29 Dec The people who support

Question 1

Normal profit is the return to? _____. Normal profit is part of a? firm’s _____ cost because it is the cost of not running another firm.

A. ?capital; fixed

B. ?capital; opportunity

C. foreign? investment; sunk

D. ?entrepreneurship; opportunity

Question 2

Ty leases a? farmer’s field and grows melons. He hires students to pick and pack the melons.

The table sets out Ty’s total product schedule.

What is the marginal product of the first student and the average product of 1 student??

The marginal product of the first student is _____ melons a day.

The average product of 1 student1 student is ______melons a day.

?>>> Answer to 1 decimal place.

Labor

?(students)

Total product

?(melonsmelons

per? day)

0

0

1

100

2

220

3

300

4

360

5

400

6

420

7

430

Question 3

Naomi’s birdhouse factory rents equipment for constructing birdhouses and hires students.

Naomi pays ?$50 a day for equipment and ?$120 a day for each student hired

The table shows Naomi’s total product schedule.

Construct Naomi’s total variable cost and total cost schedules. Fill in the columns in the table.

At each? output, total cost exceeds total variable cost by the? firm’s _______.?

A. average fixed cost

B. total fixed cost

C. average total cost

D. marginal cost

Question 4

The table gives the cost of producing? T-shirts.

The total fixed cost is? ______ and the marginal cost of increasing production from 10 to 12? T-shirts is? _______.

A. ?$56; $16??

B. ?$20; $64

C. ?$8; $20

D. ?$20; $8

Output

?(T-shirts

per? hour)

Total

cost

?(dollars)

Total variable cost

?(dollars)

??8

76

56

10

84

64

12

100

80

Question 5

The graph shows the average variable cost curve and average total cost curve for a firm that produces candles.

Draw the? firm’s marginal cost curve. Label it.

When the marginal cost of producing an output exceeds its average variable cost but is less than its average total? cost, _______.?

A. average variable cost is increasing while average total cost is decreasing

B. total variable cost is at its maximum value

C. both average variable cost and average total cost are increasing

D. average fixed cost is increasing

Question 6

hires students at ?$50 a day to paint houses.??

She leases equipment that costs ?$120 a day.??

Suppose that Judy doubles the number of students sheshe hires and doubles the amount of equipment that she leases.

If Judy experiences diseconomies of scale diseconomies of scale?, herher ?long-run average cost curve? ______.

A. slopes upward

B. shifts upward

C. slopes downward

D. shifts downward

E. is horizontal

Question 7

The table shows the demand schedule for Lila’s

Apple Orchard.

Lila’s Apple Orchard operates in a market called? ______.

A. monopolistic competition

B. a perfect oligopoly

C. a monopoly

D. perfect competition

E. an oligopoly

Lila’s marginal revenue for each crate of apples demanded is ?$_______

Price

?(dollars per

cratecrate?)

Quantity demanded

?(cratescrates

per? day)

35

0

35

1

35

2

35

3

35

4

35

5

35

6

Question 8

The table shows the cost structure of a firm selling bottles of water in a perfectly competitive market.

What is the quantity at the? firm’s shutdown? point?

The? firm’s shutdown point occurs at a quantity of _____bottles of water per week and the market price is ?$_____ a bottle

Quantity

?(bottles per? week)

Marginal

cost

Average variable cost

?(dollars per? bottle)

0

0

0

100

3.00

4.40

200

3.20

3.90

300

3.50

3.50

400

3.82

3.55

500

4.20

3.60

600

5.00

3.75

Question 9

Rose growing is a perfectly competitive industry and all rose growers have the same costs

The market price of roses is ?$15 a bunch and each grower maximizes profit by producing 1600 bunches a week.?

Average total cost of producing roses is ?$11 a bunch and average variable cost is ?$7 a bunch.

Minimum average variable cost is ?$3 a bunch.

What is the price at the? grower’s shutdown? point?

The price at the? grower’s shutdown point is ?$____bunch.

Question 10

Consider a perfectly competitive market in which all firms have the same costs.

Choose the statement that is incorrect.

