Question 1

Figure 9-11  
-Refer to Figure 9-11. Producer surplus in this market before trade is

Accepted Answer

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

Question 2

Scenario 9-3
Suppose domestic demand and domestic supply in a market are given by the following equations:  
-Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country allows free trade, how much are consumer surplus, producer surplus, and producer surplus with trade?

Accepted Answer

With trade, consumer

Question 3

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 4

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Accepted Answer

A)  Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off. 
B)  Turkish consumers of wheat become worse off and Turkish producers of wheat become better off. 
C)  Turkish consumers of wheat become better off and Turkish producers of wheat become worse off. 
D)  Turkish consumers of wheat become better off and Turkish producers of wheat become better off. 
A)  Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off. 
B)  Turkish consumers of wheat become worse off and Turkish producers of wheat become better off. 
C)  Turkish consumers of wheat become better off and Turkish producers of wheat become worse off. 
D)  Turkish consumers of wheat become better off and Turkish producers of wheat become better off.

Question 5

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. If this country allows free trade in tricycles,

Accepted Answer

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

Question 6

Figure 9-12  
-Refer to Figure 9-12. Equilibrium price and equilibrium quantity without trade 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 7

Figure 9-15  
-Refer to Figure 9-15. For the saddle market, area E represents

Accepted Answer

A)  government's revenue from the tariff. 
B)  producer surplus after the tariff becomes effective. 
C)  the decrease in consumer surplus, relative to the free-trade situation, as a result of the tariff. 
D)  the decrease in total surplus, relative to the free-trade situation, as a result of the tariff. 
A)  government's revenue from the tariff. 
B)  producer surplus after the tariff becomes effective. 
C)  the decrease in consumer surplus, relative to the free-trade situation, as a result of the tariff. 
D)  the decrease in total surplus, relative to the free-trade situation, as a result of the tariff.

Question 8

Which of the following is not a commonly-advanced argument for trade restrictions?

Accepted Answer

A)  the jobs argument 
B)  the national-security argument 
C)  the infant-industry argument 
D)  the efficiency argument 
A)  the jobs argument 
B)  the national-security argument 
C)  the infant-industry argument 
D)  the efficiency argument

Question 9

A country has a comparative advantage in a product if the world price is

Accepted Answer

A)  lower than that country's domestic price without trade. 
B)  higher than that country's domestic price without trade. 
C)  equal to that country's domestic price without trade. 
D)  not subject to manipulation by organizations that govern international trade. 
A)  lower than that country's domestic price without trade. 
B)  higher than that country's domestic price without trade. 
C)  equal to that country's domestic price without trade. 
D)  not subject to manipulation by organizations that govern international trade.

Question 10

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

Accepted Answer

A)  consumer surplus and producer surplus both increase. 
B)  consumer surplus and producer surplus both decrease. 
C)  consumer surplus increases and producer surplus decreases. 
D)  consumer surplus decreases and producer surplus increases. 
A)  consumer surplus and producer surplus both increase. 
B)  consumer surplus and producer surplus both decrease. 
C)  consumer surplus increases and producer surplus decreases. 
D)  consumer surplus decreases and producer surplus increases.

Question 11

Use the graph to answer the following questions about CDs.   
a. What is the equilibrium price of CDs before trade?
b. What is the equilibrium quantity of CDs before trade?
c. What is the price of CDs after trade is allowed?
d. What is the quantity of CDs exported 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. $12
b. $50
c. $15

Question 12

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

Accepted Answer

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

Question 13

Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,

Accepted Answer

A)  consumer surplus increases for consumers of coats in Iceland. 
B)  producer surplus increases for producers of coats in Iceland. 
C)  total surplus remains unchanged in the coat market in Iceland. 
D)  it is reasonable to infer that Iceland has a comparative advantage over other countries in coat production. 
A)  consumer surplus increases for consumers of coats in Iceland. 
B)  producer surplus increases for producers of coats in Iceland. 
C)  total surplus remains unchanged in the coat market in Iceland. 
D)  it is reasonable to infer that Iceland has a comparative advantage over other countries in coat production.

Question 14

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Accepted Answer

A) True 
 B)False

Question 15

Figure 9-15  
-Refer to Figure 9-15. With the tariff, the quantity of saddles imported is

Accepted Answer

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

Question 16

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular 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 17

Trade decisions are based on the principle of absolute advantage.

Accepted Answer

A) True 
 B)False

Question 18

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit.  
-Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, consumer surplus is

Accepted Answer

A)  $75,000 and producer surplus is $27,000. 
B)  $63,000 and producer surplus is $12,000. 
C)  $75,000 and producer surplus is $12,000. 
D)  $63,000 and producer surplus is $27,000. 
A)  $75,000 and producer surplus is $27,000. 
B)  $63,000 and producer surplus is $12,000. 
C)  $75,000 and producer surplus is $12,000. 
D)  $63,000 and producer surplus is $27,000.

Question 19

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.  
-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 20

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.

Exam 9: Application: International Trade

Figure 9-11 -Refer to Figure 9-11. Producer surplus in this market before trade is

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

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. If this country allows free trade in tricycles,

Figure 9-12 -Refer to Figure 9-12. Equilibrium price and equilibrium quantity without trade are

Figure 9-15 -Refer to Figure 9-15. For the saddle market, area E represents

Which of the following is not a commonly-advanced argument for trade restrictions?

A country has a comparative advantage in a product if the world price is

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

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

Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Figure 9-15 -Refer to Figure 9-15. With the tariff, the quantity of saddles imported is

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

Trade decisions are based on the principle of absolute advantage.

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, consumer surplus is

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The area C + D + E + F represents

When a country allows trade and becomes an exporter 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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