Quiz # 3-3

Figure 9.8: A Foreign Trade Problem

Draw the appropriate lines to answer questions 15-20. Here, Pw = the world price of sugar.

15. Refer to Figure 9.8. With no government interference, the country pictured will
a. import 500 tons of sugar.
b. import 300 tons of sugar.
c. import 200 tons of sugar.
d. import no sugar.
e. export sugar.

16. Refer to Figure 9.8. A $50 tariff would result in domestic consumption of
a. 600, domestic production of 100, and imports of 500.
b. 500, domestic production of 200, and imports of 300.
c. 400, domestic production of 300, and imports of 100.
d. 300, domestic production of 400, and exports of 100.
e. 200, domestic production of 500, and exports of 300.

17. Refer to Figure 9.8. If free trade in sugar is allowed, consumer surplus will be
a. $175.
b. $250.
c. $30,625.
d. $61,250.
e. $62,500.

18. Refer to Figure 9.8. If free trade in sugar is replaced by a $50 tariff in sugar, consumer surplus will
a. fall by $50.
b. fall by $26,250.
c. fall by $22,500.
d. rise by $50.
e. rise by $17,500.

19. Refer to Figure 9.8. If free trade in sugar is replaced by a $50 tariff on sugar, the effect on domestic producer surplus will be to
a. lower it by $50.
b. lower it by $12,500.
c. leave it unchanged.
d. raise it by $50.
e. raise it by $12,500.

20. Refer to Figure 9.8. If free trade in sugar is replaced by a $50 tariff in sugar, government revenue from the tariff will be
a. $50.
b. $5000.
c. $15,000.
d. $17,500.
e. $25,000.