941. _________ is said to exist when the formation of a regional trading group leads to an expansion of trade above pregroup levels ?
A. trade creation
B. trade diversion
C. trade exclusion
D. trade distortion

942. A positive, dynamic effect of economic integration is illustrated by ?
A. trade diversion effect
B. increased monopoly power of firms
C. decrease customs costs
D. economy-of-scale effect

943. Criticisms against the North American Free Trade Agreement include all of the following except ?
A. wages in the United States will rise relative to Mexican wages
B. American jobs will be lost to workers in Mexico
C. The environment is not adequately protected by NAFTA
D. None of the above

944. Profit-maximizing firms want to maximize the difference between ?
A. marginal revenue and marginal cost.
B. total revenue and total cost
C. total revenue and marginal cost
D. marginal revenue and average cost

945. Which of the following is most likely to be a variable cost for a firm ?
A. The franchiser’s fee that a restaurant must pay to the national restaurant chain
B. The payroll taxes that are paid on employee wages.
C. The monthly rent on office space that it leased for a year
D. The interest payments made on loans.

946. Which level of economic integration best applies to the U.S economy ?
A. free trade area
B. customs union
C. common market
D. monetary union

947. Suppose that tomatoes from Mexico face a 20 percent tariff in the United States and a 25 percent tariff in Canada. If the United States and Canada maintain free trade between each other, the these two countries belong to a ?
A. free-trade area
B. customs union
C. common market
D. monetary union

948. When imports from a higher-cost supplier within a customs union replace imports from a lower-cost supplier outside the custom union, there exists ?
A. trade creation
B. trade diversion
C. dynamic welfare effects
D. comprehensive welfare effects

949. Trade creation takes place when ?
A. a country moves from autarky to free trade
B. a movement to a customs union reduces the cost of trade through standardization
C. economic integration results in a movement in product origin to a lower-cost member country
D. economic integration results in a shift in product origin from a lower cost nonmember country to a member country having higher costs

950. Under the EU’s Common Agricultural Policy, a variable import levy equals the ?
A. amount the which the EU’s support price exceeds the world price
B. amount by which the world price exceeds the EU’s support price
C. support price of the EU
D. world price

 

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