Question 1

When markets open up to international trade, we know that total surplus will rise.
​

Accepted Answer

A) True 
 B)False

Question 2

Suppose Japan exports televisions to the United States and imports sugar from Argentina. This situation suggests

Accepted Answer

A) Japan has a comparative advantage relative to the United States in producing televisions, and Argentina has a comparative advantage relative to Japan in producing sugar. 
B) Japan has a comparative advantage relative to the United States in producing sugar, and Argentina has a comparative advantage relative to Japan in producing televisions. 
C) Japan has an absolute advantage relative to the United States in producing televisions, and Argentina has an absolute advantage relative to Japan in producing sugar. 
D) Japan has an absolute advantage relative to Argentina in producing sugar, and the United States has an absolute advantage relative to Japan in producing televisions. 
A) Japan has a comparative advantage relative to the United States in producing televisions, and Argentina has a comparative advantage relative to Japan in producing sugar. 
B) Japan has a comparative advantage relative to the United States in producing sugar, and Argentina has a comparative advantage relative to Japan in producing televisions. 
C) Japan has an absolute advantage relative to the United States in producing televisions, and Argentina has an absolute advantage relative to Japan in producing sugar. 
D) Japan has an absolute advantage relative to Argentina in producing sugar, and the United States has an absolute advantage relative to Japan in producing televisions.

Question 3

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be

Accepted Answer

A) better off regardless of how Colombia responds. 
B) better off if Colombia removes the subsidies, and will be no worse off if it doesn't. 
C) worse off if Colombia doesn't remove the subsidies in response to the threat. 
D) worse off regardless of how Colombia responds. 
A) better off regardless of how Colombia responds. 
B) better off if Colombia removes the subsidies, and will be no worse off if it doesn't. 
C) worse off if Colombia doesn't remove the subsidies in response to the threat. 
D) worse off regardless of how Colombia responds.

Question 4

Figure 9-24
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. With trade and a tariff, total surplus is

Accepted Answer

A) $750. 
B) $900. 
C) $950. 
D) $1,550. 
A) $750. 
B) $900. 
C) $950. 
D) $1,550.

Question 5

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. Given that Vietnam is a small country, it is apparent from the figure that

Accepted Answer

A) Vietnam will export rice if trade is allowed. 
B) Vietnam will import rice if trade is allowed. 
C) Vietnam has nothing to gain either by importing or exporting rice. 
D) the world price will fall if Vietnam begins to allow its citizens to trade with other countries. 
A) Vietnam will export rice if trade is allowed. 
B) Vietnam will import rice if trade is allowed. 
C) Vietnam has nothing to gain either by importing or exporting rice. 
D) the world price will fall if Vietnam begins to allow its citizens to trade with other countries.

Question 6

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of beans increases to equal the world price of beans, then

Accepted Answer

A) that country becomes an exporter of beans. 
B) that country has a comparative advantage in producing beans. 
C) at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. 
D) All of the above are correct. 
A) that country becomes an exporter of beans. 
B) that country has a comparative advantage in producing beans. 
C) at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. 
D) All of the above are correct.

Question 7

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles,

Accepted Answer

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

Question 8

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

Accepted Answer

A) The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers. 
B) The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. 
C) The quotas are probably the result of lobbying from foreign producers of sugar. The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers. 
D) U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them. 
A) The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers. 
B) The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. 
C) The quotas are probably the result of lobbying from foreign producers of sugar. The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers. 
D) U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them.

Question 9

Using the graph below, answer the following questions about hammers.   
a.What is the equilibrium price of hammers before trade?
b.What is the equilibrium quantity of hammers before trade?
c.What is the price of hammers after trade is allowed?
d.What is the quantity of hammers imported after trade is allowed?
e.What is the amount of consumer surplus before trade?
f. What is the amount of consumer surplus after trade?
g. What is the amount of producer surplus before trade?
h. What is the amount of producer surplus after trade?
i. What is the amount of total surplus before trade?
j. What is the amount of total surplus after trade?
k. What is the change in total surplus because of trade?

Accepted Answer

a.$14
b.90
c.$10
d.8

Question 10

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

Accepted Answer

A) $6,400. 
B) $9,600. 
C) $12,800. 
D) $14,400. 
A) $6,400. 
B) $9,600. 
C) $12,800. 
D) $14,400.

Question 11

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

Accepted Answer

A) both domestic producers and domestic consumers become better off. 
B) domestic producers become better off, and domestic consumers become worse off. 
C) domestic producers become worse off, and domestic consumers become better off. 
D) both domestic producers and domestic consumers become worse off. 
A) both domestic producers and domestic consumers become better off. 
B) domestic producers become better off, and domestic consumers become worse off. 
C) domestic producers become worse off, and domestic consumers become better off. 
D) both domestic producers and domestic consumers become worse off.

Question 12

Figure 9-11  
-Refer to Figure 9-11. The change in total surplus in this market because of trade is

Accepted Answer

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

Question 13

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

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

Accepted Answer

A) $845. 
B) $1,620. 
C) $1,690. 
D) $3,240. 
A) $845. 
B) $1,620. 
C) $1,690. 
D) $3,240.

Question 16

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland.  
-Refer to Figure 9-18. If Isoland allows international trade and if the world price of peaches is $5, then

Accepted Answer

A) Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B) Isoland will import peaches. 
C) consumer surplus with trade exceeds consumer surplus without trade. 
D) All of the above are correct. 
A) Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B) Isoland will import peaches. 
C) consumer surplus with trade exceeds consumer surplus without trade. 
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. In the absence of trade, total surplus in the Vietnamese rice market amounts to

Accepted Answer

A) 9,250. 
B) 10,000. 
C) 12,000. 
D) 13,000. 
A) 9,250. 
B) 10,000. 
C) 12,000. 
D) 13,000.

Question 18

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

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

Question 19

Figure 9-12  
-Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are

Accepted Answer

A) $54 and 800. 
B) $54 and 1,600. 
C) $42 and 800. 
D) $42 and 1,200. 
A) $54 and 800. 
B) $54 and 1,600. 
C) $42 and 800. 
D) $42 and 1,200.

Question 20

The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic sellers of soybeans if

Accepted Answer

A) consumer surplus equals producer surplus in the Canadian soybean market. 
B) total surplus exceeds consumer surplus in the Canadian soybean market. 
C) Canada permits international trade in soybeans. 
D) Canada forbids international trade in soybeans. 
A) consumer surplus equals producer surplus in the Canadian soybean market. 
B) total surplus exceeds consumer surplus in the Canadian soybean market. 
C) Canada permits international trade in soybeans. 
D) Canada forbids international trade in soybeans.

Exam 9: Application: International Trade

When markets open up to international trade, we know that total surplus will rise. ​

Suppose Japan exports televisions to the United States and imports sugar from Argentina. This situation suggests

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be

Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. With trade and a tariff, total surplus is

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. Given that Vietnam is a small country, it is apparent from the figure that

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of beans increases to equal the world price of beans, then

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles,

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

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

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

Figure 9-11 -Refer to Figure 9-11. The change in total surplus in this market because of trade is

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

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

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

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland. -Refer to Figure 9-18. If Isoland allows international trade and if the world price of peaches is $5, then

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. In the absence of trade, total surplus in the Vietnamese rice market amounts to

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Figure 9-12 -Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are

The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic sellers of soybeans if

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

When markets open up to international trade, we know that total surplus will rise.