Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

Figure 9-24
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The amount of revenue collected by the government from the tariff is

Accepted Answer

A) $50. 
B) $100. 
C) $150. 
D) $200. 
A) $50. 
B) $100. 
C) $150. 
D) $200. B

Question 3

Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit.  
-Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how much is the deadweight loss caused by the tariff?

Accepted Answer

The deadweight loss of the tariff is $100.

Question 4

Which of the following statements is true?

Accepted Answer

A) Free trade benefits a country when it exports but harms it when it imports. 
B) "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports. 
C) Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses. 
D) Free trade benefits a country both when it exports and when it imports. 
A) Free trade benefits a country when it exports but harms it when it imports. 
B) "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports. 
C) Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses. 
D) Free trade benefits a country both when it exports and when it imports.

Question 5

​Mexico has imposed a tariff on the importation of chocolate. As a consequence of the tariff,

Accepted Answer

A) ​Mexico as a whole is better off, since the tariff increases employment and production in the domestic chocolate industry. 
B) ​Mexico as a whole is better off, since the tariff results in tax revenue for the Mexican government. 
C) ​Mexico as a whole is worse off, since producer surplus and consumer surplus both decrease. 
D) ​Mexico as a whole is worse off, since the increase in producer surplus is smaller than the drop in consumer surplus plus tariff revenues. 
A) ​Mexico as a whole is better off, since the tariff increases employment and production in the domestic chocolate industry. 
B) ​Mexico as a whole is better off, since the tariff results in tax revenue for the Mexican government. 
C) ​Mexico as a whole is worse off, since producer surplus and consumer surplus both decrease. 
D) ​Mexico as a whole is worse off, since the increase in producer surplus is smaller than the drop in consumer surplus plus tariff revenues.

Question 6

Figure 9-4. The domestic country is Nicaragua.  
-Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is

Accepted Answer

A) $375. 
B) $2,000. 
C) $2,250. 
D) $8,700. 
A) $375. 
B) $2,000. 
C) $2,250. 
D) $8,700.

Question 7

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. In the absence of trade, the equilibrium price of coffee in Guatemala is

Accepted Answer

A) $30. 
B) $90. 
C) $110. 
D) $140. 
A) $30. 
B) $90. 
C) $110. 
D) $140.

Question 8

Suppose a country begins to allow international trade in steel. Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?

Accepted Answer

A) The sum of consumer surplus and producer surplus for domestic traders of steel increases. 
B) The quantity of steel demanded by domestic consumers increases. 
C) Domestic producers of steel receive a higher price for steel. 
D) The losses of the losers exceed the gains of the winners. 
A) The sum of consumer surplus and producer surplus for domestic traders of steel increases. 
B) The quantity of steel demanded by domestic consumers increases. 
C) Domestic producers of steel receive a higher price for steel. 
D) The losses of the losers exceed the gains of the winners.

Question 9

Suppose Ecuador imposes a tariff on imported bananas. If the increase in producer surplus is $50 million, the reduction in consumer surplus is $150 million, and the deadweight loss of the tariff is $30 million, then the tariff generates $130 million in revenue for the government.

Accepted Answer

A) True 
 B)False

Question 10

When a country allows international trade and becomes an importer of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off.

Accepted Answer

A) True 
 B)False

Question 11

Using the graph, assume that the government imposes a $1 tariff on hammers. Answer the following questions given this information.   
a.What is the domestic price and quantity demanded of hammers after the tariff is imposed?
b.What is the quantity of hammers imported before the tariff?
c.What is the quantity of hammers imported after the tariff?
d.What would be the amount of consumer surplus before the tariff?
e.What would be the amount of consumer surplus after the tariff?
f. What would be the amount of producer surplus before the tariff?
g. What would be the amount of producer surplus after the tariff?
h. What would be the amount of government revenue because of the tariff?
i. What would be the total amount of deadweight loss due to the tariff?

