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The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. If this economy's government restricts trade, area G will represent: A) government tax revenues. B) deadweight loss. C) quota rents. D) transferred surplus. If this economy's government restricts trade, area G will represent:


A) government tax revenues.
B) deadweight loss.
C) quota rents.
D) transferred surplus.

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If the economy decides to impose a $15 per unit tariff, the government can expect to raise how much in government revenue? A) $1,500 B) $1,800 C) $3,000 D) $2,400 If the economy decides to impose a $15 per unit tariff, the government can expect to raise how much in government revenue?


A) $1,500
B) $1,800
C) $3,000
D) $2,400

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. Which area(s) represent the amount of consumer surplus domestic consumers will enjoy after the tariff has been imposed? A) A B) A + B + C C) A + B + C + D + E + F + G D) A + B + C + D + E + F + G + H + I + J + K + L Which area(s) represent the amount of consumer surplus domestic consumers will enjoy after the tariff has been imposed?


A) A
B) A + B + C
C) A + B + C + D + E + F + G
D) A + B + C + D + E + F + G + H + I + J + K + L

E) B) and D)
F) All of the above

Correct Answer

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A country is likely to have a comparative advantage in a land-intensive activity if it has a:


A) lot of land relative to its population.
B) large population relative to its landmass.
C) higher opportunity cost of producing technology.
D) large amount of capital equipment relative to its population.

E) A) and B)
F) None of the above

Correct Answer

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Which of the following does not affect the cost of producing goods in a particular country?


A) Natural resources and climate
B) Endowment of factors of production
C) Technology
D) Proper government oversight of production

E) A) and B)
F) All of the above

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to go from autarky to free trade, which of the following statements is true? The country will export 100 units.Producers will produce 120 units.Total surplus will be $2,000. A) I only B) I and II only C) III only D) I, II, and III If this economy were to go from autarky to free trade, which of the following statements is true? The country will export 100 units.Producers will produce 120 units.Total surplus will be $2,000.


A) I only
B) I and II only
C) III only
D) I, II, and III

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. If this economy decides to open to free trade and imposes a tariff, the domestic quantity supplied will increase from: A) 815 units to 1,500 units. B) 815 units to 1,150 units. C) 250 units to 500 units. D) 250 units to 815 units. If this economy decides to open to free trade and imposes a tariff, the domestic quantity supplied will increase from:


A) 815 units to 1,500 units.
B) 815 units to 1,150 units.
C) 250 units to 500 units.
D) 250 units to 815 units.

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

Correct Answer

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The World Trade Organization (WTO) is an international organization designed to:


A) monitor and enforce trade agreements, while also promoting free trade.
B) monitor and enforce world banking policies and lending between nations.
C) provide a forum for all nations to discuss various international issues of concern.
D) be the final arbiter of all world trade.

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. If this economy is an autarky, its equilibrium price is _______ and its equilibrium quantity is _______. A) $175; 815 B) $215; 500 C) $130; 1,150 D) $130; 500 If this economy is an autarky, its equilibrium price is _______ and its equilibrium quantity is _______.


A) $175; 815
B) $215; 500
C) $130; 1,150
D) $130; 500

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to open to trade, domestic consumers would: A) enjoy a net gain of the surplus in areas B + C. B) suffer a net loss of the surplus in areas B + C + D. C) transfer the surplus in areas B + C to producers. D) lose the surplus in areas F + G to deadweight loss. If this economy were to open to trade, domestic consumers would:


A) enjoy a net gain of the surplus in areas B + C.
B) suffer a net loss of the surplus in areas B + C + D.
C) transfer the surplus in areas B + C to producers.
D) lose the surplus in areas F + G to deadweight loss.

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. If this economy's government decides to restrict trade, a deadweight loss will be created equal to area(s) : A) F + H. B) D + F + G + H. C) F + G + H. D) G. If this economy's government decides to restrict trade, a deadweight loss will be created equal to area(s) :


A) F + H.
B) D + F + G + H.
C) F + G + H.
D) G.

E) C) and D)
F) None of the above

Correct Answer

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Once a new technology spreads and is adopted by many countries:


A) the first country to use it may lose its comparative advantage.
B) the first country to use it will lose its absolute advantage.
C) other countries will perfect it, putting them at an absolute advantage.
D) the country of origin will want to enact strict intellectual property rights.

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. If this economy is operating under free trade, who would be opposed to a tariff? Foreign producersDomestic consumersDomestic producers A) I only B) II and III only C) III only D) I and II only If this economy is operating under free trade, who would be opposed to a tariff? Foreign producersDomestic consumersDomestic producers


A) I only
B) II and III only
C) III only
D) I and II only

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to open to trade, which amount of surplus would be transferred and to who? A) Areas B + C would be transferred to the consumer. B) Areas B + C + D would be transferred to the producer. C) Areas B + C + D would be transferred to the consumer. D) Areas B + C would be transferred to the producer. If this economy were to open to trade, which amount of surplus would be transferred and to who?


A) Areas B + C would be transferred to the consumer.
B) Areas B + C + D would be transferred to the producer.
C) Areas B + C + D would be transferred to the consumer.
D) Areas B + C would be transferred to the producer.

E) All of the above
F) None of the above

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this country is an autarky, what amount of the good will be sold domestically? A) 45 B) 85 C) 120 D) 75 If this country is an autarky, what amount of the good will be sold domestically?


A) 45
B) 85
C) 120
D) 75

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

Correct Answer

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When a price-taking country joins the global market for a particular good, it:


A) shifts the world demand and world supply curves to the right.
B) has a negligible effect on the world equilibrium.
C) shifts the world demand and world supply curves to the left.
D) shifts the world demand curve to the right and the world supply curve to the left.

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

Correct Answer

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When a country has the ability to produce more of a good than others with a given amount of resources, it:


A) has an absolute advantage.
B) has a comparative advantage.
C) it a free-trader.
D) should remain self-sufficient.

E) B) and C)
F) None of the above

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. If the economy was previously operating in autarky, the decision to open to trade and impose a tariff will cause the economy to: A) decrease its consumption from 1,500 units to 1,150 units. B) increase its consumption from 815 units to 1,500 units. C) increase its consumption from 815 units to 1,150 units. D) decrease its consumption from 1,500 units to 815 units. If the economy was previously operating in autarky, the decision to open to trade and impose a tariff will cause the economy to:


A) decrease its consumption from 1,500 units to 1,150 units.
B) increase its consumption from 815 units to 1,500 units.
C) increase its consumption from 815 units to 1,150 units.
D) decrease its consumption from 1,500 units to 815 units.

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

Correct Answer

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If a country that has a comparative advantage at producing tea moves from autarky to free trade, what reaction would we expect to see in the world market?


A) Domestic tea producers would be opposed.
B) Foreign tea producers would be opposed.
C) Foreign tea consumers would be opposed.
D) Foreign producers would be in favor of.

E) All of the above
F) A) and B)

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. According to the graph, the amount of the tariff is _______. A) $30 B) $130 C) $45 D) $75 According to the graph, the amount of the tariff is _______.


A) $30
B) $130
C) $45
D) $75

E) All of the above
F) None of the above

Correct Answer

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