Question 1

A major difference between tariffs and import quotas is that

Accepted Answer

A) tariffs create deadweight losses, but import quotas do not. 
B) tariffs help domestic consumers, and import quotas help domestic producers. 
C) tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import. 
D) All of the above are correct. 
A) tariffs create deadweight losses, but import quotas do not. 
B) tariffs help domestic consumers, and import quotas help domestic producers. 
C) tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import. 
D) All of the above are correct.

Question 2

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. Suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, what will be the domestic price in this market?

Accepted Answer

With trade and a tar

Question 3

The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

Accepted Answer

A) True 
 B)False

Question 4

​There are only increases in total surplus when a country exports a good, since more units of the country's output of that good are produced.

Accepted Answer

A) True 
 B)False

Question 5

Figure 9-12  
-Refer to Figure 9-12. With trade, domestic production and domestic consumption, respectively, are

Accepted Answer

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

Question 6

When the nation of Worldova allows trade and becomes an exporter of silk,

Accepted Answer

A) residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova rises. 
B) residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova falls. 
C) residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises. 
D) residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova falls. 
A) residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova rises. 
B) residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova falls. 
C) residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises. 
D) residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova falls.

Question 7

​Suppose that Honduras opens its markets to international trade. As a result of this, the domestic price of coffee decreases. We can conclude that

Accepted Answer

A) Honduras has a comparative advantage in the production of coffee. 
B) Honduras has begun to import coffee into the country. 
C) ​the price of coffee in Honduras prior to the opening of trade was lower than the world price. 
D) ​Honduras should specialize in the production of coffee. 
A) Honduras has a comparative advantage in the production of coffee. 
B) Honduras has begun to import coffee into the country. 
C) ​the price of coffee in Honduras prior to the opening of trade was lower than the world price. 
D) ​Honduras should specialize in the production of coffee.

Question 8

​Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade,

Accepted Answer

A) ​U.S. citizens benefit from lower software prices, increasing consumer surplus in the market. 
B) ​U.S. software producers are harmed, since the price that these producers receive will decline as the price falls to the world price. 
C) ​total surplus in this market will remain unchanged, as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers. 
D) ​U.S. producers benefit from higher software prices, increasing producer surplus in the market. 
A) ​U.S. citizens benefit from lower software prices, increasing consumer surplus in the market. 
B) ​U.S. software producers are harmed, since the price that these producers receive will decline as the price falls to the world price. 
C) ​total surplus in this market will remain unchanged, as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers. 
D) ​U.S. producers benefit from higher software prices, increasing producer surplus in the market.

Question 9

The "unfair-competition" argument might be cited by an American who believes that

Accepted Answer

A) almost every country has a comparative advantage, relative to the United States, in producing almost all goods. 
B) young industries should be protected against foreign competition until they become profitable. 
C) the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost. 
D) the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products. 
A) almost every country has a comparative advantage, relative to the United States, in producing almost all goods. 
B) young industries should be protected against foreign competition until they become profitable. 
C) the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost. 
D) the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.

Question 10

Refer to Figure 9-16. The area C + D + E + F represents

Accepted Answer

A) the decrease in consumer surplus caused by the tariff. 
B) the decrease in total surplus caused by the tariff. 
C) the deadweight loss of the tariff minus government revenue raised by the tariff. 
D) the deadweight loss of the tariff plus government revenue raised by the tariff. 
A) the decrease in consumer surplus caused by the tariff. 
B) the decrease in total surplus caused by the tariff. 
C) the deadweight loss of the tariff minus government revenue raised by the tariff. 
D) the deadweight loss of the tariff plus government revenue raised by the tariff.

Question 11

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

Accepted Answer

A) the demand for calculators from the rest of the world. 
B) the supply of calculators from the rest of the world. 
C) the level of inefficiency in the domestic market caused by trade. 
D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage. 
A) the demand for calculators from the rest of the world. 
B) the supply of calculators from the rest of the world. 
C) the level of inefficiency in the domestic market caused by trade. 
D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.

Question 12

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. With free trade, consumer surplus is

Accepted Answer

A) $320. 
B) $640. 
C) $845. 
D) $1,690. 
A) $320. 
B) $640. 
C) $845. 
D) $1,690.

Question 13

When a country allows trade and becomes an exporter of a good,

Accepted Answer

A) domestic producers gain and domestic consumers lose. 
B) domestic producers lose and domestic consumers gain. 
C) domestic producers and domestic consumers both gain. 
D) domestic producers and domestic consumers both lose. 
A) domestic producers gain and domestic consumers lose. 
B) domestic producers lose and domestic consumers gain. 
C) domestic producers and domestic consumers both gain. 
D) domestic producers and domestic consumers both lose.

