ECON 1202 Chapter 5 HW Questions
with Guaranteed Pass Solutions.
Many countries engage in trade protection by imposing import tariffs or quotas for at least
some goods. This is because:
-while such restrictions harm consumers, they benefit producers, who are usually a more
cohesive and politically influential group.
-while such restrictions harm consumers and benefit producers, the losses to consumers are
outweighed by the gains to producers.
-economists have established that such restrictions are welfare-improving for certain categories
of goods (such as raw materials).
-such restrictions tend to benefit consumers without harming producers. - Answer while such
restrictions harm consumers, they benefit producers, who are usually a more cohesive and
politically influential group.
Suppose the United States auctioned off all import quotas, the auctions were perfectly
competitive, and the government received the revenues from the auction. In this case, the
deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff.
-greater than
-equal to
-less than
-in the case of demand being elastic, greater than - Answer equal to
France and England both produce wine and cloth with constant opportunity costs. France can
produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine.
England can produce 50 barrels of wine if it produces no cloth or 100 bolts of cloth if it
produces no wine. Using this information, we can conclude that:
-France has a comparative advantage in cloth production.
-England has a comparative advantage in cloth production.
-France has a comparative advantage in both goods.
-mutually beneficial international trade is not possible. - Answer England has a comparative
advantage in cloth production.
, -a model of increasing returns
-the Ricardian model
-the Heckscher-Ohlin model
-a model of autarky - Answer the Heckscher-Ohlin model
The effect of international trade on U.S. factor markets is to:
-decrease the wage of both highly educated workers and unskilled workers.
-increase the wage of highly educated workers.
-increase the wage of both highly educated workers and unskilled workers.
-increase the wage of unskilled workers. - Answer increase the wage of highly educated
workers.
If the _____ differ(s) between two countries, this suggests the possibility for mutually
advantageous trade.
-currency
-factor endowments
-level of government spending for defense
-exchange rate - Answer factor endowments
Use Figure: The Domestic Supply and Demand for SUVs in the United States. Suppose the world
price equals $50,000 and there is free trade. In the United States, consumer surplus would
_____ and producer surplus would _____.
The graph in the image is titled The Domestic Supply and Demand for SUVs in the United States.
The vertical axis of the graph is labeled as Price of SUVs ranging from 0 to 60,000 dollars, in
increments of 5,000. The horizontal axis of the graph is labeled as SUVs, in millions ranging from
0 to 12, in increments of 1. It shows a positively sloping linear supply curve denoted by the
letter S. The other is a negatively sloping linear demand curve denoted by the letter D. It shows
the supply and the demand curve meets each other at a point on the graph that lies opposite to
42,500 on the vertical axis and 7 on the horizontal axis.
-decrease; decrease
with Guaranteed Pass Solutions.
Many countries engage in trade protection by imposing import tariffs or quotas for at least
some goods. This is because:
-while such restrictions harm consumers, they benefit producers, who are usually a more
cohesive and politically influential group.
-while such restrictions harm consumers and benefit producers, the losses to consumers are
outweighed by the gains to producers.
-economists have established that such restrictions are welfare-improving for certain categories
of goods (such as raw materials).
-such restrictions tend to benefit consumers without harming producers. - Answer while such
restrictions harm consumers, they benefit producers, who are usually a more cohesive and
politically influential group.
Suppose the United States auctioned off all import quotas, the auctions were perfectly
competitive, and the government received the revenues from the auction. In this case, the
deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff.
-greater than
-equal to
-less than
-in the case of demand being elastic, greater than - Answer equal to
France and England both produce wine and cloth with constant opportunity costs. France can
produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine.
England can produce 50 barrels of wine if it produces no cloth or 100 bolts of cloth if it
produces no wine. Using this information, we can conclude that:
-France has a comparative advantage in cloth production.
-England has a comparative advantage in cloth production.
-France has a comparative advantage in both goods.
-mutually beneficial international trade is not possible. - Answer England has a comparative
advantage in cloth production.
, -a model of increasing returns
-the Ricardian model
-the Heckscher-Ohlin model
-a model of autarky - Answer the Heckscher-Ohlin model
The effect of international trade on U.S. factor markets is to:
-decrease the wage of both highly educated workers and unskilled workers.
-increase the wage of highly educated workers.
-increase the wage of both highly educated workers and unskilled workers.
-increase the wage of unskilled workers. - Answer increase the wage of highly educated
workers.
If the _____ differ(s) between two countries, this suggests the possibility for mutually
advantageous trade.
-currency
-factor endowments
-level of government spending for defense
-exchange rate - Answer factor endowments
Use Figure: The Domestic Supply and Demand for SUVs in the United States. Suppose the world
price equals $50,000 and there is free trade. In the United States, consumer surplus would
_____ and producer surplus would _____.
The graph in the image is titled The Domestic Supply and Demand for SUVs in the United States.
The vertical axis of the graph is labeled as Price of SUVs ranging from 0 to 60,000 dollars, in
increments of 5,000. The horizontal axis of the graph is labeled as SUVs, in millions ranging from
0 to 12, in increments of 1. It shows a positively sloping linear supply curve denoted by the
letter S. The other is a negatively sloping linear demand curve denoted by the letter D. It shows
the supply and the demand curve meets each other at a point on the graph that lies opposite to
42,500 on the vertical axis and 7 on the horizontal axis.
-decrease; decrease
