Multiple Choice Questions:
1. Protectionist legislation is often passed because?
a. Employers in the affected industry lobby more effectively than the workers in that industry.
b. Both employers and workers in the affected industry lobby for protectionist policies.
c. Trade restrictions often benefit domestic consumers in the long run, even though they must pay more in the short run.
d. None of the above
2. Introducing a tariff on vitamin E would?
a. Reduce imports of vitamin E.
b. Increase U.S. consumption of domestically produced vitamin E.
c. Decrease total U.S. consumption of vitamin E.
d. Do all of the above.
e. Do none of the above.
3. A new U.S. import quota on imported steel would be likely to?
a. Raise the cost of production for steel-using American firms.
b. Generate tax revenue to the government.
c. Decrease U.S. production of steel.
d. Increase the production of steel-using American firms.
e. Do all of the above.
4. An import quota does which of the following?
a. Decreases the price of the imported goods to consumers
b. Increases the price of the domestic goods to consumers
c. Redistributes income away from domestic producers of those products toward domestic producers of exports
d. A and c
e. B and c
5. A crucial difference between the impacts of import quotas and of tariffs is that?
a. Import quotas generate revenue to the domestic government, but tariffs do not.
b. Import quotas generate no revenue to the domestic government, but tariffs do.
c. Tariffs increase the prices paid by domestic consumers, but quotas do not.
d. A and c
e. B and c
6. If the United States could produce 0.5 ton of potatoes or 1 ton of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, the country with the comparative advantage in producing wheat is ___________ and the country with the absolute advantage in producing potatoes is ___________?
a. The United States; the United States
b. The United States; Ireland
c. Ireland; the United States
d. Ireland; Ireland
7. According to international trade theory, a country should?
a. Import goods in which it has an absolute advantage.
b. Export goods in which it has an absolute advantage.
c. Import goods in which it has a comparative disadvantage.
d. Import goods in which it has an absolute disadvantage.
e. Import goods when it has either a comparative or absolute disadvantage in producing them.
8. Relative to a no-international-trade initial situation, if the United States imported wine, the U.S. domestic price of wine?
a. Would rise, but domestic output would fall.
b. Would fall, but domestic output would rise.
c. Would rise, and domestic output would rise.
d. Would fall, and domestic output would fall.
9. Relative to a no-international-trade initial situation, if the United States exported wine, the U.S. domestic price of wine?
a. Would rise, but domestic output would fall.
b. Would fall, but domestic output would rise.
c. Would rise, and domestic output would rise.
d. Would fall, and domestic output would fall.