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WorksheetsUnit 3 - Microeconomics
Total questions: 83
Worksheet time: 1hrs 3mins
Which country is the world's largest international trader?
Germany
China
The United States
Canada
What do the demand curve Dc and supply curve Sc in the Canadian domestic market represent?
Dc shows the quantity of T-shirts Canada exports, and Sc shows the quantity imported
Dc shows the quantity of T-shirts Canadians are willing to buy, and Sc shows the quantity Canadian garment makers are willing to sell
Dc and Sc both show the quantity of T-shirts produced in Canada
Dc and Sc both show the international demand and supply for T-shirts
According to the text, how are the gains and losses from imports measured in the importing country?
By the number of imports
By their effect on consumer surplus, producer surplus, and total surplus
By the difference in export and import prices
By the volume of goods produced domestically
Who are considered the winners in the importing country when it comes to imports?
Those whose surplus decreases
Those whose surplus remains the same
Those whose surplus increases
Those who do not participate in trade
What is the total surplus in an importing country?
The sum of consumer surplus and producer surplus
The sum of domestic demand and domestic supply
The sum of world price and domestic price
The sum of imports and exports
What is the effect on producer surplus when international trade is introduced?
Producer surplus increases
Producer surplus remains unchanged
Producer surplus shrinks
Producer surplus is redistributed to consumers
When the Canadian market opens to imports, what happens to the quantity produced in Canada?
It increases
It decreases
It remains the same
It is not mentioned in the text
What is the net effect on total surplus as a result of the increase in consumer surplus from imports?
There is no change in total surplus
Total surplus decreases
Total surplus increases
The text does not provide enough information
How is the gain from imports distributed between consumers and domestic producers?
Only consumers gain from imports
Only domestic producers gain from imports
Both consumers and domestic producers gain from imports
Neither consumers nor domestic producers gain from imports
How is the gain from exports distributed between consumers and domestic producers?
Only consumers gain from exports
Only domestic producers gain from exports
Both consumers and domestic producers gain from exports
Neither consumers nor domestic producers gain from exports
Why is the net gain from international trade positive?
Because it only benefits domestic producers
Because it only benefits consumers
Because it benefits both consumers and domestic producers
Because it does not benefit anyone
Which of the following is NOT a tool used by governments to influence international trade and protect domestic industries?
Tariffs
Import quotas
Export subsidies
Currency exchange rates
What is a tariff?
A tax on a good that is imposed by the exporting country
A limit on the quantity of goods that can be imported
A tax on a good that is imposed by the importing country when an imported good crosses its international boundary
What is the primary purpose of tariffs according to the text?
To decrease the gains from trade and benefit the social interest
To increase the quality of imported goods
To promote free international trade
What effect does a tariff have on the price of imported goods for buyers?
Buyers must pay the world price minus the tariff
Buyers must pay the world price without any additional costs
Buyers receive a subsidy equal to the tariff
Who are the losers when the Canadian government imposes a tariff on an imported good?
Canadian consumers of the good.
Canadian producers of the good.
Foreign producers of the good.
The Canadian government.
What is the result of a tariff on imported goods in terms of social loss?
A surplus gain arises.
A deadweight loss arises.
An increase in consumer surplus.
An increase in producer surplus.
According to the text, what is one of the reasons consumer surplus shrinks when a tariff is imposed?
The higher price transfers surplus from consumers to producers.
The quantity imported increases.
Foreign producers have higher costs than domestic producers.
The government's tariff revenue decreases.
What is an import quota?
A tax on goods coming into a country
A restriction that limits the quantity of a good that may be imported in a given period
A subsidy provided to domestic producers
A law that prohibits certain goods from being imported
What is one of the effects of an import quota according to the text?
It increases the gains from trade and is in the social interest
It decreases the price of goods in the domestic market
It decreases the quantity bought and increases the quantity produced domestically
It allows unlimited imports of a particular good
How does an import quota affect the self-interest of the people who earn their incomes in the competing industries?
It has no effect on their self-interest
It decreases their incomes significantly
It enables the government to satisfy their self-interest
It encourages them to import more goods
22-36.
Answer the questions below after watching the video
What axis is used to represent price in a demand and supply diagram?
Neither axis
Horizontal axis
Both axes
Vertical axis
What does a horizontal supply curve for foreign firms indicate in the context of international trade?
Foreign firms have a monopoly
The domestic market has a large impact on world prices
The domestic market has no impact on world prices
Foreign firms are not competitive
What does the world price (P sub W) represent in the context of international trade?
