Question 1

If a country is an exporter of a good, then it must be the case that

Accepted Answer

A) the world price is less than its domestic price. 
B) consumer surplus is higher than a no trade situation. 
C) the world price is greater than its domestic price. 
D) they used an infant-industry argument to protect its producers. 
A) the world price is less than its domestic price. 
B) consumer surplus is higher than a no trade situation. 
C) the world price is greater than its domestic price. 
D) they used an infant-industry argument to protect its producers.

Question 2

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. When trade is allowed,

Accepted Answer

A) Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off. 
B) Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off. 
C) both Guatemalan producers and consumers of coffee become better off. 
D) both Guatemalan producers and consumers of coffee become worse off. 
A) Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off. 
B) Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off. 
C) both Guatemalan producers and consumers of coffee become better off. 
D) both Guatemalan producers and consumers of coffee become worse off.

Question 3

Scenario 9-2
• For a small country called Boxland, the equation of the domestic demand curve for
cardboard is   ,
where   represents the domestic quantity of cardboard demanded, in tons, and   represents the price of a ton of cardboard.
• For Boxland, the equation of the domestic supply curve for cardboard is   ,
where   represents the domestic quantity of cardboard supplied, in tons, and   again
represents the price of a ton of cardboard.
-Refer to Scenario 9-2. Suppose the world price of cardboard is $60. Then Boxland's gains from international trade in cardboard amount to

Accepted Answer

A) $145. 
B) $160. 
C) $210. 
D) $320. 
A) $145. 
B) $160. 
C) $210. 
D) $320.

Question 4

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Accepted Answer

A) representatives of industry. 
B) representatives of the defense establishment. 
C) members of households. 
D) foreign government officials. 
A) representatives of industry. 
B) representatives of the defense establishment. 
C) members of households. 
D) foreign government officials.

Question 5

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars.  
-Refer to Figure 9-8. The country for which the figure is drawn

Accepted Answer

A) has a comparative advantage relative to other countries in the production of cars and it will export cars. 
B) has a comparative advantage relative to other countries in the production of cars and it will import cars. 
C) has a comparative disadvantage relative to other countries in the production of cars and it will export cars. 
D) has a comparative disadvantage relative to other countries in the production of cars and it will import cars. 
A) has a comparative advantage relative to other countries in the production of cars and it will export cars. 
B) has a comparative advantage relative to other countries in the production of cars and it will import cars. 
C) has a comparative disadvantage relative to other countries in the production of cars and it will export cars. 
D) has a comparative disadvantage relative to other countries in the production of cars and it will import cars.

Question 6

Economists view free trade as a way to raise living standards both at home and abroad.

Accepted Answer

A) True 
 B)False

Question 7

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

Accepted Answer

A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. 
B) this is an indication that the nation has a comparative advantage in producing soybeans. 
C) the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off. 
D) All of the above are correct. 
A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. 
B) this is an indication that the nation has a comparative advantage in producing soybeans. 
C) the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off. 
D) All of the above are correct.

Question 8

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. Without trade, the equilibrium price of roses is

Accepted Answer

A) $4 and the equilibrium quantity is 300. 
B) $3 and the equilibrium quantity is 200. 
C) $3 and the equilibrium quantity is 400. 
D) $2 and the equilibrium quantity is 500. 
A) $4 and the equilibrium quantity is 300. 
B) $3 and the equilibrium quantity is 200. 
C) $3 and the equilibrium quantity is 400. 
D) $2 and the equilibrium quantity is 500.

Question 9

Figure 9-3. The domestic country is China.  
-Refer to Figure 9-3. If China were to abandon a no-trade policy in favor of a free-trade policy,

Accepted Answer

A) Chinese producers of pencil sharpeners would become worse off. 
B) Chinese consumers of pencil sharpeners would become better off. 
C) total surplus in the Chinese economy would increase. 
D) All of the above are correct. 
A) Chinese producers of pencil sharpeners would become worse off. 
B) Chinese consumers of pencil sharpeners would become better off. 
C) total surplus in the Chinese economy would increase. 
D) All of the above are correct.

