Your Go-to Economics Quiz!

Under a policy of free trade, U.S. consumers will buy Q1 quantity of the good from U.S. producers and (Q3 - Q1) quantity from foreign producers. This is because at the world price (PW), U.S. consumers will prefer to buy from foreign producers as it is cheaper compared to buying from U.S. producers. Therefore, the quantity bought from U.S. producers will be Q1, while the remaining quantity (Q3 - Q1) will be imported from foreign producers.

The given answer, Q2 - Q1, suggests that Americans import the quantity Q2 - Q1 from foreign producers at the world price PW. This means that Americans are purchasing Q1 from U.S. producers and then importing an additional quantity of Q2 - Q1 from foreign producers to meet their demand.

A tariff is a tax imposed on imported goods, in this case, strawberries. When a tariff is imposed on strawberries, it raises the price of strawberries in the domestic market. This is because the tariff increases the cost of importing strawberries, which is passed on to the consumers in the form of higher prices. As a result, the price of strawberries in the domestic market is raised.

On the other hand, the tariff lowers the quantity of strawberries imported in the domestic market. This is because the higher price of strawberries makes it less attractive for importers to bring them into the domestic market. Therefore, the quantity of strawberries imported decreases.

Lastly, the tariff lowers consumers' surplus. Consumers' surplus refers to the difference between the price consumers are willing to pay for a product and the actual price they pay. When the price of strawberries is raised due to the tariff, consumers have to pay more for the same quantity of strawberries, reducing their surplus.

The opportunity cost of one unit of X in France can be determined by looking at the trade-off between producing X and producing Y. In this case, for every unit of X produced, France has to give up producing 1/3 unit of Y. Therefore, the opportunity cost of one unit of X in France is 1/3Y.

Under a policy of free trade, U.S. consumers will import 50 units of X from abroad because the world price of X is $15.

Dumping refers to the practice of selling goods in a foreign market at a price that is lower than their production cost and lower than the price charged in the domestic market. This is done to gain a competitive advantage over local producers in the foreign market. By selling goods at a lower price, the exporting country can potentially drive out competition and capture a larger market share. Dumping is often considered an unfair trade practice and can lead to trade disputes between countries.

"Dumping" refers to the practice of selling goods in a foreign market at a price that is lower than the cost of production and lower than the price charged in the domestic market. This is considered to be an unfair trade practice as it can harm domestic industries by creating an uneven playing field. By selling goods at a lower price, foreign companies can gain a competitive advantage and potentially drive domestic companies out of business. Governments often take actions to address dumping, such as imposing anti-dumping duties or negotiating trade agreements to prevent unfair trade practices.

When imports are prohibited, the domestic price (PN) will be higher than the world price (PW). As a result, consumer surplus will decrease, represented by the area PNAB, as consumers have to pay a higher price for the good. On the other hand, producer surplus will increase, represented by the area PNBE, as domestic producers can sell the good at a higher price. Therefore, the correct answer is PNAB; PNBE.

The correct answer is LGK + JHI. This answer is derived from the information provided in the question. It states that with the imposition of a quota, consumers lose more than producers and importers gain. The area of net loss is represented by LGK + JHI, indicating that consumers are experiencing a greater loss compared to the gains made by producers and importers.

Exhibit 34-11 shows that the price in the market increases from PW to PW + T after the tariff is imposed. This increase in price leads to a decrease in consumer surplus, represented by the area DBE. Additionally, there is a decrease in producer surplus, represented by the area FCG. Therefore, the net loss to society is equal to the sum of these two areas, DBE + FCG.

The correct answer is soybeans and scientific instruments. This is because the question asks for the two major exports for the United States, and soybeans and scientific instruments are commonly known as significant exports for the country.

The opportunity cost of one unit of Y in the United States can be calculated by comparing the amount of X that could be produced instead. In this case, for every unit of Y produced in the United States, 2/3 unit of X could be produced. Therefore, the opportunity cost of one unit of Y is 2/3 X.

