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Which of the following are reasons economists consider valid for trade protection? I.Protection penalizes countries that have weak environmental standards. II.Protection limits dumping of low-wage jobs into the domestic economy. III.Protection prevents low-wage jobs in foreign countries from lowering wages in Canada.


A) I and II
B) II and III
C) I,II,and III
D) I and III
E) None of the above

F) C) and D)
G) B) and C)

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In a market that moves from a situation of no trade to a situation where a good is exported,the price of the good ________,the quantity produced by the domestic industry ________,and producer surplus ________.


A) rises;increases;increases
B) falls;decreases;decreases
C) does not change;increases;increases
D) does not change;decreases;decreases
E) rises;increases;decreases

F) A) and B)
G) B) and E)

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Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand.As a result of the tariffs,the


A) price of beef in Mooland falls.
B) quantity of beef exported by Mooland increases.
C) quantity of beef imported by Mooland decreases.
D) quantity of beef imported by Mooland increases.
E) price of beef in Mooland does not change.

F) B) and D)
G) C) and E)

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If a country imposes a tariff on an imported good,the tariff ________ the price in the importing country and ________ the quantity of imports.


A) raises;increases
B) raises;does not change
C) lowers;does not change
D) lowers;increases
E) raises;decreases

F) A) and B)
G) A) and C)

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Among the following,the domestic government gains the most revenue when it


A) imposes an import quota.
B) eliminates an import quota.
C) encourages freer trade.
D) imposes a tariff.
E) increases the demand for a domestically-produced good.

F) A) and D)
G) B) and C)

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Canada has a comparative advantage in producing hardwood if the Canadian price of hardwood before international trade is ________ the world price.


A) equal to
B) greater than
C) not comparable to
D) at least double
E) less than

F) C) and D)
G) B) and D)

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Which of the following is a Canadian service export?


A) a Canadian buys dinner while travelling in Switzerland
B) a Swiss buys dinner while travelling in Canada
C) a Canadian buys a clock made in Switzerland
D) a Swiss buys a computer made in Canada
E) a Canadian buys a Canadian computer in Switzerland

F) A) and E)
G) A) and D)

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Canada exports athletic coaching services and imports computer tech support.The price of computer tech support in Canada is ________ with international trade than without international trade.As a result of trade in computer tech support,the Canadian producer surplus from computer tech support ________ and the Canadian consumer surplus from computer tech support ________.


A) higher;increases;increases
B) lower;decreases;increases
C) lower;decreases;decreases
D) higher;increases;decreases
E) lower;increases;increases

F) A) and B)
G) B) and E)

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B

The fundamental force that drives international trade is


A) comparative advantage.
B) absolute advantage.
C) a countries' desire to increase their trade surplus.
D) cheap labour in countries like China and India.
E) unemployment of factors of production.

F) None of the above
G) A) and B)

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When Canada exports a good,Canada's consumer surplus ________ and Canada's total surplus ________.


A) increases;increases
B) increases;decreases
C) decreases;increases
D) decreases;decreases
E) decreases and Canada's producer surplus increases;does not change

F) D) and E)
G) A) and B)

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A tariff ________ a deadweight loss and an import quota ________ a deadweight loss.


A) creates;creates
B) does not create;creates
C) creates;does not create
D) does not create;does not create
E) sometimes creates;always creates

F) B) and D)
G) A) and C)

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When a firms "dumps" some of its output in another country,it


A) creates an environmental hazard in the receiving country.
B) sells its output abroad at a price lower than it costs to produce the output.
C) increases the total level of employment in the importing country.
D) is specializing according to comparative advantage.
E) creates for itself an absolute advantage.

F) C) and D)
G) B) and C)

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B

The introduction of a tariff ________ consumer surplus,________ producer surplus,and ________ total surplus.


A) increases;decreases;decreases
B) increases;increases;decreases
C) decreases;decreases;decreases
D) decreases;increases;decreases
E) decreases;increases;increases

F) B) and C)
G) A) and B)

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The effects of offshoring from opening up call centres in India are similar to the effects from


A) free trade.
B) tariffs.
C) import quota.
D) voluntary export restraints.
E) export subsidies.

F) B) and E)
G) A) and D)

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A

Rent seeking is one reason why countries choose to


A) export and import the same goods.
B) work for freer trade.
C) follow the theory of comparative advantage.
D) hire foreign labour.
E) restrict trade.

F) A) and C)
G) A) and E)

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Refer to the figure below to answer the following question. Refer to the figure below to answer the following question. Figure 7.2.3 -Refer to Figure 7.2.3.The graph shows the market for shoes in Canada.The world price of a pair of shoes is $20.With free international trade,Canadian consumer surplus ________ and Canadian producer surplus ________. A) increases by area A + B;decreases by area B B) increases by area B;decreases by area B C) increases by area A;decreases by area B D) decreases by area A + B;increases by area B E) decreases by area B;increases by area A Figure 7.2.3 -Refer to Figure 7.2.3.The graph shows the market for shoes in Canada.The world price of a pair of shoes is $20.With free international trade,Canadian consumer surplus ________ and Canadian producer surplus ________.


A) increases by area A + B;decreases by area B
B) increases by area B;decreases by area B
C) increases by area A;decreases by area B
D) decreases by area A + B;increases by area B
E) decreases by area B;increases by area A

F) A) and E)
G) D) and E)

Correct Answer

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Refer to the figure below to answer the following questions. Refer to the figure below to answer the following questions. The figure shows the market for shirts in Canada,where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt. Figure 7.2.1 -In Figure 7.2.1,with international trade Canadians buy ________ million shirts per year. A) 48 B) 32 C) 16 D) 24 E) 56 The figure shows the market for shirts in Canada,where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt. Figure 7.2.1 -In Figure 7.2.1,with international trade Canadians buy ________ million shirts per year.


A) 48
B) 32
C) 16
D) 24
E) 56

F) A) and B)
G) B) and C)

Correct Answer

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Refer to the figure below to answer the following questions. Refer to the figure below to answer the following questions. The figure shows the market for shirts in Canada,where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt. Figure 7.2.1 -In Figure 7.2.1,international trade ________ consumer surplus in Canada by ________. A) increases;$320 million B) decreases;$192 million C) increases;$192 million D) decreases;$320 million E) increases;$576 million The figure shows the market for shirts in Canada,where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt. Figure 7.2.1 -In Figure 7.2.1,international trade ________ consumer surplus in Canada by ________.


A) increases;$320 million
B) decreases;$192 million
C) increases;$192 million
D) decreases;$320 million
E) increases;$576 million

F) A) and B)
G) C) and D)

Correct Answer

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Refer to the figure below to answer the following questions. Refer to the figure below to answer the following questions. The figure shows the market for shirts in Canada,where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt. Figure 7.2.1 -In Figure 7.2.1,with international trade Canada ________ million shirts per year. A) imports 32 B) imports 48 C) exports 16 D) exports 32 E) imports 16 The figure shows the market for shirts in Canada,where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt. Figure 7.2.1 -In Figure 7.2.1,with international trade Canada ________ million shirts per year.


A) imports 32
B) imports 48
C) exports 16
D) exports 32
E) imports 16

F) All of the above
G) B) and E)

Correct Answer

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Compared to the situation before international trade,after Canada imports a good,production in Canada ________ and consumption in Canada ________.


A) increases;increases
B) increases;decreases
C) decreases;increases
D) decreases;decreases
E) does not change;increases

F) A) and C)
G) B) and C)

Correct Answer

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