A. The market demand is perfectly elastic at the market price.

B. Market demand and market supply determine the market price and market output.

C. The market supply curve is upward sloping at prices above the? firm’s shutdown price.

D. Each firm takes the market price as given and produces its? profit-maximizing output.

Question 11

Rose growing is a perfectly competitive industry and all rose growers have the same cost curves.

The market price of roses is ?$14 a bunch and each grower maximizes profit by producing 700700 bunches a week.

The average total cost of producing roses is ?$25 a bunch. Minimum average variable cost is ?$1212 a bunch?, and the minimum average total cost is ?$17 a bunch.

In the long? run, the market price of roses is? _____ a bunch.

A. ?$17

B. ?$14

C. ?$25

D. ?$12

E ?$59

In the long? run, a rose ?grower’s economic profit is ?$______

Question 12

Peter’s tattoos is a tattooing business in a perfectly competitive market in Fargo.

The table shows the total cost schedule of Peter’s Tattoos.

If the market price is ?$35.00 a tattoo?, Peter’s Tattoos _________ in the short run of ?$

____ an hour.

In the long? run, firms _____ the industry.

Quantity

?(tattoostattoos

per? hour)

Total cost

?(dollars per? hour)

1

70

2

100

3

120

4

150

5

190

6

250

Question 13

Allegiant? Air: The? tardy, gas-guzzling, most profitable airline in America

With 64? jets, Allegiant Air has achieved the lowest? costs, fullest? planes, and highest margins in the U.S. airline industry. It serves 75 small U.S. cities and faces competition on just 17 of its 203 routes. It offers? no-frills fare and charges for everything? else, from? carry-on luggage to water.

?Source: The Wall Street Journal?, June? 4, 2013

Read the news? clip, then answer the following questions.

Allegiant Air is? _________ monopoly on 186 routes.??

A. a legal

B. not a

C. ?cost-effective

D. a natural

The barrier to entry in the market in which Allegiant Air competes is? _________.???

A. a public franchise

B. a government license

C. ?Allegiant’s costs, which are lower than other airlines

D.?Allegiant’s decision to charge for? carry-on luggage and water

Question 14

A multiplex cinema in downtown Minneapolis is a monopoly.

A. True

B.False

Tiffany, the upscale jeweler is a monopoly.

A. True

B. False

Costco, the discount retailer is a monopoly.

A. True

B. False??

The only bus service licensed to operate at an airport is a monopoly.

A. True

B. False?

The U.S. Postal Service is a monopoly.

A. True

B. False

Question 15

Mineral Springs is a? single-price monopoly.

The table shows the demand schedule for Mark’s Mineral Springs ?(columns 1 and ? 2) and the? firm’s total cost schedule? (columns 2 and? 3).

What is Mark’s ?profit-maximizing output,? price, and economic? profit?

Mark’s ?profit-maximizing output is _____bottles an hour.

Mark’s ?profit-maximizing price is ?$______ a bottle.

When Mark’s produces the? profit-maximizing output and charges the? profit-maximizing price, economic profit is

?$_____ an hour.

Price

?(dollars per

bottlebottle?)

Quantity

?(bottlesbottles

per? hour)

Total cost

?(dollars

per? hour)

14

0

1

13

1

8

12

2

17

11

3

28

10

4

41

9

5

56

Question 16

Out of This World is the only private rocket ride in the nation. ??

The table sets out the demand schedule for rides and the cost schedule for producing the rides.

???

Calculate Out of This World’s ?profit-maximizing price, output and economic profit if it charges a single price for all rides.

Out of This World’s ?profit-maximizing output is __________rides a day.

Out of This World’s ?profit-maximizing price is ?$____ a ride.

?>>> Answer to 2 decimal places.

When Out of This World produces the? profit-maximizing output and charges the? profit-maximizing price, economic profit is ?$_________

?>>> If the firm incurs an economic? loss, indicate the loss with a minus sign. If the firm earns an economic? profit, do not include a plus sign

Price

Quantity

Total cost

?(dollars per

rideride?)

?(ridesrides

per

dayday?)

?(dollars per

dayday?)

20

0

1,000

18

100

2,000

16

200

3,000

14

300

4,000

12

400

5,000

10

500

6,000

8

600

7,000

6

700

8,000

4

800

9 000

Question 17

Cook’s Tall Ship Cruises is a? single-price monopoly.

