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Question: question 21 suppose the country of clyde imposes tariffs on...

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QUESTION 21

  1. Suppose the country of Clyde imposes tariffs on Part P imported from Country 1 and Country 2. Producers in Clyde use Part P as an input in their production of Good Q. Clyde Good Q producers may react to the tariff by,

    a.

    stockpiling Part P before the tariff takes effect

    b.

    buying Part P from countries other than Country 1 and Country 2

    c.

    both A and B

    d.

    neither A nor B

3 points   

QUESTION 22

  1. Consider a set of differentiated products, which have economies of scale in their production. International trade in these products,

    a.

    tends to make it less likely that consumers get their preferred version of a product

    b.

    tends to reduce production costs and product prices

    c.

    requires a difference in comparative advantage between producers

    d.

    both B and C

3 points   

QUESTION 23

  1. Consider a case where a country imports Good C and the Basic Tariff Model holds. When the country changes from trade in Good C without a tariff to trade in Good C with a tariff (assuming no retaliation on that product),

    a.

    domestic producer surplus falls and domestic consumer surplus falls

    b.

    domestic producer surplus falls and domestic consumer surplus rises

    c.

    domestic producer surplus rises and domestic consumer surplus falls

    d.

    domestic producer surplus rises and domestic consumer surplus rises

3 points   

QUESTION 24

  1. Suppose the country of Luton is targeted by Home country tariffs. Some possible consequences of these tariffs include,

    a.

    the Luton government imposing tariffs on Home country goods

    b.

    the Luton government treating Home country firms doing business in Luton more harshly

    c.

    resentful Luton consumers trying to boycott Home country goods

    d.

    all of the above are possible consequences

3 points   

QUESTION 25

  1. Suppose that a country can either specialize in producing Good E or it can produce no Good E. We know it will specialize in producing Good E when,

    a.

    it can produce more units of Good E per labor hour than other countries

    b.

    it produces fewer units of Good E per labor hour than other countries

    c.

    it has a higher opportunity cost of producing Good E than other countries

    d.

    it has a lower opportunity cost of producing Good E than other countries

3 points   

QUESTION 26

  1. A benefit of being in a customs union is,

    a.

    a member country is more likely than a non-member country to have market access for its products vis-a-vis the various customs union countries

    b.

    a country's firms typically face less market competition when the country joins a customs union

    c.

    both A and B

    d.

    neither A nor B

3 points   

QUESTION 27

  1. Consider a set of differentiated products, which have economies of scale in their production. International trade in these products,

    a.

    tends to reduce the degree of competition in the market for those products

    b.

    tends to reduce the total number of units produced of those products

    c.

    both A and B

    d.

    neither A nor B

3 points   

QUESTION 28

  1. Suppose the world price of Good D is less than the no trade domestic price of Good D in the country of St. Marie. Also suppose that St. Marie isn't involved with a customs union. When St. Marie changes from no trade in Good D to allowing trade in Good D (with no tariffs),

    a.

    the total surplus for St. Marie falls

    b.

    the total surplus for St. Marie rises

    c.

    the total surplus for St. Marie stays the same

    d.

    the total surplus for St. Marie can fall, but only in the case when the total surplus for its trading partner rises

3 points   

QUESTION 29

  1. When a country joins a customs union, any trade diversion that occurs does so because,

    a.

    there is a change of product supplier from a low cost supplier to a high cost supplier

    b.

    there is a change of product supplier from a high cost supplier to a low cost supplier

    c.

    more units of the product are traded

    d.

    fewer units of the product are traded

3 points   

QUESTION 30

  1. Suppose there are two countries, Country K and Country L and there are two products, cheese and toothpaste. In 10 labor hours, Country K can produce 200 pounds of cheese or it can produce 50 packs of toothpaste. Meanwhile, in 10 labor hours, Country L can produce 150 pounds of cheese or it can produce 30 packs of toothpaste. Suppose both countries want both products. If they specialize and trade,   

    a.

    Country K will have a higher overall standard of living and Country L will have a higher overall standard of living

    b.

    Country K will have a higher overall standard of living and Country L will have a lower overall standard of living

    c.

    Country K will have a lower overall standard of living and Country L will have a higher overall standard of living

    d.

    Country K will have a lower overall standard of living and Country L will have a lower overall standard of living

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