ECON 201
A maximum limit set on the amountof a specific good that may be imported into a countryover a given period of time is called a
A. tariff.
B. quota.
nontariff barrier.
voluntary export restriction.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic: Trade Barriersand Export Subsidies
A "Buy American" policy strictly enforcedis equivalent to a(n)
A. tariff.
B. quota.
export subsidy.
voluntary export restriction.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
A tariff is a
A. tax.
price ceiling.
quantity limit.
subsidy.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
An excise tax on imported items is known as a(n)
A. quota.
B. tariff.
export restriction.
price ceiling.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Which of the following statements is true about the alleged benefits and adverse effectsof trade barriers?
A. The allegedbenefits like "saved jobs" are limited to a narrow sector of the economy and clearlyseen by the general public,while the adverse effects tend to be obscure and dispersed.
The general public does not have much interest in trade and trade barriers because their effects are very small.
The alleged benefitsof trade barrierstend to be spread over the whole economy,while their adverse effects are narrow and concentrated on a small sector.
The U.S. does not really have any significant trade barriers. That’s why there is not much debate about them.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
An excise tax that is applied to an imported product that is not at all produced domestically is called a(n)
A. protective tariff.
B. revenue tariff.
import quota.
nontariff barrier.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
An import-licensing requirement or import restrictions pertaining to the productquality andsafety are examplesof
A. protective tariffs.
B. nontariff barriers.
voluntary export restrictions.
quotas on imported products.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Which of the following statements best describes a protective tariff?
A. an excise tax that is usually applied to products that are not produceddomestically in order to raise revenues for government
B. an excise tax that is designed to put foreign producersat a competitive disadvantage in selling in domesticmarkets
a specification of the maximum amount of a product that may be imported in any period of time that is often used to protectdomestic producers of a product
such activities as restricting the issuance of licenses for imported products or setting unreasonable standards for quality or safety in order to restrict imports and protect domestic markets
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
An example of a nontariff barrier would be
A. a minimumlimit on the quantity of imports.
B. excessivelicensing requirements.
a tax on an imported product.
voluntary export restraints.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
If a nation agrees to set an upper limit on the total amount of a product that it exports toanother nation, then this situation would be an example of
an import quota.
a revenue tariff.
a protective tariff.
D. a voluntary export restriction.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
A key difference betweenimport quotas and voluntary export restraints (VERs) is that the
A. domestic government administers the former, whereasthe foreign government administers the latter.
foreign government administers the former, whereas the domestic government administers the latter.
one is a tax, whereas the other is a quantitylimit.
one raises the price of the imported product involved, whereas the other one does not.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
If the United States government were to impose a quota on wristwatches imported from Switzerland, then the
price of wristwatches in the United States would decreaseand total quantity consumed (domestic and imported) would increase.
prices of wristwatches in Switzerlandwould rise, and that's how Switzerland wouldbehurt by the quota.
price of wristwatches in the United States would remain the same,but the quantitywould fall as imports fell.
D. total quantityof wristwatches (domesticand imported) purchased would decline as prices rose.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
The imposition of a tariff on a productis least likely to resultin a(n)
A. increasein efficiency in the domestic industry producing the product.
increase in the price of the product.
decrease in the quantityof imports.
decrease in the real incomes of workers in other industries.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
If a nation imposes a tariff on an importedproduct, then the nation will experience a(n)
A. decrease in total supply and an increase in the price of the product.
decrease in demand and a decreasein the price of the product.
decrease in supply of, and an increasein demand for, the product.
increase in supply of, and a decrease in demand for,theproduct.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
Tariffs and quotas are costly to consumers because
the price of the imported good falls.
the supply of the imported good increases.
import competition increases for domesticgoods.
D. consumershave to switch to higher-priced domestic goods.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Assume that a tariff is imposed on an importedproduct. The differencebetween the domesticprice and the world price is capturedby
A. the government.
domestic consumers.
domestic producers.
foreign exporters.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Assume that a VER (voluntaryexport restraint) is imposed on an imported product. The difference betweenthe domestic price and the world price is captured by
A. the government.
B. foreign exporters.
domestic consumers.
domestic workers.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Import quotas on products will reduce the quantity of the imported products and
A. decrease the price to the consumers.
B. increasethe price to the consumers.
will not affect the price to the consumers.
increase the total quantity of the productconsumed.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
Tariffs and import quotas would benefit the following groups, except
A. consumersof the product.
domestic producers of the product.
workers in domestic firms producing the product.
the government of the importingcountry.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
When a tariff or quota on a product is removed, this policy action
A. benefits domestic producers of the product.
B. benefits consumersof the product.
benefits the government.
hurts nations exporting the product.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
When tariffs on imported products are removed by a nation, it will result in
higher prices and lower quantities consumed in that nation.
higher prices and higher quantitiesconsumed in that nation.
lower prices and lower quantities consumed in that nation.