The table shows the demand schedule for cruises ?(columns 1 and? 2) and Cook’s total cost schedule? (columns 2 and? 3).

Calculate Cook’s total revenue and marginal revenue schedules and fill in the two right columns of the table.

Question 18

Fogg’s Adventure Holidays is a? single-price monopoly. ?

The table gives the demand schedule for holidays ?(columns 1 and? 2) and Fogg’s total cost schedule before taxes? (columns 2 and? 3).?

Suppose the government taxes Fogg’s by ?$50,000 per holiday.?

Calculate Fogg’s new? profit-maximizing output, price and economic profit.

?>>> Remember that the amounts in the table are given in thousands of dollars.

Fogg’s ?profit-maximizing output is ______holidays a month.

?>>> Answer to 1 decimal place.

Fogg’s ?profit-maximizing price is ?$_______a holiday.

When Fogg’s produces the? profit-maximizing output and charges the? profit-maximizing price, economic profit is _________dollars.

???>>> If your answer is? negative, include a minus sign. If your answer is? positive, do not include a plus sign.

Price

?(thousands of dollars

per

holidayholiday?)

Quantity

?(holidaysholidays

per

? month)

Total cost

?(thousands of dollars per

?month)

240

0

75

220

1

170

200

2

275

180

3

390

160

4

515

140

5

650

Question 19

?Bob’s Books is the only bookstore in town.

The graph shows the demand curve for books and? Bob’s Books’ marginal revenue curve and marginal cost curve.

?Bob’s Books maximizes its profit by charging? ______ a book and selling? ______ books a year.

A. ?$12; 26,000

B. ?$32; 6,000??

C. ?$8; 15,000

D. ?$23; 15,000

Question 20

Major league baseball is exempt from laws designed to limit market power and it operates as a monopoly.

If the baseball market became? competitive, the number of teams would? ______ and the economic profit of each team would? ______.

A.?increase; increase

B. ?increase; decrease

C.?decrease; decrease

D. not change because the current number of teams is the efficient? number; not change

E.?decrease; increase

Question 21

For each of the following situations in? California, indicate whether or not it is an example of price discrimination.

The weekend price of a hotel room is greater than the? mid-week price.

?Stand-by passengers can fly at lower fares than passengers who buy etickets.

Colleges charge? out-of-state students a higher tuition than Californian students.

A cruise line sells the second cruise booked within a year at a 20 percent discount.

A bank charges a higher interest rate on a car loan than it charges the same person for a student loan.

The price of water is higher for a car wash firm than it is for a farmer.

A tropical resort offers lower prices on holidays in low season.

A railway company offers discounts to families traveling with young children.

Question 22

Which of the following is an example of a price cap regulation??

A. Fast food employers have raised the wage rate to? $15 an hour following the new employee act.

B. A government regulation has forced cable TV operators to lower the price of cable TV from? $55 a month to? $30 a month.

C. Political parties are protesting against the? government’s decision to deregulate gas prices.

D. Cell phone companies have reported an increase in profits this quarter.

Question 23

A firm is a natural monopoly if? ______.

A. it can satisfy the market demand at a lower average total cost than other firms can

B. it can produce a larger quantity of the good than other firms could

C. the government grants it a public franchise or patent

D. it can produce the good at a price below its? competitor’s price

Question 24

Hostess Brands closing for good

When its customers switched to healthier? foods, Hostess incurred losses. To return to? profit, the firm proposed a wage? cut, but its workers went on strike. Hostess shut down its 33? bakeries, 565 distribution? centers, and 570 outlet stores.

?Source: CNN? Money, November? 16, 2012

Read the news? clip, then answer the following questions.

The switch to healthier foods brought economic loss to Hostess in the short run because? _______.??

A. the demand for Hostess products decreased

B. the average fixed cost of Hostess products increased

C. the marginal cost of Hostess products increased

D. the marginal revenue from Hostess products increased

Hostess decided to exit the market in the long run because it? _______.?

A. expected the economic loss to persist

B. expected new firms to enter the market

C. wanted to break the union

D. expected other firms in the market to exit

Question 25

Lorie teaches singing. Her fixed costs are? $1,000 a? month, and it costs her? $50 of labor to give one class. The table shows the demand schedule for? Lorie’s singing lessons.

