Pearson 21 trade protection

What is the most likely effect of a U.S. import quota on foreign cars?

• The price of domestic cars would decrease because of improved production methods.
• Foreign automobile manufacturers would be allowed to sell more cars in the United States
• Domestic automobile manufacturers would sell more cars in markets in the United States
• The price of cars would increase in foreign countries because of the trade restrictions

A free good in economics is considered to be one that
I.  has no opportunity cost.
II.  is supplied free of charge by the public agencies.
III.  is produced by the state. **

• I only
• i and II only 
• II and III only
• I, II and III

The supply of organically produced food tends to be price inelastic in the short run because **

• the land on which it is grown must be free of fertilisers for a number of years.
• it is more expensive than non-organic food.
• some consumers are increasingly concerned about the health effects of chemicals on food.
• there is limited availability of close substitutes.

Which one of the following is most likely to have caused the shift from AD₁ to AD_{2  to the RIGHT  *}

• A reduction in interest rates
• An increase in taxes
•  Lower government spending
•  Increased unemployment.

What happens when the supply decreases but the demand increases for a product?

• The price falls
• The price stays the same
• The price goes up
• The price drops

 In 2005, the United States limited the imports of Chinese textiles to 7.5% a year.

• Tariff
• Embargo
• Quota

In 1962, the United States prohibited all imports and exports to and from Cuba.

• Tariff
• Embargo
• Quota

Argentina increased taxes to 9% on the import of milk powder after record levels of imports and fears Argentina farmers would suffer falling incomes.

• Tariff
• Embargo
• Quota

Which of the following statements is false?

• Large industries tend to get more protection than small ones.
• Concentrated industries tend to get more protection than industries that have a  large number of small firms.
• Intermediate products tend to get less protection than final products.
• Industries that are not very concentrated geographically tend to receive lower levels of protection than industries that are regionally concentrated.

Dumping by a firm can be defined as:

• a firm selling a product at a price below its cost of production in a foreign market.
• a firm selling a product in a foreign market at a price lower than the price charged in its home market.
• the discharge of waste products into the environment.
• both a and b