Exam 9: Application: International Trade

Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. With free trade and a $5 per unit tariff, the country

Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Trade decisions are based on the principle of absolute advantage.

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

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Without trade, producer surplus amounts to

Figure 9-21 The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-21. With free trade allowed, this country

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

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, how many units will domestic consumers demand, and how many units will domestic producers produce?

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

Suppose that the US market for soybeans is not open to international trade. Currently, soybeans sell for $6.00 per bushel in the US and the world price for soybeans is $8.00 per bushel. This information implies that

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, this country

Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. The deadweight loss caused by the tariff is

In a 2007 New York Times article Paul Krugman wrote that

If the demand curve and the supply curve for a good are straight lines, then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by

The history of the textile industry raises important questions for economic policy.

Figure 9-17 -Refer to Figure 9-17. With free trade, consumer surplus is

Which of the following is the most accurate statement?

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

Refer to Figure 9-15. Producer surplus with the tariff is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, producer surplus is