Question : 19.5   Free Trade or Protection? 1) The case for ________ based : 1381565

19.5   Free Trade or Protection?

1) The case for ________ is based on the theory of ________ advantage.

A) trade barriers; comparative

B) free trade; absolute

C) trade barriers; absolute

D) free trade; comparative

2) Which of the following statements is true?

A) Trade is beneficial because it allows more efficient allocation of resources.

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

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

D) all of the above

3) A tariff imposed on imported wine will cause the domestic ________ of wine to increase and the domestic ________ of wine to increase.

A) price; production

B) cost; price

C) imports; exports

D) revenues; imports

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 ________ 300 pairs of shoes.

A) buy

B) sell

C) import

D) export

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 the number of pairs of shoes imported into this country to

A) increase.

B) decrease.

C) remain the same.

D) fall to zero.

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 falls, 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 ________ 200 leather wallets.

A) buy

B) sell

C) import

D) export

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 ________ 250 leather wallets.

A) buy

B) sell

C) import

D) export

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, ________ revenue in this country will be $500.

A) export

B) import

C) tariff

D) total

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, domestic production will ________ by 50 wallets and domestic consumption will ________ by 50 wallets.

A) increase; decrease

B) decrease; increase

C) decrease; decrease

D) none of the above