is the
A)producer surplus when there is free trade.
B)deadweight loss from tariff.
C)tariff revenue.
D)increase in producer surplus due to the tariff.
E)gain in total surplus due to the tariff.

Accepted Answer

The answer of 
-The above figure shows the U.S. market...

Question 16

If a quota is imposed on imports of shrimp into the United States, U.S. consumer surplus from shrimp will ________ and U.S. producer surplus from shrimp will ________.
A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease
E)increase; not change

Accepted Answer

When a quota is imposed on imports of shrimp, the supply of shrimp in the U.S. market will decrease, causing an increase in the price of shrimp. As a result, U.S. consumer surplus will decrease due to higher prices, while U.S. producer surplus will increase as domestic shrimp producers can charge higher prices for their product.

Question 17

The difference between a tariff and a quota is that the revenue from the tariff goes to the
A)domestic consumer.
B)domestic producer.
C)domestic government.
D)foreign producers.
E)foreign government.

Accepted Answer

The revenue generated from a tariff goes to the domestic government, while a quota restricts the quantity of imports without generating revenue.

Question 18

If the United States imposed a quota on the amount of salmon imported from Chile, the result would be ________ salmon prices in the United States and ________ in the quantity of salmon demanded in the United States.
A)higher; an increase
B)higher; a decrease
C)lower; an increase
D)lower; a decrease
E)higher; no change

Accepted Answer

If a quota is imposed on the amount of salmon imported from Chile, the supply of salmon in the United States would decrease, leading to higher salmon prices due to reduced competition among buyers. Consequently, the higher prices would decrease the quantity of salmon demanded in the United States. Therefore, the correct answer is B - higher salmon prices in the United States and a decrease in the quantity of salmon demanded in the United States.

Question 19

A specified maximum amount of the good that may be imported in a given period of time is a
A)forcible limit.
B)quota.
C)tariff.
D)sanction.
E)dumping limit.

Accepted Answer

A quota is a specific limit set on the amount of a particular good that can be imported within a certain period of time. This serves as a mechanism to restrict the amount of foreign goods entering a country and protect domestic industries.

Question 20

Of the following, who gains from a tariff?
A)the government of the importing country
B)the government of the exporting country
C)consumers in the importing country
D)producers in the exporting country
E)both the government of the exporting country and the government of the importing country

Accepted Answer

The government of the importing country gains from a tariff because it collects the tariff as a form of tax revenue on imported goods.

Quiz 8: Global Markets in Action

-The above figure shows the U.S. market for replacement cell phone batteries. Area C is the

A quota is

Of the following, who gains with a quota?

If the U.S. government imposes a tariff on imported steel, who else besides U.S. steel producers gains from the tariff?

Which type of policy raises the most revenue for the government?

Of the following, who gains with a tariff?

A quota is a

-The above figure shows the U.S. market for replacement cell phone batteries. Area B + area D is the

The imposition of a quota domestic production, imports, and domestic purchases.

-The above figure shows the U.S. market for replacement cell phone batteries. With free trade, U.S. production is equal to batteries per year. When a $2 tariff is in place, U.S. production is equal to batteries per year.

-The above figure shows the U.S. market for replacement cell phone batteries. Area A + area E is the

-The above figure shows the U.S. market for replacement cell phone batteries. The U.S. government collects tariff revenue of ________ on each battery imported.

When governments specify the maximum amount of a good that may be imported in a given period of time, they are establishing a

-The above figure shows the U.S. market for replacement cell phone batteries. Area E is the

If a quota is imposed on imports of shrimp into the United States, U.S. consumer surplus from shrimp will and U.S. producer surplus from shrimp will .

The difference between a tariff and a quota is that the revenue from the tariff goes to the

If the United States imposed a quota on the amount of salmon imported from Chile, the result would be salmon prices in the United States and in the quantity of salmon demanded in the United States.

A specified maximum amount of the good that may be imported in a given period of time is a

Of the following, who gains from a tariff?