The price at which a country can import goods
The price at which domestic goods are exported
The equilibrium price in the domestic market
The price of goods in the domestic market
What happens to the equilibrium price in a domestic market when international trade is introduced without tariffs?
It remains the same
It decreases
It becomes volatile
It increases
How does international trade without tariffs affect consumer surplus?
Initially increases, then decreases
Has no effect
Increases it
Decreases it significantly
What is the main reason some domestic firms exit the industry after the introduction of free trade?
Decreased demand for domestic goods
Increased tariffs
Decreased producer surplus
Increased consumer surplus
What is the impact of free trade on the total surplus in the market?
First increases, then decreases
No impact
Decreases
Increases
What is the effect of tariffs on the price of imported goods?
Makes the price volatile
Increases the price
No effect on the price
Decreases the price
What is the effect of a tariff on the quantity of goods produced by domestic firms?
Increases
Decreases
Becomes volatile
Remains the same
How does the imposition of tariffs affect the level of imports?
Remains unchanged
Decreases
First decreases, then increases
Increases significantly
What is the term used to describe the loss of efficiency in the market due to tariffs?
Market distortion
Consumer distortion
Producer surplus
Deadweight loss
What represents the tariff revenue for the government in the context of tariffs on imported goods?
Region A
Region C
Region D
Region B
Which region represents the gain in producer surplus due to tariffs?
Region A
Region B
Region C
Region D
Which regions represent the deadweight loss due to tariffs?
Regions A and D
Regions A and B
Regions C and D
Regions B and C
What is the effect of tariffs on consumer surplus?
Decreases it
No effect
Increases it
Initially decreases, then increases
Which country is the world's largest international trader?
Germany
China
The United States
Canada
What do the demand curve Dc and supply curve Sc in the Canadian domestic market represent?
Dc shows the quantity of T-shirts Canada exports, and Sc shows the quantity imported
Dc shows the quantity of T-shirts Canadians are willing to buy, and Sc shows the quantity Canadian garment makers are willing to sell
Dc and Sc both show the quantity of T-shirts produced in Canada
Dc and Sc both show the international demand and supply for T-shirts
According to the text, how are the gains and losses from imports measured in the importing country?
By the number of imports
By their effect on consumer surplus, producer surplus, and total surplus
By the difference in export and import prices
By the volume of goods produced domestically
Who are considered the winners in the importing country when it comes to imports?
Those whose surplus decreases
Those whose surplus remains the same
Those whose surplus increases
Those who do not participate in trade
What is the total surplus in an importing country?
The sum of consumer surplus and producer surplus
The sum of domestic demand and domestic supply
The sum of world price and domestic price
The sum of imports and exports
What is the effect on producer surplus when international trade is introduced?
Producer surplus increases
Producer surplus remains unchanged
Producer surplus shrinks
Producer surplus is redistributed to consumers
When the Canadian market opens to imports, what happens to the quantity produced in Canada?
It increases
It decreases
It remains the same
It is not mentioned in the text
What is the net effect on total surplus as a result of the increase in consumer surplus from imports?
There is no change in total surplus
Total surplus decreases
Total surplus increases
The text does not provide enough information
How is the gain from imports distributed between consumers and domestic producers?
Only consumers gain from imports
Only domestic producers gain from imports
Both consumers and domestic producers gain from imports
Neither consumers nor domestic producers gain from imports
How is the gain from exports distributed between consumers and domestic producers?
Only consumers gain from exports
Only domestic producers gain from exports
Both consumers and domestic producers gain from exports
Neither consumers nor domestic producers gain from exports
Why is the net gain from international trade positive?
Because it only benefits domestic producers
Because it only benefits consumers
Because it benefits both consumers and domestic producers
Because it does not benefit anyone
Which of the following is NOT a tool used by governments to influence international trade and protect domestic industries?
Tariffs
Import quotas
Export subsidies
Currency exchange rates
What is a tariff?
A tax on a good that is imposed by the exporting country
A limit on the quantity of goods that can be imported
A tax on a good that is imposed by the importing country when an imported good crosses its international boundary
What is the primary purpose of tariffs according to the text?
To decrease the gains from trade and benefit the social interest
To increase the quality of imported goods
To promote free international trade
What effect does a tariff have on the price of imported goods for buyers?
Buyers must pay the world price minus the tariff
Buyers must pay the world price without any additional costs
Buyers receive a subsidy equal to the tariff
Who are the losers when the Canadian government imposes a tariff on an imported good?
Canadian consumers of the good.
Canadian producers of the good.
Foreign producers of the good.
