European Union Worksheet

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EUROPEAN INTEGRATION
WORKSHEET 1

I) TRUE / FALSE

1. The European Coal and Steel Community (ECSC) consisted of the same 6 nations that later formed the European Economic Community.

2. The EEC was established by the Treaty of Rome.

3. The EU’s custom union was completed ahead of the schedule that was agreed for it in the Treaty of Rome.

4. The European Free Trade Association (EFTA) was set up in response to the ECSC.

5. The Council of Europe is part of the European Union.

6. All new EU Treaties must be ratified by each Member State according to its own constitutional provisions.

7. The European Commission now has one Commissioner from each Member State.

8. The European Parliament meets in Brussels and Strasbourg.

9. Members of the European Parliament are appointed by their national parliaments.

10. If the Lisbon Treaty is ratified, it will replace the Treaty of Rome.

11. Trade decisions are based on the concept of absolute advantage.

12. The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive in a market.

13. According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

14. Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

15. If the world price of a good is greater than the domestic price in a country that can engage in international trade, that country would become an importer of that good.

16. If the domestic price of a good is low relative to the world price, the country has a comparative advantage in producing that good.

17. Without free trade, the domestic price of a good must be equal to the world price of a good.

18. If Greece exports oranges to the rest of the world, Greece’s producers of oranges are worse off as a result of trade, but Greece’s consumers of oranges are better off. 19. If the United Kingdom imports tea cups from other countries, U.K. producers of tea cups are better off as a result of trade, but U.K. consumers of tea cups are worse off.

20. If Belgium exports chocolate to the rest of the world, Belgian chocolate sellers benefit from higher producer surplus, Belgian chocolate buyers are worse off because of lower consumer surplus, but total surplus in Belgium increases because of trade.

21. In principle, trade can make everyone better off, since the gains to the winners exceed the losses to the losers.

22. If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the tariff.

23. When a government imposes a tariff on a product, the domestic price will equal the world price.

24. A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

25. Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

26. If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

27. Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight loss of the tariff is $300 million.

28. Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade, thus reducing the gains from trade.

29. Import quotas and tariffs both cause the quantity of imports to fall.

30. Import quotas make domestic sellers better off and domestic buyers worse off.

31. An import quota increases domestic producer surplus and the surplus of import license holders, but reduces domestic consumer surplus, and creates deadweight loss.

32. Economists agree...
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