Question

QUESTION 5

Suppose Belgium produces only two goods, chocolate and lace. If Belgium has a comparative advantage in lace, a move toward free trade will

	A.	harm chocolate workers in the short run, benefit lace workers, but benefit the nation as a whole.
	B.	benefit chocolate workers, harm lace workers in the short run, but harm the nation as a whole.
	C.	harm chocolate workers in the short run, harm lace workers, but benefit the nation as a whole.
	D.	benefit chocolate workers, harm lace workers in the short run, but benefit the nation as a whole.

4 points   

QUESTION 6

An import ban results in

	A.	an increase in the product's price.
	B.	a decrease in the supply of the product.
	C.	a decrease in the quantity of the product bought and sold.
	D.	all of the above.

4 points   

QUESTION 7

An import quota

	A.	limits the amount of a good that can be imported, thus decreasing prices.
	B.	increases the amount of a good imported, thus increasing prices.
	C.	increases the amount of a good imported, thus decreasing prices.
	D.	limits the amount of a good that can be imported, thus increasing prices.

4 points   

QUESTION 8

A(n) ________ is a trade policy by which a nation agrees to limit its exports of a good in order to avoid more restrictive trade policies.

	A.	tariff
	B.	import ban
	C.	import quota
	D.	voluntary export restraint

Answer 1

5.

Since Belgium produces only two goods, chocolate and lace. If Belgium has a comparative advantage in lace, a move toward free trade will harm chocolate workers in the short run, benefit lace workers, but benefit the nation as a whole. This is because with trade, the production of lace will increase, the workers of lace firm will be employed and so they will be better off.

But the chocolate workers will be worse off because the production of the chocolate will decrease.

Hence option A is the correct answer.

6.

Since import bans restrict the import, so the quantity supplied decreases, so the price will increase. Since price has increased and quantity has decreased, so the product bought and sold will also decrease.

Hence option D is the correct answer.

D; all of the above.

7.

Since import quota is a legal limit restriction on the imported goods.

Hence import quota limits the amount of a good that can be imported, thus increase price because the quantity will decrease in the domestic country.

Hence option D is the correct answer.

8.

A(n) tariff is a trade policy by which a nation agrees to limit its exports of a good in order to avoid more restrictive trade policies.

This is because tariff increase the price of the exported goods, so the export demand decreases.

Hence option A is the correct answer.