The Canadian government.
What is the result of a tariff on imported goods in terms of social loss?
A surplus gain arises.
A deadweight loss arises.
An increase in consumer surplus.
An increase in producer surplus.
According to the text, what is one of the reasons consumer surplus shrinks when a tariff is imposed?
The higher price transfers surplus from consumers to producers.
The quantity imported increases.
Foreign producers have higher costs than domestic producers.
The government's tariff revenue decreases.
What is an import quota?
A tax on goods coming into a country
A restriction that limits the quantity of a good that may be imported in a given period
A subsidy provided to domestic producers
A law that prohibits certain goods from being imported
What is one of the effects of an import quota according to the text?
It increases the gains from trade and is in the social interest
It decreases the price of goods in the domestic market
It decreases the quantity bought and increases the quantity produced domestically
It allows unlimited imports of a particular good
How does an import quota affect the self-interest of the people who earn their incomes in the competing industries?
It has no effect on their self-interest
It decreases their incomes significantly
It enables the government to satisfy their self-interest
It encourages them to import more goods
What is a government regulation that makes it illegal to charge a price higher than a specified level called?
Price floor
Price cap
Price control
Price limit
What happens when a price ceiling is set above the equilibrium price?
It creates a housing shortage.
It has no effect.
It increases search activity.
It creates an illicit market.
What are the effects of a price ceiling set below the equilibrium price?
It increases the equilibrium price.
It decreases the quantity demanded.
It has powerful effects on the market.
It aligns the market forces with the law.
What is a price ceiling applied to a housing market known as?
Housing cap
Rent limit
Rent ceiling
Market ceiling
What does a rent ceiling set below the equilibrium rent create?
A balanced market
A surplus of housing
A housing shortage
Decreased search activity
What is one way in which the allocation of housing occurs when there is a shortage?
Decreased search activity
Increased search activity
Price increase
Government intervention
What is the term used to describe the time spent looking for someone with whom to do business?
Opportunity cost
Search activity
Rent ceiling
Illicit market
What is the opportunity cost of a good related to in the context of search activity?
What can increase when there is a shortage and a price is regulated?
The quality of goods
The opportunity cost of goods
Search activity
The equilibrium price
What does a rent ceiling encourage in the housing market?
Decreased search activity
Legal trading
Increased opportunity cost
Illegal trading in an illicit market
According to the fair-rules view, what is considered unfair in the context of rent ceilings?
Any mechanism that allocates scarce housing to the poorest.
Anything that blocks voluntary exchange.
The use of a lottery system to allocate housing.
Discrimination based on friendship, family ties, and other criteria.
What is the fair-result view's perspective on the fairest outcome for allocating scarce housing?
Allocating housing to those who are lucky.
Allocating housing to those who demand it the most.
Allocating scarce housing to the less well off.
Allocating housing based on the self-interest of the bureaucracy.
Which of the following is NOT listed as a possible mechanism for allocating scarce housing when rent is not permitted to do so?
A lottery
First-come, first-served
Discrimination
Income-based allocation
Why is it difficult to make a case for rent ceilings on the basis of fairness?
Because rent ceilings ensure that housing is allocated to the most deserving individuals.
Because rent ceilings prevent discrimination in housing allocation.
Because other methods of allocating scarce housing resources that arise when rent adjustments are blocked do not produce a fair outcome.
Because rent ceilings increase the quantity of housing available.
What is a rent ceiling and what are its effects if it is set above the equilibrium rent?
A maximum price that can be charged for rented accommodation, it has no effect if set above the equilibrium rent
A minimum price that can be charged for rented accommodation, it creates a housing surplus if set above the equilibrium rent
A maximum price that can be charged for rented accommodation, it creates a housing shortage if set above the equilibrium rent
A minimum price that can be charged for rented accommodation, it has no effect if set above the equilibrium rent
What are the effects of a rent ceiling that is set below the equilibrium rent?
It leads to a housing surplus and lower rents for everyone
It creates a housing shortage and raises rents for some people
It ensures equal distribution of housing resources among all income groups
It has no significant effect on the housing market
How are scarce housing resources allocated when a rent ceiling is in place?
Based on the highest bidder in the market
Through a lottery system among all potential renters
According to the length of time families have lived in the city
Equally among all residents of the city
Why does a rent ceiling create an inefficient and unfair outcome in the housing market?
Because it increases the voting power of the rich and famous
Because it ensures that only new residents benefit from the housing market
Because it leads to an equitable distribution of housing resources
Because it is in principle and in practice inefficient and unfair
What is a price floor in the context of government regulation?