D. lower prices and higher quantities consumed in that nation.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
An export subsidy for a productwill benefit
domestic consumers of the product.
foreign producers of the product.
C. foreignconsumers of the product.
D. the domestic taxpayers.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
The higher price of imported productsdue to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now
lower in price because import competition has risen.
higher in price becauseimport competition has risen.
C. higher in price because import competition has declined.
D. lower in price becauseimport competition has declined.
Quantity Demanded Domestically PriceQuantity Supplied Domestically1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200 267.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Refer to the accompanying table for a certain product'smarket in Econland. If Econland were entirelyclosed to international trade, the equilibrium price and quantitywould be
A. $9 and 2,000 units.
B. $8 and 1,800 units.
$7 and 2,000 units.
$6 and 1,400 units.
Quantity Demanded Domestically PriceQuantity Supplied Domestically1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200 268.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic: Trade Barriersand Export Subsidies
Refer to the accompanying table for a certainproduct's market in Econland. If the world price for this productwere $6, then Econlandwould import
A. 400 units and domestic producers would supply 1,400.
B. 800 units and domesticproducers wouldsupply 1,400.
800 units and domestic producers would supply 2,200.
400 units and domestic producers would supply 2,200.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
Quantity Demanded Domestically PriceQuantity Supplied Domestically1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200 269.
Refer to the accompanying table for a certain product's market in Econland. If the world price of the product were $6 and a tariffof $1 per unit imported is imposed, then the quantity of output that would be supplieddomestically would be
1,400 units, and the quantity of output that would be importedwould be 800 units.
1,600 units, and the quantity of output that would be imported would be 800 units.
C. 1,600 units, and the quantityof output that would be imported would be 400 units.
D. 1,400 units,andthe quantity of output that wouldbeimported would be 400 units.
Quantity Demanded Domestically PriceQuantity Supplied Domestically1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200 270.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
Refer to the accompanying table for a certain product's market in Econland.Ifthe world price of the productwere $6 and a tariff of $1 per unit were appliedto imports of the product, then the tariff would generate government revenues of
A. $600. B. $400. C. $800. D. $1,200.
Quantity Demanded Domestically PriceQuantity Supplied Domestically1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200 271.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Refer to the accompanying table for a certain product's market in Econland. If the world price of the product were $6 and a tariffof $1 per unit were applied to imports of the product, then the total revenue(after tariff) going todomestic producers would be
A. $11,200, andthetotal revenue (after tariff) going toforeign producers would be $2,800.
B. $11,200, andthetotal revenue (after tariff) going toforeign producers wouldbe$2,400.
$8,400, and the total revenue (after tariff) going to foreign producers would be $2,800.
$13,200, and the total revenue (after tariff) going to foreign producers would be $2,400.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Quantity Demanded Domestically PriceQuantity Supplied Domestically1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200 272.
Refer to the accompanying table for a certainproduct's market in Econland. If the world price of the productwere $6 and an import quota of 400 units were imposed on the product,then the equilibrium price in Econland would be
$6 and thetotal quantity availableinEconland would be 2,200 units.
$6 and the total quantityavailable in Econlandwould be 1,800 units.
C. $7 and the total quantity available in Econland would be 2,000 units.
D. $7 and the total quantity available in Econland would be 1,800 units.
Quantity Demanded Domestically PriceQuantity Supplied Domestically1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200 273.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
Refer to the accompanying table for a certain product's market in Econland. Assume that the world price of the productis $6. What would be the difference in the total revenue receivedby foreign producers after a quota of 400 units is imposed, comparedagainst the total revenue received by foreign producers when a $1 per unit tariff is paid?