Jason has the comparative advantage when it comes to mowing lawns because he can mow a lawn in 50 minutes, which is less time compared to Danielle who takes 120 minutes. Comparative advantage is determined by the opportunity cost, which is the value of the next best alternative forgone. In this case, Jason's opportunity cost of mowing a lawn is lower than Danielle's, making him more efficient and better suited for the task.

The correct answer is good Y because the United States has a lower opportunity cost for producing good Y compared to France. This can be observed by looking at the production possibilities table, where the United States can produce 90 units of good Y while France can only produce 30 units. Therefore, the United States has a comparative advantage in producing good Y.

Country 1 has a comparative advantage in the production of Good A because it has the highest production quantity for Good A compared to Country 2. Country 2 has a comparative advantage in the production of Good B because it has the highest production quantity for Good B compared to Country 1.

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Exhibit 34-12 is not provided, so we cannot directly refer to it for information. However, based on the context given, it is stated that if the U.S. imposes a quota to reduce imports to Q4 - Q3, the price will rise. Therefore, the correct answer is P1, as it implies that the price will increase due to the quota.

Jason's opportunity cost of mowing the lawn is 0.50 clean houses. This means that for every hour Jason spends mowing the lawn, he could have cleaned 0.50 houses instead. This calculation is based on the fact that Jason takes 50 minutes to mow the lawn and his sister, Danielle, takes 60 minutes to clean a house. Therefore, if Jason spent his time cleaning houses instead of mowing the lawn, he could have cleaned 0.50 houses in the same amount of time.

France is the lower opportunity cost producer of good X because it only requires 20 units of good Y to produce 60 units of good X, while the United States requires 30 units of good Y to produce the same amount of good X. This means that France has a lower cost in terms of sacrificing units of good Y to produce more units of good X compared to the United States.

Country 1 has a comparative advantage in the production of Good A because it can produce more units of Good A compared to Country 2 for every unit of Good B produced. Similarly, Country 2 has a comparative advantage in the production of Good B because it can produce more units of Good B compared to Country 1 for every unit of Good A produced.

Exhibit 34-6 is likely a table or graph that provides information about the production possibilities for country A. The answer 2 suggests that the opportunity cost of producing one unit of wine is 2 units of cheese. This means that for every unit of wine produced, country A has to give up producing 2 units of cheese.

Danielle has the comparative advantage when it comes to cleaning the house because she can clean the house in 60 minutes, while Jason takes 100 minutes. This means that Danielle is more efficient and productive in cleaning the house compared to Jason.

Danielle's opportunity cost of cleaning the house can be calculated by comparing the time it takes for her to clean the house (60 minutes) with the time it takes for her to mow the lawn (120 minutes). Since it takes Danielle twice as long to mow the lawn compared to cleaning the house, her opportunity cost of cleaning the house is half of mowing the lawn. Therefore, her opportunity cost is 0.50 mowed lawns.

The correct answer is 3/2X = 1Y. This is because the terms of trade refer to the rate at which one good can be exchanged for another. In this case, the ratio of Good X to Good Y that both countries would agree to is 3/2X to 1Y. This means that for every 3/2 units of Good X, 1 unit of Good Y would be exchanged between the United States and France.

The comparative advantage argument is not an argument for trade restrictions because it states that countries should specialize in producing goods and services in which they have a comparative advantage, and then trade with other countries to obtain goods and services that they cannot produce efficiently. This argument promotes free trade and opposes trade restrictions.

Exhibit 34-6 likely provides information about the production possibilities frontier (PPF) for country A, showing the different combinations of cheese and wine that can be produced. The opportunity cost of a unit of cheese in terms of units of wine can be calculated by comparing the trade-off between producing cheese and wine. If the opportunity cost is 1/2, it means that for every unit of cheese produced, country A must give up producing 1/2 unit of wine. This suggests that cheese production is relatively more efficient for country A compared to wine production, as it has a lower opportunity cost.

