|
| 1 | The demand curve for an individual shows how the marginal utility of consuming an extra unit of the good declines with as total consumption rises. |
 | A) | TRUE |
| B) | FALSE |
|
| 2 | A firm’s marginal cost curve is also its supply curve when the firm acts in a perfectly competitive manner. |
| A) | TRUE |
| B) | FALSE |
|
| 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 (ignoring fixed costs). |
| A) | TRUE |
| B) | FALSE |
|
| 4 | The demand curve reflects the marginal utility of consumption since firms set prices equal to marginal cost. |
| A) | TRUE |
| B) | FALSE |
|
| 5 | The supply curve shows marginal cost since consumers buy goods up to the point where their marginal utility equals the price. |
| A) | TRUE |
| B) | FALSE |
|
| 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. |
| A) | TRUE |
| B) | FALSE |
|
| 7 | Under perfect competition, the fact that the price is set by the intersection of the supply and demand curves means that the marginal cost of producing an extra unit to the good is exactly equal to the marginal utility of consuming an extra unit. |
| A) | TRUE |
| B) | FALSE |
|
| 8 | The import demand curve is: |
| 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. |
|
| 9 | The import supply curve is: |
| 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. |
|
| 10 | When the price of imports fall, the home nation gains on net because: |
| 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. |
|
| 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: |
| A) | the volume of imports. |
| B) | the terms of trade. |
| C) | the level of the tariff. |
| D) | domestic consumption. |
|
| 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: |
| A) | the initial level of imports. |
| B) | domestic production. |
| C) | foreign welfare. |
| D) | tariff revenue. |
|
| 13 | A tariff tends to drive down a nation’s border price since it: |
| 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. |
|
| 14 | If the price of a nation’s exports rise, it gains on the whole even though consumers _______ and producers ___________. |
| A) | win, lose |
| B) | have no gains, win |
| C) | lose, win |
| D) | win, have no gains |
|
| 15 | If the price of a nation’s imports rise, this is _________ for domestic producers and ________ for domestic consumers. |
| A) | bad, good |
| B) | neutral, good |
| C) | good, neutral |
| D) | good, bad |
|
| 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. |
|
| 17 | The equilibrium border price is where the import supply and import demand curves . |
|
| 18 | An MFN tariff is one that is applied to all importers. |
|
| 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. |
|
| 20 | Imposing a tariff unilaterally on imports may improve a nation’s welfare because, the tariff is, in effect, paid by foreigners. |