Question : 19.5   Free Trade or Protection? 1) The case for free trade : 1381279

19.5   Free Trade or Protection?

1) The case for free trade is based on the

A) theory of balanced growth.

B) theory of absolute advantage.

C) argument for a diversified economy.

D) theory of comparative advantage.

2) Which of the following statements is NOT true?

A) Trade is beneficial because it allows more efficient production.

B) Trade is beneficial because it allows consumers to buy goods at cheaper prices.

C) Trade is beneficial because it allows all domestic industries to increase production.

D) Trade is beneficial because it allows consumption beyond the production possibility frontier.

3) A tariff imposed on imported shoes will cause the domestic price of shoes to ________ and the domestic production of shoes to ________.

A) increase; increase

B) increase; decrease

C) decrease; increase

D) decrease; decrease

Refer to the information provided in Figure 19.3 below to answer the questions that follow.

Figure 19.3

4) Refer to Figure 19.3. The domestic price of shoes is $80. After trade the price of a pair of shoes is $60. After trade this country will import

A) 100 pairs of shoes.

B) 200 pairs of shoes.

C) 300 pairs of shoes.

D) 1,300 pairs of shoes.

5) Refer to Figure 19.3. The domestic price of shoes is $80. After trade the price of a pair of shoes is $60. Now domestic production costs fall so that the equilibrium domestic price of a pair of shoes is $70. This would cause

A) the number of pairs of shoes imported into this country to increase.

B) the number of pairs of shoes imported into this country to decrease.

C) the number of pairs of shoes exported from this country to increase.

D) the number of pairs of shoes exported from this country to decrease.

6) Refer to Figure 19.3. The domestic price of shoes is $80. After trade the price of a pair of shoes is $60. If shoes are a normal good and income in this country rises, then we would expect

A) the number of pairs of shoes imported into this country to increase.

B) the number of pairs of shoes imported into this country to decrease.

C) the number of pairs of shoes exported from this country to increase.

D) the number of pairs of shoes exported from this country to decrease.

Refer to the information provided in Figure 19.4 below to answer the questions that follow.

Figure 19.4

7) Refer to Figure 19.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. If there is free trade, this country will import ________ leather wallets.

A) 50

B) 100

C) 200

D) 300

8) Refer to Figure 19.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed, this country will import ________ leather wallets.

A) 50

B) 100

C) 150

D) 200

9) Refer to Figure 19.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed, tariff revenue in this country will be

A) $50.

B) $250.

C) $500.

D) $750.

10) Refer to Figure 19.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed,

A) domestic production and consumption will increase by 50 wallets and domestic consumption will increase by 50 wallets.

B) domestic production will increase by 150 wallets and domestic consumption will decrease by 250 wallets.

C) domestic production will increase by 100 wallets and domestic consumption will decrease by 100 wallets.

D) domestic production will increase by 50 wallets and domestic consumption will decrease by 50 wallets.