The removal of the $100 per ton tariff on sugar imports would lead to an increase in imports. The current price of sugar in the United States is $300 per ton, which includes the tariff. Removing the tariff would lower the price of imported sugar, making it more attractive for importers. The increase in imports would be 10 million tons.

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The tariff on sugar imports is $100 per ton. The current price of sugar in the United States is $300 per ton. Therefore, for every ton of sugar imported, the government collects $100 in tariff revenue. To calculate the total tariff revenue, we need to find out how many tons of sugar are being imported. Since the question does not provide this information, we cannot determine the exact amount of tariff revenue. However, we can assume that the government collects $500 million in tariff revenue based on the given options.

The infant industry argument for trade protectionism suggests that new industries require protection in order to develop and compete with established foreign competitors. This protection creates a favorable environment for the growth of these industries. The argument does not mention anything about foreign competitors being viewed as "infants" by large U.S. firms or the preference for tariffs over quotas. Therefore, the correct answer is that new industries need a protective environment to compete with established foreign competitors.

Exhibit 34-9 shows the production possibilities for countries X and Y. For country Y, the opportunity cost of producing one unit of good B is 10 units of good A. This can be determined by looking at the table and comparing the number of units of good A that need to be given up in order to produce one unit of good B. In this case, country Y would need to give up 10 units of good A to produce one unit of good B.

Jason's opportunity cost of cleaning the house is the value of the next best alternative that he is giving up, which is mowing the lawn. According to the exhibit, Jason takes 100 minutes to clean the house and 50 minutes to mow the lawn. Therefore, for every 100 minutes he spends cleaning the house, he could have mowed the lawn twice (50 minutes x 2 = 100 minutes). Hence, his opportunity cost of cleaning the house is 2.00 mowed lawns.

The correct answer is producers' surplus. Producers' surplus refers to the difference between the price at which producers are willing to supply a good and the price they actually receive. In this context, it represents the difference between the highest amount a buyer is willing to pay and the actual amount paid, which is a benefit for the producers. Consumers' surplus, on the other hand, refers to the difference between the price consumers are willing to pay and the price they actually pay. Windfall gain and excess profit are not applicable in this scenario.

The correct answer is 1 + 2 + 3 + 4 because when a tariff is imposed, the price of the good increases from PW to PW + T. This results in a decrease in consumer surplus, which is the difference between what consumers are willing to pay for a good and what they actually pay. The area 1 represents the decrease in consumer surplus for the quantity consumed at the world price PW. Area 2 represents the decrease in consumer surplus for the additional quantity consumed due to the lower price resulting from the tariff. Area 3 represents the increase in producer surplus due to the higher price resulting from the tariff. Finally, area 4 represents the deadweight loss, which is the loss of total surplus due to the inefficiency caused by the tariff.

When a quota is imposed on imported goods, it restricts the quantity of goods that can be imported. This leads to a decrease in consumer surplus because consumers have limited access to the imported goods and may have to pay higher prices. On the other hand, producers benefit from the quota as it reduces competition from imported goods, allowing them to charge higher prices and increase their total revenues. However, despite the higher total revenues, producers still experience a loss in surplus due to the restriction on output.

The opportunity cost of producing one unit of good A in country Y is 1/2 unit(s) of good B. This can be determined by looking at the table in Exhibit 34-9. In country Y, producing one unit of good A requires giving up 1/2 unit(s) of good B.

Based on the information provided in Exhibit 34-10, Danielle's opportunity cost of mowing the lawn is 2.00 clean houses. This means that for every 120 minutes Danielle spends mowing the lawn, she could have cleaned 2.00 houses instead.

The opportunity cost of one unit of good B is 2A for country 1 and 1A for country 2. This means that for country 1, in order to produce one unit of good B, they have to give up producing 2 units of good A. Similarly, for country 2, in order to produce one unit of good B, they have to give up producing 1 unit of good A.

