Business Question

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Eco 330
Fall 2018 Test 3
Name___________________
St.#____________________
Answer the short answer question below. Answer the following 10 true-false
question by circling the appropriate letter. Remember a statement must be
completely and always true to be true. Then answer the 15 multiple choice
questions. Remember to select the best answer for them. Good Luck.
1. What happens to the people of a country, when they join a regional bloc?
Will a regional bloc be beneficial for sure? What are some of the
conditions under which it is likely that the people of a country joining a bloc
will gain?
T F 1. If Mexico and the US form a regional bloc, the people of the Mexico will
be better off.
T F 2. The rules of WTO/GATT prohibit import quotas except when there is
a market disruption.
T F 3. Members of a common market allow freedom of capital and labor
Mobility.
T F 4. The gains from trade creation tend to be greater than the losses from
trade diversion the higher post bloc barriers to trade.
T F 5. Regional blocs are discriminatory.
T F 6. Among the winners with labor mobility are host country workers.
T F 7. For any given level of world GDP, free trade means the less pollution.
T F 8. The optimal level of pollution is zero.
T F 9. Among the winners with capital mobility are host country workers.
T F 10. The rules of WTO/GATT prohibit tariff increases.
Figure 1
Price/unit
S
E
F
Pw + tariff
G
H
I
J
Pregion
K
L
M
N
O
R
Pw
T
V
U
Q1
W
Q2
Q3
X
Y
Q4
Z
Q5
A
Q6
11. In figure 1, with the tariff, tariff revenue is:
a. F
d. I+N
b. I
e. none of the above
c. N+X
12. In figure 1, if the country with the tariff joins the bloc, domestic production:
a. falls by Q3-Q2
d. rises by Q3-Q2
b. rises by Q5-Q4
e. none of the above
c. falls by Q5-Q4
13. In figure 1, if the country is in the regional bloc, producer surplus is:
a. G+K+T
d. E+F
b. K+T
e. none of the above
c. E+F+G+H+I+J
14. In figure 1, if the country is in the regional bloc, consumer surplus is:
a. G+K+T
d. E+F
b. K+T
e. none of the above
c. E+F+G+H+I+J
15. In figure 1, if the country with the tariff joins the bloc, the net gain or loss is:
a. H+J-N
d. H+L+M+J+O+R
b. F+I-N
e. none of the above
c. L+M+O+R
D
Figure 2
Wage
S
S + migration
T
W2
U
V
Y
W1
B
F
E
C
I
J
H
D
G
L0
L1
L2
Labor
16. Figure 2 shows the situation in the
a. world
d. both the home and host counties
b. home country
e. none of the above
c. host country
17. In figure 2 the amount of migration is:
a. L1-L0
d. L1
b. L2-L0
e. none of the above
c. L2-L1
18. In figure 2 post-migration the firms in the country get:
a. T+U+V+Y
d. B
b. U+B
e. none of the above
c. T
19. In figure 2 with migration the workers originally in the country:
a. gain U
d. lose U
b. lose U+V+Y
e. none of the above
c. gain U+V+Y
20. In figure 2 due to the migration the people originally of the country have net:
a. gain of Y+F
d. loss of V+Y
b. loss of Y+F
e. none of the above
c. gain of V+Y
P/unit
Figure 3
Marginal Global Costs
Marginal Domestic Social Costs
Marginal Private Costs = MC
D
Q1 Q2
Q3
Q4
Q/time
21. In figure 3 the domestic market would produce:
a. Q1
d. Q4
b. Q2
e. none of the above
c. Q3
22. In figure 3 a command and control production of Q1 implies:
a. there is too much pollution
d. there is zero pollution
b. pollution is the optimal amount
e. none of the above
c. there is too little pollution
23. In figure 3 the social optimum output is:
a. Q1
d. Q4
b. Q2
e. none of the above
c. Q3
24. A way to get to the social optimum output would be:
a. an optimal domestic tax
d. all of the above
b. international agreement
e. none of the above
c. government take over of the business
25. Trade creation of a bloc tends to be greater than trade diversion:
a. the greater pre bloc trade among members d. all of the above
b. the more members there are in the bloc
e. none of the above
c. the closer the members of the bloc are geographically