Question 1

Figure 9-9  
-Refer to Figure 9-9. The change in total surplus in this market because of trade is

Accepted Answer

A) D, and this area represents a loss of total surplus because of trade. 
B) D, and this area represents a gain in total surplus because of trade. 
C) B + D, and this area represents a loss of total surplus because of trade. 
D) B + D, and this area represents a gain in total surplus because of trade. 
A) D, and this area represents a loss of total surplus because of trade. 
B) D, and this area represents a gain in total surplus because of trade. 
C) B + D, and this area represents a loss of total surplus because of trade. 
D) B + D, and this area represents a gain in total surplus because of trade.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-17  
-Refer to Figure 9-17. The deadweight loss caused by the tariff is

Accepted Answer

A) $24. 
B) $72. 
C) $96. 
D) $144. 
A) $24. 
B) $72. 
C) $96. 
D) $144.

Question 4

List four benefits of international trade.

Accepted Answer

Increased variety of goods; lo

Question 5

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.

Accepted Answer

A) True 
 B)False

Question 6

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Accepted Answer

A) the domestic price of coffee will be greater than the world price of coffee. 
B) the domestic price of coffee will be lower than the world price of coffee. 
C) the domestic price of coffee will equal the world price of coffee. 
D) The world price of coffee does not matter; the domestic price of coffee prevails. 
A) the domestic price of coffee will be greater than the world price of coffee. 
B) the domestic price of coffee will be lower than the world price of coffee. 
C) the domestic price of coffee will equal the world price of coffee. 
D) The world price of coffee does not matter; the domestic price of coffee prevails.

Question 7

For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

Accepted Answer

A) True 
 B)False

Question 8

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. When the country for which the figure is drawn allows international trade in crude oil,

Accepted Answer

A) consumer surplus for domestic crude-oil consumers decreases. 
B) the demand for crude oil by domestic crude-oil consumers decreases. 
C) the losses of the domestic losers outweigh the gains of the domestic winners. 
D) domestic crude-oil producers sell less crude oil. 
A) consumer surplus for domestic crude-oil consumers decreases. 
B) the demand for crude oil by domestic crude-oil consumers decreases. 
C) the losses of the domestic losers outweigh the gains of the domestic winners. 
D) domestic crude-oil producers sell less crude oil.

Question 9

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-27. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus?

Accepted Answer

Without trade, consu

Question 10

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

Accepted Answer

A) an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus. 
B) an import quota has no effect on producer surplus, while a tariff decreases producer surplus. 
C) a tariff raises total surplus, while an import quota does not. 
D) a tariff raises revenue for that country's government, while an import quota does not. 
A) an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus. 
B) an import quota has no effect on producer surplus, while a tariff decreases producer surplus. 
C) a tariff raises total surplus, while an import quota does not. 
D) a tariff raises revenue for that country's government, while an import quota does not.

Question 11

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. Suppose the government imposes a tariff of $20 per unit. The amount of revenue collected by the government from the tariff is

Accepted Answer

A) $6,000. 
B) $9,000. 
C) $12,000. 
D) $15,000. 
A) $6,000. 
B) $9,000. 
C) $12,000. 
D) $15,000.

Question 12

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Accepted Answer

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

Question 13

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-27. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric

Question 14

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Accepted Answer

A) demand for tricycles from the rest of the world. 
B) supply of tricycles from the rest of the world. 
C) level of inefficiency in the domestic market caused by trade. 
D) surplus in the domestic tricycle market. 
A) demand for tricycles from the rest of the world. 
B) supply of tricycles from the rest of the world. 
C) level of inefficiency in the domestic market caused by trade. 
D) surplus in the domestic tricycle market.

Question 15

Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that amounts to

Accepted Answer

A) B. 
B) E. 
C) D + F. 
D) B + D + E + F. 
A) B. 
B) E. 
C) D + F. 
D) B + D + E + F.

Question 16

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, the domestic price and domestic quantity demanded are

Accepted Answer

A) $30 and 1,200. 
B) $40 and 800. 
C) $30 and 800. 
D) $40 and 1,600. 
A) $30 and 1,200. 
B) $40 and 800. 
C) $30 and 800. 
D) $40 and 1,600.

Question 17

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-27. Suppose the country imposes a $5 per unit tariff. If the country allows trade with a tariff, how much is the deadweight loss caused by the tariff?

Accepted Answer

The deadwe

Question 18

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-27. Suppose the country imposes a $5 per unit tariff. If the country allows trade with a tariff, how much are consumer surplus, producer surplus, tariff revenue, and total surplus?

Accepted Answer

With trade and a tariff, consu

Question 19

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

Accepted Answer

A) $810. 
B) $1,620. 
C) $3,240. 
D) $6,480. 
A) $810. 
B) $1,620. 
C) $3,240. 
D) $6,480.

Question 20

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

Accepted Answer

Domestic consumers w

Exam 9: Application: International Trade

Figure 9-9 -Refer to Figure 9-9. The change in total surplus in this market because of trade is

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

Figure 9-17 -Refer to Figure 9-17. The deadweight loss caused by the tariff is

List four benefits of international trade.

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.

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

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. When the country for which the figure is drawn allows international trade in crude oil,

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus?

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that 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, the domestic price and domestic quantity demanded are

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

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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