In the long? run, the demand for? Lorie’s lessons? ______, and her economic profit? ______.

A.?increases; falls to zero

B. ?decreases; increases

C.?increases; increases

D.?decreases; falls to zero

Price

Quantity demanded

?(dollars per? lesson)

?(lessons per? month)

0

250

50

200

100

150

150

100

200

50

250

0

Question 26

The graph shows the demand curve and marginal revenue curve of At Home?, ?Inc., a producer of DVD players in monopolistic competition.?

Draw the? firm’s marginal cost curve if At Home produces 125 DVD players a week. Label it.?

Draw a point at the? profit-maximizing quantity and price.

If average total cost at the? profit-maximizing quantity is ?$150 a player?, At Home?’s economic profit is ?$__________

Question 27

Suppose that a new technology enables anyone with a small workshop to produce outstanding barbecues.

You would expect? ______ in production differentiation and? ______ competition on product? quality, price, and marketing.

A. no change? in; less

B. a decrease?; less

C. an increase?; more

D. an increase?; no change in

Question 28

If in the short? run, firms in monopolistic competition make _______ economic? profit, then in the long? run, new firms will enter the market.

The? ______ each individual? firm’s product will? ______.

A.demand? for; increase

B.supply? of; increase

C.supply? of; decrease

D.demand? for; decrease

In the new? long-run equilibrium, firms will make ________economic profit.

Question 29

The dry cleaning industry is in monopolistic competition.

In the short? run, the? profit-maximizing price is? $10 per item and the average total cost is? $6 per item.

In? long-run equilibrium, the? profit-maximizing price is? $8 per item.

In? long-run equilibrium, what is the economic profit of a firm in the dry cleaning? industry?

In? long-run equilibrium, the dry cleaning firm makes ?$_______economic profit.

Question 30

Which of the following firms produce at the efficient scale??

A. Dell produces 100 computers a week at which its average total cost is minimized.

B. A Gap outlet in Chicago sells 500 jackets a day and lowers its average variable cost.

C. Toyota produces 20 cars a day at its Texas plant at which its profit is maximized.

D. ?Starbucks’ makes 1000 chai lattes each day at which is total revenue is maximized.

Question 31

Curt bakes delicious cookies. His total fixed cost is ?$80 a? day, and his average variable cost is ?$1 a bag. He is maximizing his profit by selling 16 bags of cookies a day for?$6 a bag.

Few people know about Curt’s Cookies. Curt thinks that if he spends ?$10 a day on? advertising, he can sell 38 bags of cookies a day for ?$6 a bag.

If Curt’s belief about the effect of advertising is? correct, he ?______.

A. can increase his economic profit by advertising only if he raises the price of a bag of cookies

B. can increase his economic profit by advertising

C. cannot increase his economic profit by advertising because advertising increases hishis average total cost

D. cannot increase his economic profit by advertising because advertising increases hishis total cost

E. can increase his economic profit by advertising only if hehe lowers the price of a bag of cookies

Question 32

Hidden Valley has two wind turbines producing electricity?, one owned by Bill and the other owned by Ben.

The marginal cost of producing electricity is ?$8 a unit.

The table gives the demand schedule for electricity in this area.

If Bill and Ben are forced to sell at the perfectly competitive? price, what is the price of a unit of

electricity??

The perfectly competitive price of electricity is ?$_________ a unit.

The total quantity produced is ________ units a day.

Price

?(dollars per? unit)

Quantity demanded

?(units per? day)

24

0

20

6

16

12

12

18

8

24

4

30

0

36

Question 33

Duracell and Energizer are the only major producers of batteries. Each company has developed a long-lasting battery and aggressively advertises it.

The two firms are locked in a? duopolists’ dilemma.

The? duopolists’ dilemma facing Duracell and Energizer is? ______.

A. for each firm to be successful in eliminating the other firm from the long-lasting battery market

B. what they can do to protect their control of the long-lasting battery market

C. how to increase advertising but at the same time lower average total cost

D. whether they could trust each other to raise the price of a battery and decrease advertising to raise economic profit

Question 34

Choose the statement that is incorrect.

