Question 1

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Accepted Answer

A) 54 percent 
B) 72 percent 
C) 89 percent 
D) 97 percent 
A) 54 percent 
B) 72 percent 
C) 89 percent 
D) 97 percent

Question 2

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland.  
-Refer to Figure 9-18. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

Accepted Answer

A) above $2. 
B) below $4. 
C) above $4. 
D) below $7. 
A) above $2. 
B) below $4. 
C) above $4. 
D) below $7.

Question 3

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Accepted Answer

A) True 
 B)False

Question 4

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

Accepted Answer

A) (0, P0), (Q0, P0), (Q2, P1), and (0, P1). 
B) (0, P1), (0, P2), (Q0, P0), and (Q1, P1). 
C) (Q0, P0), (Q2, P1), and (Q1, P1). 
D) (0, P0), (0, P2), and (Q0, P0). 
A) (0, P0), (Q0, P0), (Q2, P1), and (0, P1). 
B) (0, P1), (0, P2), (Q0, P0), and (Q1, P1). 
C) (Q0, P0), (Q2, P1), and (Q1, P1). 
D) (0, P0), (0, P2), and (Q0, P0).

Question 5

President Bush imposed temporary tariffs on imported steel in 2002. The reasons for this trade restriction is most consistent with the

Accepted Answer

A) national-security argument. 
B) infant-industry argument. 
C) unfair competition argument. 
D) protection-as-a-bargaining chip-argument. 
A) national-security argument. 
B) infant-industry argument. 
C) unfair competition argument. 
D) protection-as-a-bargaining chip-argument.

Question 6

A tax on an imported good is called a ______ .

Accepted Answer

The answer of A tax on an imported good is...

Question 7

Figure 9-23
The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit.  
-Refer to Figure 9-23. With free trade, the domestic price and domestic quantity supplied are

Accepted Answer

A) $90 and 10. 
B) $90 and 18. 
C) $120 and 5. 
D) $120 and 18. 
A) $90 and 10. 
B) $90 and 18. 
C) $120 and 5. 
D) $120 and 18.

Question 8

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Accepted Answer

A) foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. 
B) foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C) the critics are correct, so countries must protect their industries with tariffs or quotas. 
D) foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs. 
A) foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. 
B) foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C) the critics are correct, so countries must protect their industries with tariffs or quotas. 
D) foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.

Question 9

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland.  
-Refer to Figure 9-18. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $5, then the policy change results in a

Accepted Answer

A) $25 decrease in consumer surplus. 
B) $20 increase in consumer surplus. 
C) $25 decrease in producer surplus. 
D) $20 increase in producer surplus. 
A) $25 decrease in consumer surplus. 
B) $20 increase in consumer surplus. 
C) $25 decrease in producer surplus. 
D) $20 increase in producer surplus.

Question 10

Suppose Jamaica has an absolute advantage over other countries in producing sugar, but other countries have a comparative advantage over Jamaica in producing sugar. If trade in sugar is allowed, Jamaica

Accepted Answer

A) will import sugar. 
B) will export sugar. 
C) will either import sugar or export sugar, but it is not clear from the given information. 
D) would have nothing to gain either from exporting or importing sugar. 
A) will import sugar. 
B) will export sugar. 
C) will either import sugar or export sugar, but it is not clear from the given information. 
D) would have nothing to gain either from exporting or importing sugar.

Question 11

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil.  
-Refer to Figure 9-14. A result of this country allowing international trade in crude oil is as follows:

Accepted Answer

A) The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel. 
B) The effect on the well-being of domestic crude-oil consumers is unclear in that they now buy more crude oil, but at a higher price per barrel. 
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases, while the effect on domestic consumer surplus is unclear. 
D) All of the above are correct. 
A) The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel. 
B) The effect on the well-being of domestic crude-oil consumers is unclear in that they now buy more crude oil, but at a higher price per barrel. 
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases, while the effect on domestic consumer surplus is unclear. 
D) All of the above are correct.

