Question

5. The amount of imports under completely free international trade can be calculated as:

A. quantity supplied minus quantity demanded, at the domestic market equilibrium price.

B. quantity demanded minus quantity supplied, at the prevailing world price.

C. quantity demanded minus quantity supplied, at the domestic market equilibrium price.

D. domestic quantity supplied minus quantity demanded, at the prevailing world price.

6. A tariff is a _______, and it is shown on the demand and supply diagram as _______.

A. tax on imports; an upward shift of the world supply curve

B. tax on exports; an upward shift of the world supply curve

C. tax on exports; a downward shift of the world supply curve

D. tax on imports; a downward shift of the world supply curve

7. Which of the following is NOT one of the results of a tariff?

A. The domestic quantity supplied rises.

B. The domestic quantity demanded falls.

C. The total gains from trade rises.

D. The amount of imports falls.

8. A tariff is a tax that consumers pay to the government. What impact does the act of paying this tax have on total gains from trade?

A. It reduces total gains from trade because consumer surplus falls as a result of the tax payment.

B. It has no impact because tariffs are also paid by producers, so the two payments cancel each other out.

C. It has no impact because the gains from trade are transferred from consumers to the government.

D. It increases total gains from trade because the government earns tax revenue.

9. As a result of a tariff, domestic consumption _______, and this causes total gains from trade to _______.

A. rises; fall

B. rises; rise

C. falls; fall

D. falls; rise

Answer 1