Question 1: Most of argue that there is ultimately no real difference between a tariff and quota – both raise price and lower the quantity imported. Though, a domestic monopolist facing import competition would:
a. Prefer a tariff to its equivalent quota.
b. Prefer a quota to its equivalent tariff.
c. Indifferent between a tariff and an equivalent quota.
d. Love free trade.
Question 2: Assume that the Honduran government is considering imposing a tariff on imported computers (a K-intensive good). Realizing that Honduras is labor-abundant and there are no retaliatory tariffs placed on Honduran export goods, the Stolpher-Samuelson rule proposes that the real income of Hondura’s:
a. Capital owners will increase.
b. Capital owners will drop.
c. Labor income will increase.
d. Labor income will drop.
Question 3: After a country moves from autarky to free trade, the welfare gains that trade brings to consumers of the imported goods are, in absolute terms:
a. Bigger than the welfare losses to domestic producers of that good.
b. Smaller than the welfare losses to domestic producers of that good.
c. Exactly equivalent to the welfare losses to domestic producers of that good.
d. Immeasurable.
Question 4: The difference between an import tariff imposed by a small country and a big country is that, for a large importing country:
a. Government revenue from the tariff is paid completely by foreigners.
b. Nation welfare always rises since of the tariff.
c. National welfare of the exporting country is decreased.
d. There is no loss in consumer excess as a result of the tariff.
Question 5: According to the product life cycle hypothesis:
a. Whenever a new product is introduced, it generally needs highly skilled labor to be produced.
b. After the produce acquires mass acceptance and becomes standardized, it can frequently be produced with unskilled labor.
c. After standardization, the country in which innovation occurred frequently runs a trade deficit in regard to that good.
d. All the above.