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1.
The demand for shoes in a country is given by: D = 70 - 0.5 P, where P is the price of a pair shoes. Supply by domestic producers is given by: S = 30 + 0.5P. The world price of a pair of shoes equals 30 and this economy is open to trade. If a quota of 6 pairs is placed on shoe imports, the quantity of shoes produced domestically will change from ____ pairs with trade, but no quota, to ____ pairs with trade and a quota.
A)45; 50
B)45; 47
C)50; 55
D)50; 47
E)47; 50
2.
A more efficient alternative to restricting trade is:
A)to compensate the winners.
B)to compensate the losers.
C)autarky.
D)to repeal the law of comparative advantage.
E)a system of voluntary export restraints.
3.
Who among the following do not win from free trade?
A)Consumers of imported goods.
B)Producers of exported goods.
C)Consumers of exported goods.
D)Both a and b.
E)Both b and c.
4.
Who among the following do not lose from free trade?
A)Consumers of exported goods.
B)Producers of imported goods.
C)Consumers of imported goods.
D)Both a and b.
E)Both b and c.
5.
Who gain from import tariffs?
A)Consumers of imported goods.
B)Producers of imported goods.
C)Producers and consumers of exported goods.
D)The government.
E)Both b and d.
6.
Who lose from import tariffs?
A)Consumers of imported goods.
B)Producers of imported goods.
C)Consumers of exported goods.
D)The government.
E)Both b and c.
7.
Who gain from import quotas?
A)Consumers of imported goods.
B)Producers of imported goods.
C)Firms that hold import licenses.
D)The government.
E)Both b and c.
8.
Who lose from import quotas?
A)Consumers of imported goods.
B)Consumers of exported goods.
C)Producers of imported goods.
D)Firms that hold import licenses.
E)None of the above.
9.
The principal difference between a tariff and a quota is that:
A)A tariff generates profits for firms that hold import licenses, while a quota generates tax revenues for the government.
B)A tariff generates tax revenues for the government, while a quota generates profits for firms that hold import licenses.
C)A tariff hurts consumers of imported goods, but a quota benefits them.
D)A tariff hurts producers of imported goods, but a quota benefits them.
E)A quota hurts the consumers of exported goods, but a tariff benefits them.
10.
Which of the following is not correct about the effects of the VER the US imposed on Japanese automobiles in the 1980s?
A)It benefited the US automakers.
B)It hurt the US auto consumers.
C)It resulted in price increases in the US automobile market.
D)It benefited the Japanese automakers.
E)It hurt the US government.





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