Econ Chapter 34

81 Questions | Total Attempts: 778

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Econ Chapter 34

Questions and Answers
  • 1. 
         1.   Two major exports for the United States are
    • A. 

      Clothing and office machines.

    • B. 

      Soybeans and scientific instruments.

    • C. 

      Footwear and fish.

    • D. 

      Coffee and diamonds.

    • E. 

      None of the above

  • 2. 
         2.   Which of the following is a major import for the United States?
    • A. 

      Corn

    • B. 

      Soybeans

    • C. 

      Coal

    • D. 

      Fish

    • E. 

      None of the above

  • 3. 
    United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30      3.   Refer to Exhibit 34-1. The opportunity cost of one unit of Y in the United States is
    • A. 

      2/3 X.

    • B. 

      0.75X.

    • C. 

      2X.

    • D. 

      4X.

  • 4. 
    United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30      4.   Refer to Exhibit 34-1. The opportunity cost of one unit of Y in France is
    • A. 

      1X

    • B. 

      2X.

    • C. 

      3X.

    • D. 

      4X.

  • 5. 
    United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30      5.   Refer to Exhibit 34-1. France is the lower opportunity cost producer of
    • A. 

      Good X.

    • B. 

      Good Y.

    • C. 

      Goods X and Y.

    • D. 

      Neither good X nor good Y.

  • 6. 
    United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30      6.   Refer to Exhibit 34-1. The opportunity cost of one unit of X in the United States is
    • A. 

      3/4Y.

    • B. 

      1/3Y.

    • C. 

      10Y.

    • D. 

      3/2Y.

  • 7. 
    United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30      7.   Refer to Exhibit 34-1. The United States is the lower opportunity cost producer of
    • A. 

      Good Y.

    • B. 

      Both goods.

    • C. 

      Neither good.

    • D. 

      Good X.

  • 8. 
         8.   Refer to Exhibit 34-1. If the United States is to specialize in the production of one of the two goods (and then trade that good to France), which good should it be and why? If France is to specialize in the production of one of the two goods (and then trade that good to the United States), which good should it be and why? United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30
    • A. 

      Good X for the United States because the United States is the higher opportunity cost producer of good X; good Y for France because France is the higher opportunity cost producer of good Y.

    • B. 

      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.

    • C. 

      Good X for the United States because the United States is the lower opportunity cost producer of good X; good Y for France because France is the lower opportunity cost producer of good Y.

    • D. 

      Good Y for the United States because the United States is the higher opportunity cost producer of good Y; good X for France because France is the higher opportunity cost producer of good X.

  • 9. 
         9.   Refer to Exhibit 34-1. Considering the data, which of the following terms of trade would both countries agree to? United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30
    • A. 

      1/3X = 1Y

    • B. 

      3/2X = 1Y

    • C. 

      5X = 1Y

    • D. 

      4X = 1Y

    • E. 

      All of the above

  • 10. 
       10.   Refer to Exhibit 34-1. The opportunity cost of one unit of X in France is United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30
    • A. 

      1Y.

    • B. 

      1/3Y.

    • C. 

      2Y.

    • D. 

      60Y.

  • 11. 
       11.   Refer to Exhibit 34-1. Considering the data, which of the following terms of trade would both countries agree to? United States France Good X Good Y Good X Good Y 60 0 90 0 40 30 60 10 20 60 30 20 0 90 0 30
    • A. 

      1X = 2Y

    • B. 

      1X = 3Y

    • C. 

      1X = 1Y

    • D. 

      1X = 1/2Y

    • E. 

      All of the above

  • 12. 
       15.   The difference between the highest amount a buyer would be willing to pay for a good and the amount she actually pays for it is
    • A. 

      Producers' surplus.

    • B. 

      Windfall gain.

    • C. 

      Consumers’ surplus.

    • D. 

      Excess profit.

  • 13. 
       20.   "Dumping" refers to
    • A. 

      The sale of goods abroad at a price below their cost and below the price charged in the domestic market.

    • B. 

      Unloading of foreign goods on domestic docks.

    • C. 

      Government actions to remedy "unfair" trade practices.

    • D. 

      Buying goods at low prices in foreign countries and selling them at high prices in the United States.

  • 14. 
       27.   Which of the following is not an argument for trade restrictions?
    • A. 

      The national defense argument

    • B. 