A. Firms in oligopoly might produce a differentiated product and compete on? price, product? quality, and marketing.

B. Firms in oligopoly might produce an identical product and compete only on price.

C. Oligopoly lies between perfect competition and monopoly.???

D. Oligopolies have a natural barrier preventing the entry of new firms.

Question 35

A cartel is a group of firms acting together to? _____ output,? _____ price, and increase? _____.

A. ?increase; raise; marginal revenue

B. ?increase; raise; economic profit

C. ?limit; lower; total revenue

D. ?limit; raise; economic profit

week 4 homework

Question 1
The functional distribution of income shows the distribution of income among? ______ and the personal distribution of income shows the distribution of income among? ______.

A. factors of? production; job type

B. factors of? production; households

C. firms and? households; individuals

D. different types of? workers; households according to location

E. ?firms; households according to age

Question 2

Indicate all the items in the following list that are not factors of production and explain why.

Item a?: Trucks used by FedEx to make deliveries

Item b?: Your dog

Item c?: Undiscovered coal reserves

Item d?: A garbage truck

Item e?: A pack of bubble gum

Item f?: The President of the United States

A. Item f because people who work in government are unproductive.

B. Item b because it? isn’t productive, and item c because it? isn’t available to produce goods and services. All other items in the list are factors of production.

C. Items ?b, c, and e because they are not productive resources used to produce goods and services—?land, ?labor, capital, or entrepreneurship.

D. Item e only because it provides personal enjoyment.

E. Items ?a, d, and f??because they are productive resources used to produce goods and services—?land, ?labor, capital, or entrepreneurship.

Question 3

Which of the following correctly lists the categories of factors of? production?

A. ?owners, workers, and consumers

B. ?machines, buildings,? land, and money??

C. ?land, labor,? capital, and entrepreneurship

D. ?hardware, software,? land, and money

E. ?capital, money, and labor

Question 4

Consumption expenditure flows from? ______ to? ______ through the? ______ markets.???

A. ?firms; households; factor

B. ?households; firms; goods

C. households and? governments; firms; factor

D. ?governments; households; goods

E. households and? governments; firms; goods

Question 5

The graph shows the market for pillows.?

Draw a point to show the price of a pillow and the quantity bought and sold. Label it 1.???

The government imposes a tax of? $4 per pillow on buyers.???

Draw the S? + tax curve and label it.????

Draw a point to show the price paid by buyers and the quantity bought and sold with the tax. Label it 2.??

Draw a point to indicate the price received by sellers and the quantity bought and sold with the tax. Label it 3.

Question 6

Tax incidence is the division of the burden of a tax between the? _____ and the? _____.

A. ?government; buyer

B. ?society; seller

C.?buyer; seller

D. ?government; seller

Question 7

The graph shows the market for apartments in Dayton , Ohio.

If the city government imposes a rent ceiling of ?$600600 a? month, what is the rent and how many apartments are rented in Dayton , Ohio??

?>>> Remember that the quantity given on the x?-axis is in thousands of apartments.

The rent is ?$___ a month and ________ apartments a month are rented.

Question 8

Despite pleas for a? freeze, stabilized rents to go up

New? York’s Rent Guidelines Board ignored pleas from tenants and elected officials to freeze rents for the first time in its? 40-year history and voted for increases of? 3% on? one-year leases and? 6% on? two-year leases. Maintenance costs for? rent-stabilized buildings have increased? 4%.

Read the news? clip, then answer the following question.

If rents for? rent-stabilized apartments are frozen while maintenance costs have? increased, ______.

A. the shortage of apartments will increase

B. the demand for apartments will decrease

C. landlords will offer more apartments for rent

D. a surplus of apartments will arise

Question 9

The table shows the demand and supply schedules for? on-campus housing.

If the college puts a rent ceiling on rooms of ?$325325 a? month, rent is ?$____and the number of rooms rented is ______.

Rent

?(dollars per? month)

Quantity demanded

Quantity supplied

?(rooms)

250

7,500

6,000

275

6,750

6,000

300

6,000

6,000

325

5,250

6,000

350

4,500

6,000

375

3,750

6,000

Question 10

Concerned about the political fallout from rising college tuition?, the U.S. government decides to impose a price ceiling on tuition of ?$20,000 a student.

