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1 | |
The demand curve for a single individual shows how his or her marginal utility declines as consumption rises. |
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| | A) | TRUE |
| | B) | FALSE |
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2 | |
A firm’s marginal cost curve is also its supply curve when the firm acts in a perfectly competitive manner. |
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| | A) | TRUE |
| | B) | FALSE |
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3 | |
Since the supply curve is the marginal cost curve, the area under the supply curve up to a particular level of output shows the cost of producing that level of output. |
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| | A) | TRUE |
| | B) | FALSE |
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4 | |
The demand curve reflects the marginal utility of consumption since firms set prices equal to marginal cost. |
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| | A) | TRUE |
| | B) | FALSE |
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5 | |
The supply curve shows marginal cost since consumers buy goods up to the point where their marginal utility equals the price. |
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| | A) | TRUE |
| | B) | FALSE |
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6 | |
Consumer surplus is the area below the demand curve minus the cost of purchasing the goods - since this measures that amount of utility people get from consuming the goods in excess of what they pay for the goods. |
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| | A) | TRUE |
| | B) | FALSE |
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7 | |
Producer surplus is the area under the supply curve since this measures the operating profit from production. |
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| | A) | TRUE |
| | B) | FALSE |
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8 | |
The import demand curve is: |
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| | A) | always upward sloping. |
| | B) | the horizontal difference between the domestic demand and supply curves. |
| | C) | the vertical sum of the domestic demand and supply curves. |
| | D) | a reflection of the cost of producing the imported goods. |
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9 | |
The import supply curve is: |
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| | A) | usually downward sloped. |
| | B) | a reflection of how much it costs foreigners to supply the goods. |
| | C) | the horizontal difference between the domestic demand and supply curves. |
| | D) | the marginal value of foreign consumption. |
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10 | |
When the price of imports fall, the home nation gains on net because: |
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| | A) | it pays less for the goods it was already importing and it gets some surplus on the increased volume of imports. |
| | B) | In fact, a nation is hurt by cheap imports. |
| | C) | the higher level of imports that results allows higher levels of consumption and higher levels of domestic production. |
| | D) | the import supply curve is upward sloped. |
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11 | |
The border price effect shows how much the nation would gain or lose from an import price change assuming there is no change in: |
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| | A) | the volume of imports. |
| | B) | the terms of trade. |
| | C) | the level of the tariff. |
| | D) | domestic consumption. |
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12 | |
The trade volume effect shows the welfare effects of a change in the volume of imports, ignoring the impact of the price change on: |
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| | A) | the initial level of imports. |
| | B) | domestic production. |
| | C) | foreign welfare. |
| | D) | tariff revenue. |
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13 | |
A tariff tends to drive down a nation’s border price since it: |
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| | A) | reduces the volume of imports and this pushes foreigners down their supply curve. |
| | B) | improves the efficiency of domestic producers. |
| | C) | leads domestic consumers to consume more. |
| | D) | is fully passed on to domestic consumers. |
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14 | |
If the price of a nation’s exports rise, it gains on the whole even though consumers _______ and producers ___________. |
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| | A) | win, lose |
| | B) | have no gains, win |
| | C) | lose, win |
| | D) | win, have no gains |
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15 | |
If the price of a nation’s imports rise, this is _________ for domestic producers and ________ for domestic consumers. |
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| | A) | bad, good |
| | B) | neutral, good |
| | C) | good, neutral |
| | D) | good, bad |
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16 | |
When a nation sees the border price of its imports fall, it gains on the whole since the losers lose than the winners win. |
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17 | |
The equilibrium border price is where the import supply and import demand curves . |
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18 | |
An MFN tariff is one that is applied to all importers. |
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19 | |
Although the unilateral imposition of a tariff may improve the home nation’s welfare, the tariff harms the foreign nation than it helps the home nation. |
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20 | |
Imposing a tariff unilaterally on imports may improve a nation’s welfare because, the tariff is, in effect, paid by foreigners. |
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