Question 10

The greater the elasticities of supply and demand, the smaller are the gains from trade.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following tools and concepts is useful in the analysis of international trade?

Accepted Answer

A) total surplus 
B) domestic supply 
C) equilibrium price 
D) All of the above are correct. 
A) total surplus 
B) domestic supply 
C) equilibrium price 
D) All of the above are correct.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) consumers will gain more than producers will lose. 
B) producers will gain more than consumers will lose. 
C) producers and consumers will both gain equally. 
D) producers and consumers will both lose equally. 
A) consumers will gain more than producers will lose. 
B) producers will gain more than consumers will lose. 
C) producers and consumers will both gain equally. 
D) producers and consumers will both lose equally.

Question 14

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

Accepted Answer

A) the country becomes an importer of the good as a result. 
B) the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C) other countries have a comparative advantage, relative to the country in question, in producing the good. 
D) total surplus does not change as a result. 
A) the country becomes an importer of the good as a result. 
B) the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C) other countries have a comparative advantage, relative to the country in question, in producing the good. 
D) total surplus does not change as a result.

Question 15

A tariff on a product

Accepted Answer

A) enhances the economic well-being of the domestic economy. 
B) increases the domestic quantity supplied. 
C) increases the domestic quantity demanded. 
D) results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus. 
A) enhances the economic well-being of the domestic economy. 
B) increases the domestic quantity supplied. 
C) increases the domestic quantity demanded. 
D) results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus.

Question 16

The price of a good that prevails in a world market is called the

Accepted Answer

A) absolute price. 
B) relative price. 
C) comparative price. 
D) world price. 
A) absolute price. 
B) relative price. 
C) comparative price. 
D) world price.

Question 17

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents

Accepted Answer

A) Mexico's gains from trade. 
B) the amount by which Mexico's gain in producer surplus exceeds its loss in consumer surplus due to trade. 
C) Mexico's loss in total surplus due to trade. 
D) All of the above are correct. 
A) Mexico's gains from trade. 
B) the amount by which Mexico's gain in producer surplus exceeds its loss in consumer surplus due to trade. 
C) Mexico's loss in total surplus due to trade. 
D) All of the above are correct.

Question 18

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. With trade, total surplus in the Guatemalan coffee market amounts to

Accepted Answer

A) 1,250. 
B) 1,468. 
C) 1,870. 
D) 1,980. 
A) 1,250. 
B) 1,468. 
C) 1,870. 
D) 1,980.

Question 19

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

Accepted Answer

A) domestic producers of the good become better off. 
B) domestic consumers of the good become worse off. 
C) the gains of the winners exceed the losses of the losers. 
D) All of the above are correct. 
A) domestic producers of the good become better off. 
B) domestic consumers of the good become worse off. 
C) the gains of the winners exceed the losses of the losers. 
D) All of the above are correct.

Question 20

A possible outcome of the multilateral approach to free trade is that such an approach can

Accepted Answer

A) win political support when a unilateral approach cannot. 
B) result in more restricted trade than under a unilateral approach, when international negotiations fail. 
C) result in drastic reductions in tariffs for many countries. 
D) All of the above are correct. 
A) win political support when a unilateral approach cannot. 
B) result in more restricted trade than under a unilateral approach, when international negotiations fail. 
C) result in drastic reductions in tariffs for many countries. 
D) All of the above are correct.

Exam 9: Application: International Trade

If a country is an exporter of a good, then it must be the case that

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade is allowed,

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8. The country for which the figure is drawn

Economists view free trade as a way to raise living standards both at home and abroad.

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. Without trade, the equilibrium price of roses is

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. If China were to abandon a no-trade policy in favor of a free-trade policy,

The greater the elasticities of supply and demand, the smaller are the gains from trade.

Which of the following tools and concepts is useful in the analysis of international trade?

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

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

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

A tariff on a product

The price of a good that prevails in a world market is called the

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. With trade, total surplus in the Guatemalan coffee market amounts to

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

A possible outcome of the multilateral approach to free trade is that such an approach can

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

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The area bounded by the points (Q₀, P₀), (Q₂, P₁), and (Q₁, P₁) represents