Question 1

When a government imposes a tariff on a product, the domestic price will equal the world price.

Accepted Answer

A) True 
 B)False  False

Question 2

Scenario 9-1
​
For a small country called Boxland, the equation of the domestic demand curve for cardboard is QS1U1P1DS1S1P0 = 210 − 2P, where QS1U1P1DS1S1P0 represents the domestic quantity of cardboard demanded, in tons, and P represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is QS1U1P1SS1S1P0 = -90 + 3P, where QS1U1P1SS1S1P0 represents the domestic quantity of cardboard supplied, in tons, and P again represents the price of a ton of cardboard.
-Refer to Scenario 9-1. Suppose the world price of cardboard is $82.5. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
C) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 
A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
C) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. C

Question 3

Figure 9-8
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 9-8. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Accepted Answer

With trade, consumer surplus increases by $5,000, producer surplus falls by $3,000, and total surplus rises by $2,000.

Question 4

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Accepted Answer

A) True 
 B)False

Question 5

Figure 9-10
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 9-10. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric

Question 6

How does an import quota differ from an equivalent tariff?

Accepted Answer

Both the import quota and the tariff rai

Question 7

​We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

Accepted Answer

A) True 
 B)False

Question 8

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Accepted Answer

A) True 
 B)False

Question 9

Figure 9-10
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 9-10. If the country allows free trade, how many units will domestic consumers demand and how many units will domestic producers supply?

Accepted Answer

With trade, domestic

Question 10

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Accepted Answer

A) True 
 B)False

Question 11

The North American Free Trade Agreement

Accepted Answer

A) is an example of the unilateral approach to free trade. 
B) eliminated tariffs on imports to North America from the rest of the world. 
C) reduced trade restrictions among Canada, Mexico, and the United States. 
D) eliminated quotas between North America and China. 
A) is an example of the unilateral approach to free trade. 
B) eliminated tariffs on imports to North America from the rest of the world. 
C) reduced trade restrictions among Canada, Mexico, and the United States. 
D) eliminated quotas between North America and China.

Question 12

Figure 9-5  
-Refer to Figure 9-5. 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

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

Accepted Answer

A) Wheatland has a comparative advantage, relative to other countries, in producing corn. 
B) other countries have a comparative advantage, relative to Wheatland, in producing fish. 
C) the price of fish in Wheatland exceeds the world price of fish. 
D) if Wheatland were to allow trade, it would import corn. 
A) Wheatland has a comparative advantage, relative to other countries, in producing corn. 
B) other countries have a comparative advantage, relative to Wheatland, in producing fish. 
C) the price of fish in Wheatland exceeds the world price of fish. 
D) if Wheatland were to allow trade, it would import corn.

Question 14

Figure 9-9
The following diagram shows the domestic demand and domestic supply curves in a market.   ​
-Refer to Figure 9-9. Suppose the world price in this market is $6. If the country allows free trade, how many units will domestic consumers demand, and how many units will domestic producers supply?

Accepted Answer

Domestic consumers w

Question 15

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 16

Figure 9-6  
-The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

Accepted Answer

A) exporting steel and the price per ton in Russia remained at $650. 
B) exporting steel and the price per ton in Russia increased to $1,000. 
C) importing steel and the price per ton in Russia remained at $650. 
D) importing steel and the price per ton in Russia increased to $1,000. 
A) exporting steel and the price per ton in Russia remained at $650. 
B) exporting steel and the price per ton in Russia increased to $1,000. 
C) importing steel and the price per ton in Russia remained at $650. 
D) importing steel and the price per ton in Russia increased to $1,000.

Question 17

Figure 9-9
The following diagram shows the domestic demand and domestic supply curves in a market.   ​
-Refer to Figure 9-9. Suppose the world price in this market is $6. If the country allows free trade, how much is consumer surplus?

Accepted Answer

With trade

Question 18

Figure 9-3  
-Refer to Figure 9-3. With trade and without a tariff,

Accepted Answer

A) the domestic price is equal to the world price. 
B) roses are sold at $4 in this market. 
C) there is a shortage of 400 roses in this market. 
D) this country imports 200 roses. 
A) the domestic price is equal to the world price. 
B) roses are sold at $4 in this market. 
C) there is a shortage of 400 roses in this market. 
D) this country imports 200 roses.

Question 19

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

Accepted Answer

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

Question 20

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

Accepted Answer

A) an increase in exports of low-priced goods from developing countries to developed countries. 
B) the replacement of manufacturing jobs with service jobs in developed countries. 
C) economic dislocations caused by the North American Free Trade Agreement (NAFT
A)  in the 1990s. 
D) high tariffs imposed during the Great Depression of the 1930s. 
A) an increase in exports of low-priced goods from developing countries to developed countries. 
B) the replacement of manufacturing jobs with service jobs in developed countries. 
C) economic dislocations caused by the North American Free Trade Agreement (NAFT
A)  in the 1990s. 
D) high tariffs imposed during the Great Depression of the 1930s.

Exam 9: Application: International Trade

When a government imposes a tariff on a product, the domestic price will equal the world price.

Figure 9-8 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 9-8. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Figure 9-10 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 9-10. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

How does an import quota differ from an equivalent tariff?

​We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

The North American Free Trade Agreement

Figure 9-5 -Refer to Figure 9-5. The change in total surplus in this market because of trade is

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

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.

Figure 9-6 -The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

Figure 9-9 The following diagram shows the domestic demand and domestic supply curves in a market. ​ -Refer to Figure 9-9. Suppose the world price in this market is $6. If the country allows free trade, how much is consumer surplus?

Figure 9-3 -Refer to Figure 9-3. With trade and without a tariff,

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

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

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 Nations 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 9-8 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 9-8. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Figure 9-10 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 9-10. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

Figure 9-9 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-9. Suppose the world price in this market is $6. If the country allows free trade, how much is consumer surplus?