Accepted Answer

a.$6, 84
b.66
c.44
d

Question 12

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

Accepted Answer

A) producer surplus increases and total surplus increases in the market for that good. 
B) producer surplus increases and total surplus decreases in the market for that good. 
C) producer surplus decreases and total surplus increases in the market for that good. 
D) producer surplus decreases and total surplus decreases in the market for that good. 
A) producer surplus increases and total surplus increases in the market for that good. 
B) producer surplus increases and total surplus decreases in the market for that good. 
C) producer surplus decreases and total surplus increases in the market for that good. 
D) producer surplus decreases and total surplus decreases in the market for that good.

Question 13

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Accepted Answer

A) because it is impossible to analyze the gains and losses from international trade without making this assumption. 
B) because then we can assume that world prices of goods are unaffected by that country's participation in international trade. 
C) in order to rule out the possibility of tariffs or quotas. 
D) All of the above are correct. 
A) because it is impossible to analyze the gains and losses from international trade without making this assumption. 
B) because then we can assume that world prices of goods are unaffected by that country's participation in international trade. 
C) in order to rule out the possibility of tariffs or quotas. 
D) All of the above are correct.

Question 14

When a country allows trade and becomes an importer of a good,

Accepted Answer

A) domestic producers become better off, and domestic consumers become worse off. 
B) domestic producers become worse off, and domestic consumers become better off. 
C) domestic consumers become better off, but the effect on the well-being of domestic producers is ambiguous. 
D) domestic producers become worse off, but the effect on the well-being of domestic consumers is ambiguous. 
A) domestic producers become better off, and domestic consumers become worse off. 
B) domestic producers become worse off, and domestic consumers become better off. 
C) domestic consumers become better off, but the effect on the well-being of domestic producers is ambiguous. 
D) domestic producers become worse off, but the effect on the well-being of domestic consumers is ambiguous.

Question 15

Figure 9-13  
-Refer to Figure 9-13. Consumer surplus before trade is

Accepted Answer

A) $1,600. 
B) $2,400. 
C) $3,200. 
D) $3,600. 
A) $1,600. 
B) $2,400. 
C) $3,200. 
D) $3,600.

Question 16

The principle of comparative advantage asserts that

Accepted Answer

A) not all countries can benefit from trade with other countries. 
B) the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C) countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D) countries can become better off by specializing in what they do best. 
A) not all countries can benefit from trade with other countries. 
B) the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C) countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D) countries can become better off by specializing in what they do best.

Question 17

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. Without trade, producer surplus is

Accepted Answer

A) $423. 
B) $845. 
C) $1,690. 
D) $3,380. 
A) $423. 
B) $845. 
C) $1,690. 
D) $3,380.

Question 18

The price of sugar that prevails in international markets is called the

Accepted Answer

A) export price of sugar. 
B) import price of sugar. 
C) comparative-advantage price of sugar. 
D) world price of sugar. 
A) export price of sugar. 
B) import price of sugar. 
C) comparative-advantage price of sugar. 
D) world price of sugar.

Question 19

"Trade raises the economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods, but it is not correct for a nation that imports manufactured goods.

Accepted Answer

A) True 
 B)False

Question 20

Most economists support the infant-industry argument because it is so easy to implement in practice.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

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

Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The amount of revenue collected by the government from the tariff is

Which of the following statements is true?

​Mexico has imposed a tariff on the importation of chocolate. As a consequence of the tariff,

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. In the absence of trade, the equilibrium price of coffee in Guatemala is

Suppose a country begins to allow international trade in steel. Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?

Suppose Ecuador imposes a tariff on imported bananas. If the increase in producer surplus is $50 million, the reduction in consumer surplus is $150 million, and the deadweight loss of the tariff is $30 million, then the tariff generates $130 million in revenue for the government.

When a country allows international trade and becomes an importer of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off.

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

When a country allows trade and becomes an importer of a good,

Figure 9-13 -Refer to Figure 9-13. Consumer surplus before trade is

The principle of comparative advantage asserts that

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. Without trade, producer surplus is

The price of sugar that prevails in international markets is called the

"Trade raises the economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods, but it is not correct for a nation that imports manufactured goods.

Most economists support the infant-industry argument because it is so easy to implement in practice.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Mexico has imposed a tariff on the importation of chocolate. As a consequence of the tariff,