If more colleges open and drive the equilibrium price of tuition to ?$15 comma 00015,000 a student?, ?_____. The market for college education is? ______.

A. a surplus of college education emerges ?; inefficient

B. a shortage of college education emerges ?; inefficient

C. a surplus of college education emerges ?; efficient

D. neither a surplus nor a shortage of college education emerges ?; efficient

E. a shortage of college education emerges?; efficient

Question 11

A black market that emerges as the result of a price ceiling is an illegal market in which? _______.

A. the price is less than the legally imposed price ceiling

B. the price exceeds the legally imposed price ceiling

C. the quantity traded is less than the legally imposed quantity

D. the quantity traded is greater than the legally imposed quantity

Question 12

If the government sets a price on dog food that is below the equilibrium? price, ______.

A. a surplus of dog food occurs

B. new firms enter the industry to meet the increase in demand that results from the decrease in price

C. existing firms in the dog food industry expand production to meet the increase in the quantity demanded

D. a shortage of dog food occurs

Question 13

The graph shows the market for tomato pickers in southern California.

If California introduces a minimum wage for tomato pickers of ?$8.00 an? hour, how many pickers are employed and how many are? unemployed?

If California introduces a minimum wage for tomato pickers of ?$8.00 an? hour, ____ pickers are employed and __________ pickers are unemployed.

Question 14

The graph shows the market for orange pickers in Florida.

If Florida introduces a minimum wage for orange pickers of ?$14.00 an? hour, the minimum wage is? ______.

A. efficient and fair

B. inefficient but fair

C. efficient and fair only if the workers can increase the number of hours they work

D. efficient but not fair

E. inefficient and not fair

Question 15

The graph shows the market for blueberries.

The government introduces a price support for blueberries and sets the support price at ?$3.003.00 a pound.

?_______ gain from the price support and? ______ lose from the price support.?

A. ?Farmers; consumers and taxpayers

B. ?Consumers; farmers

C. ?Taxpayers; consumers

D. Consumers and? taxpayers; farmers

E. Farmers and? consumers; taxpayers

Question 16

The graph shows the market for cashews.

The equilibrium price of cashews is ?$_____a pound and the equilibrium quantity of cashews is _______ billion pounds

Question 17

The methods that governments use to support farms? vary, but they almost always include all of the following

except? _______.

A. the payment of a subsidy to the farms

B. the introduction of a price floor

C. lower taxes for farmers

D. isolating the domestic market from global competition

Question 18

Suppose that the world price of bananas is 18 U.S. cents a pound and that when Australia does not trade bananas? internationally, the market price of bananas in Australia is 12 U.S. cents a pound.

If Australia opens up to? trade, Australia? ______ bananas. The price of bananas in Australia? ______.

A. ?exports; falls

B. ?exports; rises

C. ?imports; falls

D. ?imports; rises

Question 19

?______ are the? ______ that we buy from people in other countries.

A. ?Imports; goods and services

B. ?Imports; goods

C. ?Exports; goods and services

D. ?Exports; goods

Question 20

National comparative advantage arises from the differences in? _______ across countries.?

A. technology

B. the money cost of production

C. opportunity cost

D. population

Question 21

A country that trades internationally imports a good at a price? ______ than what domestic producers could produce the good for before the country began to trade internationally and exports a good at a price? ______ than what domestic producers could sell the good for before the country began to trade internationally.

A. ?higher; lower

B. ?lower; higher

C. ?lower; lower

D. ?higher; higher

Question 22

The graph shows the car market in Mexico when Mexico places no restriction on the quantity of cars imported. The world price of a car is? $10,000.

Suppose the government of Mexico introduces an import quota of 4 million a year.

Draw a line to show the new supply of cars in Mexico. Label it.

Draw a point to show the quantity of cars bought in Mexico and the price paid

Question 23

A tariff? _______.

A. is a tax imposed on a good when it is imported

B. enables the government to satisfy the? self-interest of people who earn their incomes in? import-competing industries

C. provides revenue to the government

D. all of the above

Question 24

The figure shows the car market in Brazil when Brazil places no restriction on imports of cars.

The world price of a car is? $10,000.

