10. With Free Trade, what is the quantity purchased by domestic consumers and th

Question

10. With Free Trade, what is the quantity

purchased by domestic consumers and the

quantity sold by domestic producers?

a) Consumers purchase Q_3 ; producers sell Q_3

b) Consumers purchase Q_5 ; producers sell Q_1

c) Consumers purchase Q_4 ; producers sell Q_2

d) Consumers purchase Q_1 ; producers sell Q_1

11 With Free Trade, what is the price paid by domestic consumers and price received by producers in the country?

a) Consumers pay P* ; producers receive P*

b) Consumers pay P* ; producers receive Pw

c) Consumers pay Pw+t; producers receive Pw+t

d) Consumers pay Pw; producers receive Pw

12. With a tariff of t, what is the quantity purchased by domestic consumers and the quantity sold by domestic producers?

a) Consumers purchase Q_3 ; producers sell Q_3

b) Consumers purchase Q_5 ; producers sell Q_1

c) Consumers purchase Q_4 ; producers sell Q_2

d) Consumers purchase Q_1 ; producers sell Q_1

13. With a tariff of t, what is the price paid by domestic consumers and price received by producers in the country?

a) Consumers pay P* ; producers receive P*

b) Consumers pay P* ; producers receive Pw

c) Consumers pay Pw+t; producers receive Pw+t

d) Consumers pay Pw; producers receive Pw

14. What does government receive with the tariff?

a) Areas A, B, C, D, E, F, and G

b) Areas C, D, E, and F

c) Areas D, E, and F

d) Area E

15. What is economic welfare with free trade?

a) Areas A, B, C

b) Areas A, B, C, D, E, F

c) Areas A, B, C, D, E, F, and G

d) Areas D and F

16. What is economic welfare with the tariff?

a) Areas A, B, C, D, and E

b) Areas A, B, C, E, and G

c) Areas A, B, C, D, E, F, and G

d) Areas D and F

17. What is the net gain or loss in economic welfare following the tariff?

a) Gain Areas A, B, C, D, E, F, and G

b) Gain Area E

c) Gain Areas D and F

d) Lose Areas D and F

For Questions 10 to 17, please use the following diagram to refer to areas. P_w is world price and t is the level of the tariff. 0. With Free Trade, what is the quantity purchased by domestic consumers and the quantity sold by domestic producers? a) Consumers purchase Q_3 ; producers sell Q_3 b) Consumers purchase Q_5 ; producers sell Q_1 c) Consumers purchase Q_4 ; producers sell Q_2 d) Consumers purchase Q_1 ; producers sell Q_1 11 With Free Trade, what is the price paid by domestic consumers and price received by producers in the country? a) Consumers pay P* ; producers receive P* b) Consumers pay P* ; producers receive Pw c) Consumers pay Pw+t; producers receive Pw+t d) Consumers pay Pw; producers receive Pw 12. With a tariff of t, what is the quantity purchased by domestic consumers and the quantity sold by domestic producers? a) Consumers purchase Q_3 ; producers sell Q_3 b) Consumers purchase Q_5 ; producers sell Q_1 c) Consumers purchase Q_4 ; producers sell Q_2 d) Consumers purchase Q_1 ; producers sell Q_1 13. With a tariff of t, what is the price paid by domestic consumers and price received by producers in the country? a) Consumers pay P* ; producers receive P* b) Consumers pay P* ; producers receive Pw c) Consumers pay Pw+t; producers receive Pw+t d) Consumers pay Pw; producers receive Pw 14. What does government receive with the tariff? a) Areas A, B, C, D, E, F, and G b) Areas C, D, E, and F c) Areas D, E, and F d) Area E 15. What is economic welfare with free trade? a) Areas A, B, C b) Areas A, B, C, D, E, F c) Areas A, B, C, D, E, F, and G d) Areas D and F 16. What is economic welfare with the tariff? a) Areas A, B, C, D, and E b) Areas A, B, C, E, and G c) Areas A, B, C, D, E, F, and G d) Areas D and F 17. What is the net gain or loss in economic welfare following the tariff? a) Gain Areas A, B, C, D, E, F, and G b) Gain Area E c) Gain Areas D and F d) Lose Areas D and F

Explanation / Answer

10.c) Consumers purchase Q_4 ; producers sell Q_2
11.b) Consumers pay P* ; producers receive Pw
12.a) Consumers purchase Q_3 ; producers sell Q_3
13.c) Consumers pay Pw+t; producers receive Pw+t
14.b) Areas C, D, E, and F
15.d) Areas D and F
16.b) Areas A, B, C, E, and G
17.c) Gain Areas D and F

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