Labor unions in industrial nations generally favor import tariffs to:

• A) Decrease the earnings of labor and increase the returns of capital
• B) Increase the earnings of labor
• C) Benefit both labor and capital equally
• D) Decrease the earnings of labor

Consumer surplus is calculated as the area:

• A) Above the supply curve and below the market price.
• B) Above the demand curve.
• C) Under the demand curve and above the market price.
• D) Above the supply curve.

Which type of tariff is a fixed amount that is levied on each unit of imported goods?

• A) Ad valorem tariff
• B) Specific tariff
• C) Compound tariff and specific tariff
• D) Compound tariff

Voluntary export restraints are generally less effective in limiting imports than import quotas.

• A) True
• B) False
• C)
• D)

According to the Stolper-Samuelson theorem, what happens to the return or earnings of a factor used intensively in the production of a commodity when the relative price of the commodity increases due to a tariff?

• A) It remains constant.
• B) It becomes unpredictable.
• C) It decreases.
• D) It rises.

A small nation imposes a 100% ad valorem tariff on imports of commodity X. What will happen to the price of commodity X in the domestic market?

• A) It will become minimum.
• B) It will increase.
• C) It will not change.
• D) It will decrease.

Which factor of production benefits from the imposition of a tariff according to the Stolper-Samuelson theorem?

• A) Both abundant and factors get equal benefits
• B) Scarce factor
• C) Abundant factor
• D) Neither abundant factor nor scare factor get benefits

What did the Uruguay Round require in relation to voluntary export restraints (VERs)?

• A) Increasing the use of VERs in international trade
• B) Phasing out all VERs by the end of 1999
• C) Applying VERs to all developed nations
• D) Applying VERs to all developing nations

What is the impact of a large country's imposition of a tariff on its volume of trade?

• A) It becomes unpredictable.
• B) It decreases.
• C) It remains constant.
• D) It increases.

Suppose the government of a small nation has imposed a specific tariff of $10 on each imported shirt, regardless of its price. If 100 shirts are imported, customs officials will collect the tariff revenue of:

• A) $1500
• B) $1000
• C) $500
• D) $100

Nations impose tariffs on imports of commodities to:

• A) Increase imports
• B) Protect domestic industries
• C) Promote free trade
• D) Increase consumer surplus

When a very small nation imposes a tariff, what happens to the price in the world market?

• A) It fluctuates.
• B) It remains unchanged.
• C) It decreases.
• D) It increases.

When a nation increases its tariff rate from an autarky position, what happens to its welfare?

• A) It reaches a maximum and then declines.
• B) It becomes unpredictable.
• C) It remains constant.
• D) It continuously increases.

The success of an international cartel depends on having:

• A) Only a few international suppliers of an essential commodity
• B) Close substitutes for the commodity
• C) Numerous international suppliers
• D) Free trade between nations

Which of the following is a drawback of import quotas compared to import tariffs?

• A) Import quotas involve the distribution of import licenses and can create a monopoly.
• B) Import quotas result in lower prices for consumers.
• C) Import quotas are more difficult to implement and enforce.
• D) Domestic producers do not prefer import quotas to import tariffs.

The government of a small tariff-imposing nation uses the tariff revenue to:

• A) Subsidize public consumption
• B) Provide income tax relief
• C) All of the given options
• D) Reduce the tariff rate

The height of the demand curve shows:

• A) All of the given options
• B) The maximum price that consumers would be willing to pay for each unit.
• C) The minimum price that consumers would be willing to pay for each unit.
• D) The price that consumers actually pay for each unit.

An import quota results in a higher domestic price and greater domestic production than an equivalent import tariff.

• A) True
• B) False
• C)
• D)

Persistent dumping involves selling a commodity at:

• A) Lower price abroad than domestically
• B) Higher price abroad than domestically
• C) Equal price abroad and domestically
• D) Above cost abroad and domestically

The purpose of voluntary export restraints (VERs) is to:

• A) Limit the quantity of imports from specific countries
• B) Promote free trade
• C) Promote fair trade practices between nations
• D) Decrease the protection of domestic industries