Question

16 multiple choice 2 points
with a quota, the ______ is greater than the ______.
loss in consumers surplus; loss in producers surplus plus higher total revenues on the imported goods
loss in producers surplus; gain in consumers surplus
quota-determined price; quota-determined output
loss in producers surplus plus higher total revenues on the imported goods; consumers surplus

17 multiple choice 2 points
two major exports for the united states are
footwear and fish.
clothing and office machines.
coffee and diamonds.
soybeans and scientific instruments.

Explanation:

Analyze the welfare effects of an import quota

An import quota restricts the quantity of a good that can be imported. This restriction drives up the domestic price of the good. As a result:

• Consumers face higher prices and buy less, leading to a substantial loss in consumers' surplus.
• Domestic producers benefit from the higher price, leading to a gain in producers' surplus (not a loss).
• License holders or foreign exporters capture quota rents, which represent higher total revenues on the imported goods.
• Because of deadweight loss, the total loss to consumers is greater than the sum of the gains to domestic producers and the quota rents. Thus, the loss in consumers' surplus is greater than the gain in producers' surplus plus the higher total revenues on the imported goods.

Evaluate the options for Question 16

• Option 1: "loss in consumers' surplus; loss in producers' surplus plus higher total revenues on the imported goods" matches the welfare analysis, where the consumer loss exceeds the combined producer gain (noting the typo "loss" instead of "gain" in producers' surplus in standard textbook options, or representing the net redistribution components). Let's verify the standard textbook phrasing: "With a quota, the loss in consumers' surplus is greater than the gain in producers' surplus plus the higher total revenues on the imported goods." The first option contains "loss in consumers' surplus" for the first blank, which is correct.
• Option 2: "loss in producers' surplus; gain in consumers' surplus" is incorrect because consumers lose and domestic producers gain.
• Option 3: "quota-determined price; quota-determined output" does not fit the welfare comparison.
• Option 4: "loss in producers' surplus plus higher total revenues..." is incorrect.

Therefore, the first option is the correct choice.

Analyze major exports of the United States

The United States is a major global exporter of agricultural products and high-technology capital goods.

• Soybeans represent one of the largest agricultural exports of the US.
• Scientific instruments, aerospace equipment, and machinery represent major high-tech industrial exports.
• Other options like footwear, clothing, coffee, and diamonds are primarily imported by the United States rather than exported.

Evaluate the options for Question 17

• Option 1: "footwear and fish" — Footwear is heavily imported.
• Option 2: "clothing and office machines" — Clothing is heavily imported.
• Option 3: "coffee and diamonds" — Coffee and diamonds are primarily imported.
• Option 4: "soybeans and scientific instruments" — Both are major, well-documented US export categories.

Therefore, the fourth option is the correct choice.

Answer:

Question 16

• (A) loss in consumers' surplus; loss in producers' surplus plus higher total revenues on the imported goods (Correct answer)
• (B) loss in producers' surplus; gain in consumers' surplus
• (C) quota-determined price; quota-determined output
• (D) loss in producers' surplus plus higher total revenues on the imported goods; consumers' surplus

Question 17

• (A) footwear and fish.
• (B) clothing and office machines.
• (C) coffee and diamonds.
• (D) soybeans and scientific instruments. (Correct answer)