1. Which of the following arguments for trade reactions is often advanced?
A) Trade restrictions make all Americans better off
B) Trade restrictions increase economic efficiency
C) Trade restrictions are sometimes necessary for national security
D) Trade restrictions are necessary for economic growth
2. For any Country that allows free-trade,
A) Domestic quantity demanded is greater than domestic quantity supplied at the world price
B) Both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported
C) Domestic quantity demanded is equal to domestic quantity supplied at the world price
D) The domestic price is equal to the world price
3. For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that
A) An important quota has no effect on producer surplus, whereas a tariff decreases producer surplus
B) A tariff raises revenue for that country's government, whereas an import quota does not
C) An import quota has no effect on consumer surplus, whereas a tariff decreases consumer surplus
D) A tariff raises total surplus, whereas an import quota does not
4. The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither importing nor exporting TVs. We can conclude that the producer surplus in Aquilonia is now:
A) Lower in the rice and TV markets, and higher in the steel market
B) Lower in the rice and steel markets and the same in the TV market
C) Higher in the rice and steel markets and unchanged in the TV market
D) Higher in the steel market, lower in the rice market, and unchanged in the TV market
5. Relative to a situation in which firms do not compete with foreign firms, firms in countries that engage in free trade
A) Can realize economies of scale more fully
B) Each of these answers is correct
C) Have greater market power
D) Experience larger producer surplus
6. Most economists view the united states as an ongoing experiment that raises serious doubts about the virtues of free trade
(TRUE OR FALSE)