Suppose the government of Brazil introduces a 20 percent tariff on car imports.

The new price of a car in Brazil is ?$________.

Question 25

The graph shows? Spain’s demand for and supply of oranges.

The world price of oranges is euro€1.00 a pound.

Suppose that the government of Spain imposes a tariff of

euro€0.50 a pound on oranges imported into Spain.

Draw a line to show the price of oranges in Spain. Label it Spanish price.

Draw a point at the quantity of oranges demanded by Spanish consumers at the world price plus tariff. Label it 1.??

Draw a point at the quantity of oranges supplied by Spanish producers at the world price plus tariff. Label it 2.

Question 26

Which of the following is an example of an import quota??

The United States? _____ .

A. limits the quantity of textiles that U.S. producers may sell to Mexico

B. puts a 10 percent tax on auto part imports from China

C. limits the quantity of auto parts that U.S. car makers may buy from China

D. limits the quantity of sugar that farmers are permitted to produce

Questions 27

Which of the following is an example of an export subsidy??

A. The U.S. government pays farmers? $100 per ton of sugar sold to Canada.

B. Farmers form a union to get higher prices for their exports.

C. The U.S. government pays farmers? $100 per ton of sugar produced.

D. The U.S. government buys fighter jets from Boeing.

Question 28

The United States maintains an import quota on sugar. What is the argument for this import? quota???

A. Foreign producers would dump sugar at a price below its cost of production.

B. Sugar is essential for national security.

C. Foreign sugar producers pollute.

D. The U.S. sugar industry is an infant industry that will one day be able to compete without protection.

E. The import quota protects U.S. jobs

Question 29

Indonesians bemoan Hollywood blockbuster blackout

The Indonesian import tariff on Hollywood movies was meant? “to protect local film? makers,” but major Hollywood studios withdrew their films.?

?Source: The Jakarta Post?, July? 6, 2011

Indonesia is using the? ______ argument against free trade with the United States.??

A. dumping

B. lax environmental standard

C. national security

D. diversity and stability

E. ?infant-industry

Question 30

Former Venezuelan president Hugo Chavez opposed the creation of a Free Trade Area of the Americas? (FTAA).

?Why? Who did he think would gain and? lose?

President Chavez thought that? ______.?

A. Venezuela would lose tariff revenue

B. poor workers in Venezuela would lose and rich American firms would win

C. Venezuelans would lose because they would have to clean up their polluting industries

D. Venezuelans would lose because the price of oil would fall

E. Both A and B are correct

Question 31

Which of the following activities is an example of dumping??

A. Dell pays a 10 percent tariff on its imports of PCs produced in China.

B. Dell exports PCs to India at a price 20 percent lower than the cost of producing them.

C. Boeing imports aircraft components because they cost less than the same components produced in the United States.

D. Boeing exports airplanes to China at a price 10 percent higher than the cost of producing them.

Question 32

The fundamental force driving international trade is comparative? _______.

A. ?advantage: the country with the lower opportunity cost of production exports the good

B. ?abundance: the country that produces more than it needs exports the good

C. ?cost: a country trades with other countries that produce cheaper goods

D. ?advantage: a country exports those goods that have high prices

Question 33

With free trade between China and the United? States, the winners are? ______ and the losers are? ______.

A. U.S. consumers of U.S.? imports; U.S. producers of the U.S. import good

B. U.S. producers of the U.S. export? good; U.S. consumers of U.S. imports

C. ?China’s consumers of? China’s imports;? China’s producers of its export good

D. ?China’s consumers of? China’s export? good; China’s producers of its imported good

Question 34

If Korea imposes an import quota on U.S.? oranges, losers include Korean? ______ of oranges and U.S.? ______ of oranges.

A. ?consumers; producers

B. ?producers; consumers

C. ?producers; producers

D. ?consumers; consumers

Question 35

The people who support restricted international trade say that? ______.

A. outsourcing sends jobs? abroad, which brings diversification and makes our economy more stable

B. U.S. firms? won’t be able to compete with? low-wage foreign labor if trade is free

C. protection is needed to enable U.S. firms to produce the things at which they have a comparative advantage

D. protection saves? jobs, in both the U.S. and foreign economies