Question 1

In a 2007 New York Times article Paul Krugman wrote that

Accepted Answer

A)  the infant-industry argument works well as an argument in favor of protection for the U.S. steel industry. 
B)  the negative effects of third world exports on U.S. wages may be increasing. 
C)  there are social gains to the U.S. from free trade. 
D)  high wage countries account for a growing share of U.S. imports of manufactured goods. 
A)  the infant-industry argument works well as an argument in favor of protection for the U.S. steel industry. 
B)  the negative effects of third world exports on U.S. wages may be increasing. 
C)  there are social gains to the U.S. from free trade. 
D)  high wage countries account for a growing share of U.S. imports of manufactured goods.

Question 2

Honduras is an importer of goose-down pillows. The world price of these pillows is $50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras

Accepted Answer

A)  remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases. 
B)  increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
C)  increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
D)  increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same. 
A)  remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases. 
B)  increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
C)  increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
D)  increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.

Question 3

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

Accepted Answer

A)  It decreases consumer surplus, increases producer surplus, and decreases total surplus. 
B)  It decreases consumer surplus, increases producer surplus, and increases total surplus. 
C)  It decreases consumer surplus, decreases producer surplus, and decreases total surplus. 
D)  It increases consumer surplus, increases producer surplus, and increases total surplus. 
A)  It decreases consumer surplus, increases producer surplus, and decreases total surplus. 
B)  It decreases consumer surplus, increases producer surplus, and increases total surplus. 
C)  It decreases consumer surplus, decreases producer surplus, and decreases total surplus. 
D)  It increases consumer surplus, increases producer surplus, and increases total surplus.

Question 4

Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-28. 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 5

Figure 9-9  
-Refer to Figure 9-9. Consumer surplus in this market after trade is

Accepted Answer

A)  A. 
B)  A + B. 
C)  A + B + D. 
D)  C. 
A)  A. 
B)  A + B. 
C)  A + B + D. 
D)  C.

Question 6

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

Accepted Answer

A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither. 
A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

Question 7

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

Accepted Answer

A)  may prompt Russian farmers to invoke the infant-industry argument. 
B)  increase the consumer surplus of Russian buyers of wheat. 
C)  decrease the total surplus of the Russian people. 
D)  All of the above are correct. 
A)  may prompt Russian farmers to invoke the infant-industry argument. 
B)  increase the consumer surplus of Russian buyers of wheat. 
C)  decrease the total surplus of the Russian people. 
D)  All of the above are correct.

Question 8

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

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 10

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?

Accepted Answer

Without trade, consu

Question 11

Figure 9-13  
-Refer to Figure 9-13. Consumer surplus before trade is

Accepted Answer

A)  $1,600. 
B)  $2,400. 
C)  $3,200. 
D)  $3,600. 
A)  $1,600. 
B)  $2,400. 
C)  $3,200. 
D)  $3,600.

Question 12

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 13

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars.  
-Refer to Figure 9-8. In the country for which the figure is drawn, total surplus with international trade in cars

Accepted Answer

A)  is represented by the area A + B + C. 
B)  is represented by the area A + B + D. 
C)  is smaller than producer surplus without international trade in cars. 
D)  is larger than total surplus without international trade in cars. 
A)  is represented by the area A + B + C. 
B)  is represented by the area A + B + D. 
C)  is smaller than producer surplus without international trade in cars. 
D)  is larger than total surplus without international trade in cars.

Question 14

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, how many units will domestic consumers demand and how many units will domestic producers supply?

Accepted Answer

With trade and a tariff, domes

Question 15

Figure 9-15  
-Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Accepted Answer

A)  Q2 - Q1. 
B)  Q3 - Q2. 
C)  Q4 - Q3. 
D)  Q4 - Q3 + Q2 - Q1. 
A)  Q2 - Q1. 
B)  Q3 - Q2. 
C)  Q4 - Q3. 
D)  Q4 - Q3 + Q2 - Q1.

Question 16

Figure 9-25
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit.  
-Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. With trade and a tariff, total surplus is

Accepted Answer

A)  $1,700. 
B)  $1,800. 
C)  $1,900. 
D)  $2,000. 
A)  $1,700. 
B)  $1,800. 
C)  $1,900. 
D)  $2,000.

Question 17

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices, the Swedish economy would be worse off.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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

Accepted Answer

A)  domestic producers of the good become better off. 
B)  domestic consumers of the good become better off. 
C)  the gains of the winners fall short of the losses of the losers. 
D)  All of the above are correct. 
A)  domestic producers of the good become better off. 
B)  domestic consumers of the good become better off. 
C)  the gains of the winners fall short of the losses of the losers. 
D)  All of the above are correct.

Question 20

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, how much is the deadweight loss caused by the tariff?

Accepted Answer

The deadwe

Exam 9: Application: International Trade

In a 2007 New York Times article Paul Krugman wrote that

Honduras is an importer of goose-down pillows. The world price of these pillows is $50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras

Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how much is consumer surplus?

Figure 9-9 -Refer to Figure 9-9. Consumer surplus in this market after trade is

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

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

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

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?

Figure 9-13 -Refer to Figure 9-13. Consumer surplus before trade is

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

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8. In the country for which the figure is drawn, total surplus with international trade in cars

Figure 9-15 -Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. With trade and a tariff, total surplus is

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices, the Swedish economy would be worse off.

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.

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

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

Application: The Costs of Taxation

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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