Question 14

Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This situation suggests

Accepted Answer

A) Russia has a comparative advantage over Brazil in producing coffee, and Ireland has a comparative advantage over Russia in producing sunflower seeds. 
B) Russia has a comparative advantage over Ireland in producing sunflower seeds, and Brazil has a comparative advantage over Russia in producing coffee. 
C) Russia has an absolute advantage over Ireland in producing sunflower seeds, and Brazil has an absolute advantage over Russia in producing coffee. 
D) Russia has an absolute advantage over Brazil in producing coffee, and Ireland has an absolute advantage over Russia in producing sunflower seeds. 
A) Russia has a comparative advantage over Brazil in producing coffee, and Ireland has a comparative advantage over Russia in producing sunflower seeds. 
B) Russia has a comparative advantage over Ireland in producing sunflower seeds, and Brazil has a comparative advantage over Russia in producing coffee. 
C) Russia has an absolute advantage over Ireland in producing sunflower seeds, and Brazil has an absolute advantage over Russia in producing coffee. 
D) Russia has an absolute advantage over Brazil in producing coffee, and Ireland has an absolute advantage over Russia in producing sunflower seeds.

Question 15

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. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

With trade

Question 16

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. Relative to the no-trade situation, trade with the rest of the world results in

Accepted Answer

A) Guatemalan consumers paying a higher price for coffee. 
B) a decrease in producer surplus in Guatemala. 
C) a decrease in total surplus in Guatemala. 
D) All of the above are correct. 
A) Guatemalan consumers paying a higher price for coffee. 
B) a decrease in producer surplus in Guatemala. 
C) a decrease in total surplus in Guatemala. 
D) All of the above are correct.

Question 17

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. From the figure it is apparent that

Accepted Answer

A) Vietnam will experience a shortage of rice if trade is not allowed. 
B) Vietnam will experience a surplus of rice if trade is not allowed. 
C) Vietnam has a comparative advantage in producing rice, relative to the rest of the world. 
D) foreign countries have a comparative advantage in producing rice, relative to Vietnam. 
A) Vietnam will experience a shortage of rice if trade is not allowed. 
B) Vietnam will experience a surplus of rice if trade is not allowed. 
C) Vietnam has a comparative advantage in producing rice, relative to the rest of the world. 
D) foreign countries have a comparative advantage in producing rice, relative to Vietnam.

Question 18

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus with trade?

Accepted Answer

A) Consumer surplus with trade = (1/2)(Q0)(P1 - P0). 
B) Consumer surplus with trade = (1/2)(Q0)(P3 - P0). 
C) Consumer surplus with trade = (1/2)(Q1)(P3 - P1). 
D) None of the above is correct. 
A) Consumer surplus with trade = (1/2)(Q0)(P1 - P0). 
B) Consumer surplus with trade = (1/2)(Q0)(P3 - P0). 
C) Consumer surplus with trade = (1/2)(Q1)(P3 - P1). 
D) None of the above is correct.

Question 19

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

When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

Accepted Answer

A) The price paid by domestic consumers of the good increases. 
B) The price received by domestic producers of the good increases. 
C) The losses of domestic consumers of the good exceed the gains of domestic producers of the good. 
D) The gains of domestic producers of the good exceed the losses of domestic consumers of the good. 
A) The price paid by domestic consumers of the good increases. 
B) The price received by domestic producers of the good increases. 
C) The losses of domestic consumers of the good exceed the gains of domestic producers of the good. 
D) The gains of domestic producers of the good exceed the losses of domestic consumers of the good.

Exam 9: Application: International Trade

A major difference between tariffs and import quotas is that

The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

​There are only increases in total surplus when a country exports a good, since more units of the country's output of that good are produced.

Figure 9-12 -Refer to Figure 9-12. With trade, domestic production and domestic consumption, respectively, are

When the nation of Worldova allows trade and becomes an exporter of silk,

​Suppose that Honduras opens its markets to international trade. As a result of this, the domestic price of coffee decreases. We can conclude that

​Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade,

The "unfair-competition" argument might be cited by an American who believes that

Refer to Figure 9-16. The area C + D + E + F represents

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

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. With free trade, consumer surplus is

When a country allows trade and becomes an exporter of a good,

Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This situation suggests

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. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. Relative to the no-trade situation, trade with the rest of the world results in

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. From the figure it is apparent that

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus with trade?

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

When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

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

There are only increases in total surplus when a country exports a good, since more units of the country's output of that good are produced.

Suppose that Honduras opens its markets to international trade. As a result of this, the domestic price of coffee decreases. We can conclude that

Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade,