Question 1

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Accepted Answer

A) People face tradeoffs. 
B) Trade can make everyone better off. 
C) Governments can sometimes improve market outcomes. 
D) Prices rise when the government prints too much money. 
A) People face tradeoffs. 
B) Trade can make everyone better off. 
C) Governments can sometimes improve market outcomes. 
D) Prices rise when the government prints too much money.

Question 2

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. The imposition of a tariff on roses

Accepted Answer

A) increases the number of roses imported by 100. 
B) increases the number of roses imported by 200. 
C) decreases the number of roses imported by 200. 
D) decreases the number of roses imported by 400. 
A) increases the number of roses imported by 100. 
B) increases the number of roses imported by 200. 
C) decreases the number of roses imported by 200. 
D) decreases the number of roses imported by 400.

Question 3

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

Accepted Answer

A) may prompt Russian farmers to invoke the infant-industry argument. 
B) increase the consumer surplus of Russian buyers of wheat. 
C) decrease the total surplus of the Russian people. 
D) All of the above are correct. 
A) may prompt Russian farmers to invoke the infant-industry argument. 
B) increase the consumer surplus of Russian buyers of wheat. 
C) decrease the total surplus of the Russian people. 
D) All of the above are correct.

Question 4

What are the arguments in favor of trade restrictions, and what are the counterarguments? According to most economists, do any of these arguments really justify trade restrictions? Explain.

Accepted Answer

Arguments mentioned in the text include

Question 5

​Figure 9-26
The diagram below illustrates the market for baseballs in the U.S.  
-​Refer to figure 9-26. Prior to opening of the U.S. baseball market to international trade, total surplus is

Accepted Answer

A) ​$4800. 
B) ​$2400. 
C) ​$600. 
D) ​$6000. 
A) ​$4800. 
B) ​$2400. 
C) ​$600. 
D) ​$6000.

Question 6

Assume, for England, that the domestic price of wine without international trade is lower than the world price of wine. This suggests that, in the production of wine,

Accepted Answer

A) England has a comparative advantage over other countries and England will export wine. 
B) England has a comparative advantage over other countries and England will import wine. 
C) other countries have a comparative advantage over England and England will export wine. 
D) other countries have a comparative advantage over England and England will import wine. 
A) England has a comparative advantage over other countries and England will export wine. 
B) England has a comparative advantage over other countries and England will import wine. 
C) other countries have a comparative advantage over England and England will export wine. 
D) other countries have a comparative advantage over England and England will import wine.

Question 7

​Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

Accepted Answer

A) True 
 B)False

Question 8

Figure 9-13  
-Refer to Figure 9-13. With trade, domestic production and domestic consumption, respectively, are

Accepted Answer

A) 600 and 600. 
B) 600 and 300. 
C) 300 and 900. 
D) 600 and 900. 
A) 600 and 600. 
B) 600 and 300. 
C) 300 and 900. 
D) 600 and 900.

Question 9

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. In the country for which the figure is drawn, total surplus with international trade in cars

Accepted Answer

A) is represented by the area A + B + C. 
B) is represented by the area A + B + D. 
C) is smaller than producer surplus without international trade in cars. 
D) is larger than total surplus without international trade in cars. 
A) is represented by the area A + B + C. 
B) is represented by the area A + B + D. 
C) is smaller than producer surplus without international trade in cars. 
D) is larger than total surplus without international trade in cars.

Question 10

Figure 9-15  
-Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are

Accepted Answer

A) P1 and Q1. 
B) P1 and Q4. 
C) P2 and Q2. 
D) P2 and Q3. 
A) P1 and Q1. 
B) P1 and Q4. 
C) P2 and Q2. 
D) P2 and Q3.

Question 11

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. Producer surplus with free trade is

Accepted Answer

A) $200. 
B) $450. 
C) $630. 
D) $1,080 
A) $200. 
B) $450. 
C) $630. 
D) $1,080

Question 12

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. This country

Accepted Answer

A) has a comparative advantage in calculators. 
B) should export calculators. 
C) is a price taker in the world economy. 
D) All of the above are correct. 
A) has a comparative advantage in calculators. 
B) should export calculators. 
C) is a price taker in the world economy. 
D) All of the above are correct.

Question 13

Jamaica has a comparative advantage in the production of aluminum, but currently allows no international trade in aluminum. We can conclude that

Accepted Answer

A) ​the domestic price of aluminum in Jamaica is higher than the world price for aluminum. 
B) ​Jamaica has an absolute advantage in the production of aluminum. 
C) ​Jamaica should import aluminum. 
D) ​the domestic price of aluminum in Jamaica is lower than the world price for aluminum. 
A) ​the domestic price of aluminum in Jamaica is higher than the world price for aluminum. 
B) ​Jamaica has an absolute advantage in the production of aluminum. 
C) ​Jamaica should import aluminum. 
D) ​the domestic price of aluminum in Jamaica is lower than the world price for aluminum.

Question 14

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Accepted Answer

A) True 
 B)False

Question 15

Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

Accepted Answer

A) producers of incense and consumers of steel 
B) consumers of all three goods 
C) consumers of incense and producers of rugs 
D) producers of steel and consumers of incense 
A) producers of incense and consumers of steel 
B) consumers of all three goods 
C) consumers of incense and producers of rugs 
D) producers of steel and consumers of incense

Question 16

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

Accepted Answer

A) True 
 B)False

Question 17

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

Accepted Answer

A) True 
 B)False

Question 18

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel, then the domestic price of steel will increase as a result.

Accepted Answer

A) True 
 B)False

Question 19

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. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric

Question 20

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

Accepted Answer

A) if it works consumer surplus will decline. 
B) if it works producer surplus falls. 
C) if it fails the country faces a choice between two bad options. 
D) if it fails total surplus will increase. 
A) if it works consumer surplus will decline. 
B) if it works producer surplus falls. 
C) if it fails the country faces a choice between two bad options. 
D) if it fails total surplus will increase.

Exam 9: Application: International Trade

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The imposition of a tariff on roses

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

What are the arguments in favor of trade restrictions, and what are the counterarguments? According to most economists, do any of these arguments really justify trade restrictions? Explain.

​Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -​Refer to figure 9-26. Prior to opening of the U.S. baseball market to international trade, total surplus is

Assume, for England, that the domestic price of wine without international trade is lower than the world price of wine. This suggests that, in the production of wine,

​Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

Figure 9-13 -Refer to Figure 9-13. With trade, domestic production and domestic consumption, respectively, are

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. In the country for which the figure is drawn, total surplus with international trade in cars

Figure 9-15 -Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are

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. Producer surplus with free trade is

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. This country

Jamaica has a comparative advantage in the production of aluminum, but currently allows no international trade in aluminum. We can conclude that

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel, then the domestic price of steel will increase as a result.

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. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

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 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to figure 9-26. Prior to opening of the U.S. baseball market to international trade, total surplus is

Since a tariff can increase employment in an industry, the result is a net increase in total surplus.