Question 1

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by

Accepted Answer

A) $640. 
B) $1,280. 
C) $2,560. 
D) $3,840. 
A) $640. 
B) $1,280. 
C) $2,560. 
D) $3,840.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Which of the following arguments for trade restrictions is often advanced?

Accepted Answer

A) Trade restrictions make all Americans better off. 
B) Trade restrictions increase economic efficiency. 
C) Trade restrictions are necessary for economic growth. 
D) Trade restrictions are sometimes necessary for national security. 
A) Trade restrictions make all Americans better off. 
B) Trade restrictions increase economic efficiency. 
C) Trade restrictions are necessary for economic growth. 
D) Trade restrictions are sometimes necessary for national security.

Question 4

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

Accepted Answer

A) $15 and 80 calculators will be sold domestically. 
B) $15 and 130 calculators will be sold domestically. 
C) $20 and 80 calculators will be sold domestically. 
D) $20 and 130 calculators will be sold domestically. 
A) $15 and 80 calculators will be sold domestically. 
B) $15 and 130 calculators will be sold domestically. 
C) $20 and 80 calculators will be sold domestically. 
D) $20 and 130 calculators will be sold domestically.

Question 5

When a country that imports a particular good imposes a tariff on that good,

Accepted Answer

A) producer surplus increases and total surplus increases in the market for that good. 
B) producer surplus increases and total surplus decreases in the market for that good. 
C) producer surplus decreases and total surplus increases in the market for that good. 
D) producer surplus decreases and total surplus decreases in the market for that good. 
A) producer surplus increases and total surplus increases in the market for that good. 
B) producer surplus increases and total surplus decreases in the market for that good. 
C) producer surplus decreases and total surplus increases in the market for that good. 
D) producer surplus decreases and total surplus decreases in the market for that good.

Question 6

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals

Accepted Answer

A) $100. 
B) $200. 
C) $400. 
D) $500. 
A) $100. 
B) $200. 
C) $400. 
D) $500.

Question 7

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. Producer surplus with free trade is

Accepted Answer

A) $14,000. 
B) $18,000. 
C) $24,000. 
D) $32,000. 
A) $14,000. 
B) $18,000. 
C) $24,000. 
D) $32,000.

Question 8

Figure 9-12  
-Refer to Figure 9-12. Consumer surplus before trade is

Accepted Answer

A) $14,400. 
B) $16,800. 
C) $21,600. 
D) $24,800. 
A) $14,400. 
B) $16,800. 
C) $21,600. 
D) $24,800.

Question 9

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade, thus reducing the gains from trade.

Accepted Answer

A) True 
 B)False

Question 10

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 $45. Then Boxland's gains from international trade in cardboard amount to

Accepted Answer

A) $88.75. 
B) $102.50. 
C) $122.50. 
D) $135.00. 
A) $88.75. 
B) $102.50. 
C) $122.50. 
D) $135.00.

Question 11

Trade enhances the economic well-being of a nation in the sense that

Accepted Answer

A) both domestic producers and domestic consumers of a good become better off with trade, regardless of whether the nation imports or exports the good in question. 
B) the gains of domestic producers of a good exceed the losses of domestic consumers of a good, regardless of whether the nation imports or exports the good in question. 
C) trade results in an increase in total surplus. 
D) trade puts downward pressure on the prices of all goods. 
A) both domestic producers and domestic consumers of a good become better off with trade, regardless of whether the nation imports or exports the good in question. 
B) the gains of domestic producers of a good exceed the losses of domestic consumers of a good, regardless of whether the nation imports or exports the good in question. 
C) trade results in an increase in total surplus. 
D) trade puts downward pressure on the prices of all goods.

Question 12

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Accepted Answer

A) abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. 
B) abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. 
C) abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. 
D) abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples. 
A) abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. 
B) abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. 
C) abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. 
D) abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples.

Question 13

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Accepted Answer

A) True 
 B)False

Question 14

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.  
-Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area

Accepted Answer

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

Question 15

How does an import quota differ from an equivalent tariff?

Accepted Answer

Both the import quota and the tariff rai

Question 16

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 and international trade is allowed. Then Boxland's consumers demand

Accepted Answer

A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 
B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. 
D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 
A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 
B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. 
D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard.

Question 17

GATT is an example of a successful unilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 18

List five arguments given to support trade restrictions.

Accepted Answer

The jobs argument; the nationa

Question 19

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?

Accepted Answer

A) More Danish-produced chips are sold in Denmark. 
B) More foreign-produced chips are sold in Denmark. 
C) Danish consumers of chips become better off. 
D) Total surplus in the Danish chip market increases. 
A) More Danish-produced chips are sold in Denmark. 
B) More foreign-produced chips are sold in Denmark. 
C) Danish consumers of chips become better off. 
D) Total surplus in the Danish chip market increases.

Question 20

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

Accepted Answer

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

Exam 9: Application: International Trade

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by

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

Which of the following arguments for trade restrictions is often advanced?

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

When a country that imports a particular good imposes a tariff on that good,

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals

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. Producer surplus with free trade is

Figure 9-12 -Refer to Figure 9-12. Consumer surplus before trade is

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade, thus reducing the gains from trade.

Trade enhances the economic well-being of a nation in the sense that

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area

How does an import quota differ from an equivalent tariff?

GATT is an example of a successful unilateral approach to achieving free trade.

List five arguments given to support trade restrictions.

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?

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

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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