$0 revenue difference
$100 more in revenue with a quota than with a tariff
C. $400more in revenue with a quota than with a tariff
D. $400 more in revenue with a tariff than with a quota
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
274. The basic differencein the economic effects of a tariff compared with a quota is that a
A. quota reduces domestic consumption of the product, but a tariff does not.
B. tariff allows imports to increase if demand increases, whereas a quota does not.
tariff raises productprices, but a quota does not.
quota raises product prices, but a tariff does not.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic: Trade Barriersand Export Subsidies
275.
Refer to the accompanying graph, where Sd and Dd are the domestic supply anddemand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that wouldgo todomestic producers would be
A. $600, but only $240 if the domestic market were open to international trade.
B. $600, but only $120 if the domestic market were open to international trade.
$500, but only $240 if the domestic market were open to international trade.
$240, but only $120 if the domestic market were open to international trade.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic: Trade Barriersand Export Subsidies
Type: Graph
276.
Refer to the accompanying graph, where Sd and Dd are the domestic supply anddemand curves for a product.The world price of the product is $6. If the market is open to international trade but there is a tariff of $2 per unit imposed,thetotal government revenue generatedby the tariff would be
A. $40.
B. $60.
C. $80. D. $100.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Type: Graph
277.
Refer to the accompanying graph, where Sd and Dd are the domestic supply and demandcurves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be
A. $6 and the quantity consumed 80units.
B. $8 andthequantity consumed70 units.
$10 and the quantity consumed 60 units.
$12 and the quantity consumed 50 units.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
Type: Graph
278.
Refer to the accompanying graph, where Sd and Dd 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.
$240, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $80.
$400, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $80.
$240, the total revenue (after tariff) going toforeign producers would be $120,andthe tariff revenue going tothegovernment would be $120.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank:II Topic: Trade Barriers and Export Subsidies
Type: Graph
279.
Refer to the accompanying graph, where Sd andDd are the domesticsupply and demand for a product. The world price of the product is $6.What would be the differencein the total revenue received by foreign producers after a quota of 20 units is imposed compared with the total revenue received by foreign producers when a $4 per unit tariff is imposed?
A. $0 revenue difference
B. $80 more revenue with a quota than with a tariff
$200 more revenue with a quota than with a tariff
$120 more revenue with a tariff than with a quota
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic: Trade Barriersand Export Subsidies
Type: Graph
From an economicperspective, studies of the costs of trade barriersshow that they
are outweighed by the reduction in foreigncompetition providedby the barriers.
are much less than benefitsfor domestic producers and workers.
are about equal to the benefits from trade barriers.
D. far exceed their benefits for society.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyzethe economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
The use of tariffs and quotas for trade protection results in
lower prices for domestic consumers.
less revenue for government.
C. less efficiencyin the economy.
D. less rent-seeking activity.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: II Topic:Trade Barriers and Export Subsidies
Common arguments often raised to present the case for protectionism include the following, except
protecting infant industries until they mature.
protection against foreign suppliers' dumping.
raising domestic employment in specificindustries.
D. reducingthe price of the product to consumers.
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Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-05 Analyze the validity of the most frequently presented arguments for protectionism.
Test Bank:II Topic: The Case for Protection: A Critical Review
The following are commonly used arguments for protection against imports, except
self-sufficiency and diversification-for-stability.
protection against dumping.
infant industry protection.
D. price- and profit-maintenance.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-05 Analyze the validityof the most frequently presented arguments for protectionism.
Test Bank:II Topic: The Case for Protection: A CriticalReview
Dumping is the sale of a product in a foreignmarket
A. at a price below its domesticprice or cost of production.
that does not meet the quality standards in the domestic market.
and is the principal means used to enforce nontariff barriers.
and is encouragedby voluntary exportrestraints.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-05 Analyze the validityof the most frequently presented arguments for protectionism.
Test Bank:II Topic: The Case for Protection: A CriticalReview
What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?
A. Trade barriers protect the development of new technology, but the new technology eliminates jobs.
B. Import restrictions alter the composition of domestic employment, but they have minimal effect onthe overall level of domestic employment.
The volume of trade with other nations is limited to a few industries, so trade restrictions wouldnotincrease national employment.
Major American firms have produced many products in other countriesand would not hire more domesticlabor when trade barriers are imposed.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-05 Analyze the validityof the most frequently presented arguments for protectionism.
Test Bank: II Topic: The Case for Protection: A Critical Review
Which of the following is a valid counterargument to a call for higher tariffs "to save U.S.jobs"?
The government needs to protect U.S. workers from the dumpingof foreign products.
Strategic trade policy cal