Question 12

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

The countr

Question 13

Figure 9-11  
-Refer to Figure 9-11. Producer surplus plus consumer surplus in this market before trade is

Accepted Answer

A) A + B. 
B) A + B + C. 
C) A + B + C + D. 
D) B + C + D. 
A) A + B. 
B) A + B + C. 
C) A + B + C + D. 
D) B + C + D.

Question 14

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

Accepted Answer

A) consumer surplus and producer surplus both increase. 
B) consumer surplus and producer surplus both decrease. 
C) consumer surplus increases and producer surplus decreases. 
D) consumer surplus decreases and producer surplus increases. 
A) consumer surplus and producer surplus both increase. 
B) consumer surplus and producer surplus both decrease. 
C) consumer surplus increases and producer surplus decreases. 
D) consumer surplus decreases and producer surplus increases.

Question 15

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit.  
-Refer to Figure 9-22. With free trade, consumer surplus is

Accepted Answer

A) $48,000 and producer surplus is $48,000. 
B) $18,000 and producer surplus is $12,000. 
C) $108,000 and producer surplus is $12,000. 
D) $18,000 and producer surplus is $48,000. 
A) $48,000 and producer surplus is $48,000. 
B) $18,000 and producer surplus is $12,000. 
C) $108,000 and producer surplus is $12,000. 
D) $18,000 and producer surplus is $48,000.

Question 16

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

Accepted Answer

A) better off no matter how Honduras responds. 
B) better off if Honduras gives in, and will be no worse off if it doesn't. 
C) worse off if Honduras doesn't give in to the threat. 
D) worse off no matter how Honduras responds. 
A) better off no matter how Honduras responds. 
B) better off if Honduras gives in, and will be no worse off if it doesn't. 
C) worse off if Honduras doesn't give in to the threat. 
D) worse off no matter how Honduras responds.

Question 17

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is

Accepted Answer

A) P0 and Q0. 
B) P1 and Q1. 
C) P2 and Q2. 
D) P1 and Q0. 
A) P0 and Q0. 
B) P1 and Q1. 
C) P2 and Q2. 
D) P1 and Q0.

Question 18

By comparing the world price of pecans to India's domestic price of pecans, we can determine whether India

Accepted Answer

A) will export pecans (assuming trade is allowed). 
B) will import pecans (assuming trade is allowed). 
C) has a comparative advantage in producing pecans. 
D) All of the above are correct. 
A) will export pecans (assuming trade is allowed). 
B) will import pecans (assuming trade is allowed). 
C) has a comparative advantage in producing pecans. 
D) All of the above are correct.

Question 19

If the world price of coffee is lower than Colombia's domestic price of coffee without trade, then Colombia

Accepted Answer

A) should import coffee. 
B) has a comparative advantage in coffee. 
C) should produce just enough coffee to satisfy domestic demand. 
D) should produce no coffee domestically. 
A) should import coffee. 
B) has a comparative advantage in coffee. 
C) should produce just enough coffee to satisfy domestic demand. 
D) should produce no coffee domestically.

Question 20

Suppose the world price of coffee is $2 per pound and Brazil's domestic price of coffee without trade is $3 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

Accepted Answer

Brazil wil

Exam 9: Application: International Trade

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland. -Refer to Figure 9-18. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

President Bush imposed temporary tariffs on imported steel in 2002. The reasons for this trade restriction is most consistent with the

A tax on an imported good is called a ______ .

Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. With free trade, the domestic price and domestic quantity supplied are

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Suppose Jamaica has an absolute advantage over other countries in producing sugar, but other countries have a comparative advantage over Jamaica in producing sugar. If trade in sugar is allowed, Jamaica

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14. A result of this country allowing international trade in crude oil is as follows:

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Figure 9-11 -Refer to Figure 9-11. Producer surplus plus consumer surplus in this market before trade is

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

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. With free trade, consumer surplus is

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is

By comparing the world price of pecans to India's domestic price of pecans, we can determine whether India

If the world price of coffee is lower than Colombia's domestic price of coffee without trade, then Colombia

Suppose the world price of coffee is $2 per pound and Brazil's domestic price of coffee without trade is $3 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

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

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