Exam 9: Application: International Trade

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, U.S. producers of peaches

Suppose Japan exports cars to Russia and imports wine from France. This situation suggests

Figure 9-17 -Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

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

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. With free trade, the domestic price and domestic quantity demanded are

​Imposing a tariff on the import of a good is preferable to a quota because a tariff produces revenue for the government, while a quota never produces any revenue for a government.

When a country allows trade and becomes an importer of jet skis,

Without free trade, the domestic price of a good must be equal to the world price of a good.

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, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland?

Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. From the figure it is apparent that

Suppose in the country of Jumanji that the price of coffee with no trade allowed is below the world price of coffee. If Jumanji allows free trade, will Jumanji be an importer or an exporter of coffee?

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

If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the tariff.

Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, consumer surplus is

A country has a comparative advantage in a product if the world price is _____ than that country's domestic price without trade.

A tariff on a product makes

Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: -Refer to Scenario 9-3. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes