Economics Review

Figure 9-1 shows the U.S. demand and supply for leather footwear. 

Refer to Figure 9-1. Under autarky, the consumer surplus is

• $260.

• $555.

• $195.

• $300.

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. 


Refer to Figure 9-3. With a quota in place, what is the quantity supplied by domestic producers?

• 10 million pounds

• 8 million pounds

• 18 million pounds

• 16 million pounds

Trade between countries that is without restrictions is called

• free trade.

• unabated trade.

• unencumbered trade.

• unobstructed commerce.

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. In the market for steel, the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

• 1. increase; decrease

• 1. decrease; decrease

• 1. increase; increase

• 1. decrease; increase

Figure 9-1 shows the U.S. demand and supply for leather footwear. 

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of domestic producer surplus?

• 1. $0

• 1. $320

• $40

• $360

Which of the following is the best example of a tariff?

• a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

• a $150 fee imposed on all imported residential air conditioners

• a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers

• a limit on the quantity of residential air conditioners that can be imported from a foreign country

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.

Refer to Figure 9-3. What is the area that represents revenue to foreign producers who are granted permission to sell in the U.S. market when there is a quota?

• 1. E + I + J + M

• I + J

• G + H + I + J

• I + J + K+ L

Under autarky, consumer surplus is represented by the area

• above the supply curve and below the equilibrium price.

• above the demand curve and below the supply curve.

• below the demand curve and above the equilibrium price.

• above the supply curve and below the demand curve.

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to voluntary export restraints. With voluntary export restraints, foreign producers

• limit their exports to a country.

• agree to meet specific quality standards required by the importing country.

• must agree to import an equal quantity of products that they export.

• pay a tax on all products they export.

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.

Refer to Figure 9-3. What is the area that represents the deadweight loss as a result of the quota?

• E + M

• G + H + I + J

• G + H

• E + I + J + M