      The infant industry argument

    • C. 

      The comparative advantage argument

    • D. 

      The antidumping argument

  • 15. 
       28.   Refer to Exhibit 34-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is PW. At this price, consumers' surplus equals the area of
    • A. 

      PW DE.

    • B. 

      PW AB.

    • C. 

      PW AC.

    • D. 

      PW PNBD.

  • 16. 
       29.   Refer to Exhibit 34-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is PW. At this price, producers' surplus equals the area of
    • A. 

      PNBDPW

    • B. 

      DBC.

    • C. 

      PWCBPN.

    • D. 

      PWDE.

  • 17. 
       30.   Refer to Exhibit 34-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is PW. At this price, what quantity of this good do U.S. consumers buy from U.S. producers and what quantity do they import from foreign producers?
    • A. 

      Q1 from U.S. producers and (Q3 - Q1) from foreign producers

    • B. 

      Q2 from U.S. producers and (Q3 - Q1) from foreign producers

    • C. 

      (Q3 - Q1) from U.S. producers and Q1 from foreign producers

    • D. 

      Q3 from U.S. producers and nothing from foreign producers

  • 18. 
       31.   Refer to Exhibit 34-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is PW. If there is a policy change such that imports are prohibited, the price becomes PN, U.S. consumers are worse off if imports are __________; specifically, their consumers' surplus changes by area __________.
    • A. 

      Prohibited; PWABD

    • B. 

      Permitted; PWDE

    • C. 

      Prohibited; PNBCPW

    • D. 

      Permitted; PN BDPW

    • E. 

      None of the above

  • 19. 
       32.   Refer to Exhibit 34-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, where imports are permitted, the world price is PW. If there is a policy change such that imports are prohibited, the price becomes PN, consumers' surplus equals __________ and producers' surplus equals __________.
    • A. 

      PNAB; PNBE

    • B. 

      BCD; PNDE

    • C. 

      PNAD; BCD

    • D. 

      PNAD; PWBDE

    • E. 

      None of the above

  • 20. 
       33.   Refer to Exhibit 34-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is PW. If there is a policy change such that imports are prohibited, the price becomes PN. U.S. producers are better off if imports are __________; specifically, their producers' surplus changes by area __________.
    • A. 

      Permitted; PWDE

    • B. 

      Permitted; PN BDPW

    • C. 

      Prohibited; BDC

    • D. 

      Prohibited; PNBDPW

  • 21. 
       34.   Refer to Exhibit 34-3. The world price is PW. If a tariff is imposed, the price rises to PW + T. Because of the tariff, producers' surplus is __________ by an amount equal to the area of __________.
    • A. 

      Increased; 1 + 2

    • B. 

      Decreased; 1

    • C. 

      Increased; 3 + 4

    • D. 

      Increased; 1

    • E. 

      Decreased; 3

  • 22. 
       35.   Refer to Exhibit 34-3. The world price is PW. If a tariff is imposed the price rises to PW + T. Because of the tariff, consumers' surplus is reduced by an amount equal to the area of
    • A. 

      1 + 2 + 3.

    • B. 

      1 + 2.

    • C. 

      1 + 2 + 3 + 4.

    • D. 

      3 + 4.

    • E. 

      2 + 3 + 4.

  • 23. 
       36.   Refer to Exhibit 34-3. The world price is PW. At this price, Americans purchase Q1 from U.S. producers and import the quantity __________ from foreign producers.
    • A. 

      Q4 - Q1

    • B. 

      Q2 - Q1

    • C. 

      Q2 - Q4

    • D. 

      Q2 - Q3

  • 24. 
       37.   Refer to Exhibit 34-3. The world price is PW. If a tariff is imposed, the price rises to PW + T. Because of the tariff, government collects tariff revenues equal to the area of
    • A. 

      1.

    • B. 

      1 + 2.

    • C. 

      3.

    • D. 

      1 + 2 + 4.

    • E. 

      1 + 3.

  • 25. 
       40.   A quota is      
    • A. 

      A tax imposed on imported goods.

    • B. 

      A legal limit on the amount of a good that can be produced by foreign owners of a firm located in a host country.

    • C. 

      A legal limit on the amount of a good that can be imported.

    • D. 

      An agreement between two countries in which the exporting country voluntarily agrees to limit its exports to the importing country.