A government regulation that sets a maximum price for goods and services.
A government regulation that makes it illegal to charge a price lower than a specified level.
A market strategy used by companies to undercut competitors' prices.
A guideline for consumers to understand the fair price of a product.
What happens when a price floor is set below the equilibrium price?
It leads to a surplus of the product or service in the market.
It causes a shortage of the product or service in the market.
It has no effect because it does not constrain market forces.
It immediately results in increased prices for the product or service.
What is the term used when a price floor is applied to a labour market?
Price ceiling
Minimum wage
Equilibrium wage
Wage subsidy
What is the effect of a minimum wage set above the equilibrium wage?
It decreases the quantity of labour demanded and creates unemployment.
It increases the quantity of labour demanded and reduces unemployment.
It has no effect on the quantity of labour demanded or unemployment.
It balances the quantity of labour demanded with the quantity supplied.
What is the result in a labour market when the wage rate is at the equilibrium level?
There is a surplus of labour.
There is a shortage of labour.
The quantity of labour supplied equals the quantity of labour demanded.
The government intervenes to set a minimum wage.
What is a government regulation that makes it illegal to charge a price lower than a specified level called?
Price ceiling
Price floor
Minimum wage
Equilibrium price
What happens when a price floor is set below the equilibrium price?
It creates unemployment.
It has no effect.
It decreases the quantity of labor demanded.
It increases the quantity of labor supplied.
What is the term used when a price floor is applied to a labor market?
Price ceiling
Price floor
Minimum wage
Equilibrium wage
What is the result of imposing a minimum wage above the equilibrium wage?
It decreases the quantity of labor demanded.
It creates a surplus of labor.
It has no effect on employment.
It ensures that there is neither a shortage nor a surplus of labor.
According to the text, what determines the level of employment in the labor market?
The minimum wage
The price floor
The demand for labor
The supply of labor
What is one mechanism that determines who finds a job when the wage rate doesn't allocate labour?
Market efficiency
Government intervention
Discrimination
Voluntary exchange
Why does the minimum wage impose an unfair rule according to the text?
It increases the cost of job search
It allows firms to hire more labour
It blocks voluntary exchange
It allocates the economy's scarce labour resources efficiently
What is the consequence of an unregulated labour market as described in the text?
It leads to unemployment
It allocates the economy's scarce labour resources to the jobs valued most highly
It results in a minimum wage
It decreases the firms' surplus
According to the text, what is the result of the minimum wage frustrating the market mechanism?
Decreased job search
Increased efficiency
Unemployment and increased job search
Higher workers' surplus
What does the demand curve measure in the labour market?
The workers' marginal social cost of supplying labour
The firms' marginal social benefit of using labour
The value of the goods and services produced
The efficiency of the market
What does the supply curve measure in the labour market?
The workers' marginal social cost of supplying labour
The firms' marginal social benefit of using labour
The value of the goods and services produced
The efficiency of the market
What is a minimum wage and what are its effects if it is set above the equilibrium wage?
A) A minimum wage is a government-mandated lowest hourly rate that workers can be paid, and if set above the equilibrium wage, it can lead to unemployment.
B) A minimum wage is the highest salary a worker can earn, and if set above the equilibrium wage, it increases productivity.
C) A minimum wage is a suggestion by the government on what wages should be, and if set above the equilibrium wage, it has no effect.
D) A minimum wage is a fixed salary for all workers, and if set above the equilibrium wage, it ensures equal pay for everyone.
What are the effects of a minimum wage set below the equilibrium wage?
A) It causes a surplus of jobs.
B) It has no effect since it is below the market rate.
C) It decreases the quality of goods and services.
D) It increases the cost of living.
Explain how scarce jobs are allocated when a minimum wage is in place.
A) Jobs are allocated to the most experienced workers.
B) Jobs are allocated through a lottery system.
C) Jobs are allocated to those willing to work for the lowest wages.
D) Jobs are allocated based on seniority.
Explain why a minimum wage creates an inefficient allocation of labour resources.
A) It leads to a mismatch of skills and job requirements.
B) It ensures that only the most qualified individuals are hired.
C) It increases the competition for jobs, leading to better performance.
D) It allows for more training opportunities for employees.
What happens to the supply curve when a tax is placed on sellers?
It shifts to the left.
It remains unchanged.
It shifts to the right.
It becomes perfectly elastic.
What is the effect of a tax on buyers on the demand curve?
It shifts to the right.
It shifts to the left.
It remains unchanged.
It becomes perfectly inelastic.
