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Exam 20: International Trade

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Question 81

Multiple Choice

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Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If the economy is open to international trade but a per unit tariff of $4 is imposed, then the total revenue going to domestic producers would be:

A) $400, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $80
B) $240, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $80
C) $400, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $80
D) $240, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $120

E) A) and B)
F) C) and D)

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Question 82

Multiple Choice

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Frederic Bastiat's satire clearly illustrates that:

A) French candle makers would benefit from government restrictions on trade
B) French consumers would benefit from a tariff on U.S. candles
C) The arguments in favor of trade protectionism can sometimes be ridiculous
D) The arguments in favor of protectionism are sometimes well-founded

E) C) and D)
F) B) and D)

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Question 83

Multiple Choice

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Refer to the table above for a certain product's market in Econland. If Econland were entirely closed to international trade, the equilibrium price and quantity would be:

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by:

The table below shows the output (either machines or wine) that each unit of input in France and Germany can produce: Refer to the table above. Based on the given information, we see that:

In 2011, the United States was the largest exporter in the world.

Answer the following question based on the data provided in the tables below for two hypothetical nations, Wat and Xat. The nations have the production possibilities for rice and corn given in the following table: Refer to the data above. The mutually-beneficial terms of trade will be:

An example of a nontariff barrier would be:

If two nations specialize in their respective comparative advantage and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.

If a nation's labor can produce more of a good compared to labor in another nation, then we say that the first nation has a comparative advantage in producing that good.

Refer to the graph above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. At what price will Econland be neither importing nor exporting the product?