Tariffs and quotas are often imposed when a government is responsive to producer interests, meaning that they are trying to protect domestic industries and businesses. The benefits of these trade restrictions are often concentrated, meaning that they primarily benefit the producers and businesses that are being protected. This concentration of benefits can lead to increased profits and market power for the protected producers, but it can also result in higher prices and reduced choices for consumers.

The correct answer is Good Y for the United States because the United States is the lower opportunity cost producer of good Y; good X for France because France is the lower opportunity cost producer of good X. This is because the opportunity cost of producing a good is the amount of the other good that must be given up to produce an additional unit of the first good. In this case, the United States has a lower opportunity cost of producing good Y compared to France, while France has a lower opportunity cost of producing good X compared to the United States. Therefore, it is more efficient for each country to specialize in producing the good with the lower opportunity cost.

A tariff is a tax imposed on imported goods, which increases the price of those goods for consumers. This decrease in consumer surplus is not mentioned in the given answer. However, the answer states that the effect of a tariff is an increase in tariff revenues for the government. This is because the government collects the tax revenue from the tariff. Therefore, the correct answer is that the effect of a tariff is an increase in tariff revenues for the government.

The situation where a country can produce a good at a lower opportunity cost than another country is called a comparative advantage. This means that the country can produce the good more efficiently or with fewer resources compared to another country. It does not necessarily mean that the country has an absolute advantage in producing the good, but rather it has a relative advantage in terms of opportunity cost.

Exhibit 34-7 is not provided, so it is difficult to determine the exact explanation for the correct answer. However, based on the information given, if the world price of X is $15 and imports are legally limited to 30 units, it suggests that there is a restriction on the quantity of X that can be imported. This restriction would likely lead to a decrease in supply, causing the price of X in the United States to increase. Therefore, the price of X in the United States would be higher than the world price, possibly around $25.

A quota is a legal limit on the amount of a good that can be imported. This means that there is a specific quantity of a product that can be brought into a country from abroad. Quotas are often implemented by governments to protect domestic industries and limit competition from foreign goods. By restricting the amount of imports, quotas can help to control the supply and demand of a particular product in the domestic market.

Exhibit 34-9 shows the production possibilities for country X and country Y. The opportunity cost of producing one unit of good B for country X can be determined by looking at the trade-off between producing good A and good B. In this case, for country X, producing one unit of good B requires giving up the production of 3 units of good A. Therefore, the opportunity cost of producing one unit of good B for country X is 3 units of good A.

The opportunity cost of one unit of Y in France is 3X because for every unit of Y produced, France has to give up producing 3 units of X. This can be seen by comparing the production possibilities of X and Y in France. When France produces 1 unit of Y, it has to give up producing 3 units of X. Therefore, the opportunity cost of one unit of Y in France is 3X.

The correct answer is 1X = 1Y. This means that both countries would agree to a terms of trade where the exchange rate between Good X and Good Y is 1 to 1. This implies that the two goods are of equal value to both countries, making it a fair trade.

The correct answer is 3. The area of 1 + 2 + 4 represents the total tariff revenue collected by the government. Area 1 represents the revenue from the quantity imported before the tariff, area 2 represents the revenue from the additional quantity imported after the tariff, and area 4 represents the revenue from the domestic production that replaces the imports. Therefore, the correct answer is 3.

The correct answer is A + B; C + G. This means that consumers' surplus is equal to the area A + B, while producers' surplus is equal to the area C + G.

Fish is a major import for the United States because it is a highly consumed food item in the country. The United States does not produce enough fish domestically to meet the demand, so it relies on imports from other countries. Fish is an important part of the American diet and is consumed in various forms, such as fresh, frozen, and canned. The import of fish contributes to the availability and variety of seafood options for consumers in the United States.