Question 1

Figure 9-11  
-Refer to Figure 9-11. Consumer surplus in this market after trade is

Accepted Answer

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

Question 2

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. When the tariff is imposed, domestic consumers

Accepted Answer

A)  lose by $200. 
B)  lose by $450. 
C)  gain by $200. 
D)  gain by $450. 
A)  lose by $200. 
B)  lose by $450. 
C)  gain by $200. 
D)  gain by $450.

Question 3

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

Accepted Answer

A)  should import apples. 
B)  has a comparative advantage in apples. 
C)  should produce just enough apples to meet its domestic demand. 
D)  should refrain altogether from producing apples. 
A)  should import apples. 
B)  has a comparative advantage in apples. 
C)  should produce just enough apples to meet its domestic demand. 
D)  should refrain altogether from producing apples.

Question 4

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

Accepted Answer

A)  an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus. 
B)  an import quota has no effect on producer surplus, while a tariff decreases producer surplus. 
C)  a tariff raises total surplus, while an import quota does not. 
D)  a tariff raises revenue for that country's government, while an import quota does not. 
A)  an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus. 
B)  an import quota has no effect on producer surplus, while a tariff decreases producer surplus. 
C)  a tariff raises total surplus, while an import quota does not. 
D)  a tariff raises revenue for that country's government, while an import quota does not.

Question 5

When a country takes a multilateral approach to free trade, it

Accepted Answer

A)  removes trade restrictions on its own. 
B)  reduces its trade restrictions while other countries do the same. 
C)  does not remove trade restrictions no matter what other countries do. 
D)  is willing to trade with multiple countries at once. 
A)  removes trade restrictions on its own. 
B)  reduces its trade restrictions while other countries do the same. 
C)  does not remove trade restrictions no matter what other countries do. 
D)  is willing to trade with multiple countries at once.

Question 6

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

Accepted Answer

A)  better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off. 
B)  worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off. 
C)  worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off 
D)  better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off 
A)  better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off. 
B)  worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off. 
C)  worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off 
D)  better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off

Question 7

When the nation of Brownland first permitted trade with other nations, domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million.
We can conclude that

Accepted Answer

A)  Brownland became an exporter of wheat. 
B)  consumer surplus in Brownland increased by $3 million. 
C)  the opening of trade caused the domestic supply curve for wheat in Brownland to shift to the left. 
D)  this example is inconsistent with the economic theory of international trade. 
A)  Brownland became an exporter of wheat. 
B)  consumer surplus in Brownland increased by $3 million. 
C)  the opening of trade caused the domestic supply curve for wheat in Brownland to shift to the left. 
D)  this example is inconsistent with the economic theory of international trade.

Question 8

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Accepted Answer

A)  representatives of industry. 
B)  representatives of the defense establishment. 
C)  members of households. 
D)  foreign government officials. 
A)  representatives of industry. 
B)  representatives of the defense establishment. 
C)  members of households. 
D)  foreign government officials.

Question 9

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 10

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?

Accepted Answer

Jumanji wi

Question 11

Figure 9-15  
-Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that amounts to

Accepted Answer

A)  B. 
B)  E. 
C)  D + F. 
D)  B + D + E + F. 
A)  B. 
B)  E. 
C)  D + F. 
D)  B + D + E + F.

Question 12

Economists view the fact that Florida grows oranges, Texas pumps oil, and California makes wine as

Accepted Answer

A)  confirmation of the virtues of free trade. 
B)  confirmation of the infant-industry argument. 
C)  confirmation that free trade agreements are not necessary. 
D)  confirmation that specialization in absolute advantage works. 
A)  confirmation of the virtues of free trade. 
B)  confirmation of the infant-industry argument. 
C)  confirmation that free trade agreements are not necessary. 
D)  confirmation that specialization in absolute advantage works.

Question 13

Figure 9-27
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 9-27. If the country allows free trade, how many units will domestic consumers demand and how many units will domestic producers produce?

Accepted Answer

With trade, domestic

Question 14

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are

Accepted Answer

A)  P1 and Q2. 
B)  P1 and Q1. 
C)  P0 and Q0. 
D)  P3 and Q1. 
A)  P1 and Q2. 
B)  P1 and Q1. 
C)  P0 and Q0. 
D)  P3 and Q1.

Question 15

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

Question 16

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. In the absence of trade, total surplus in Guatemala is represented by the area

Accepted Answer

A)  A + B + C. 
B)  A + B + C + D + F. 
C)  A + B + C + D + F + G. 
D)  A + B + C + D + F + G + H. 
A)  A + B + C. 
B)  A + B + C + D + F. 
C)  A + B + C + D + F + G. 
D)  A + B + C + D + F + G + H.

Question 17

When a country that imports a particular good imposes an import quota on that good,

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 18

If a country is an exporter of a good, then it must be the case that

Accepted Answer

A)  the world price is less than its domestic price. 
B)  consumer surplus is higher than a no trade situation. 
C)  the world price is greater than its domestic price. 
D)  they used an infant-industry argument to protect its producers. 
A)  the world price is less than its domestic price. 
B)  consumer surplus is higher than a no trade situation. 
C)  the world price is greater than its domestic price. 
D)  they used an infant-industry argument to protect its producers.

Question 19

Figure 9-12  
-Refer to Figure 9-12. With trade, domestic production and domestic consumption, respectively, are

Accepted Answer

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

Question 20

Trade among nations is ultimately based on

Accepted Answer

A)  absolute advantage. 
B)  strategic advantage. 
C)  comparative advantage. 
D)  technical advantage. 
A)  absolute advantage. 
B)  strategic advantage. 
C)  comparative advantage. 
D)  technical advantage.

Exam 9: Application: International Trade

Figure 9-11 -Refer to Figure 9-11. Consumer surplus in this market after trade is

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When the tariff is imposed, domestic consumers

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

When a country takes a multilateral approach to free trade, it

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

When the nation of Brownland first permitted trade with other nations, domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million. We can conclude that

One should be especially wary of the national-security argument for restricting trade when that argument is made by

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,

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?

Figure 9-15 -Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that amounts to

Economists view the fact that Florida grows oranges, Texas pumps oil, and California makes wine as

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. In the absence of trade, total surplus in Guatemala is represented by the area

When a country that imports a particular good imposes an import quota on that good,

If a country is an exporter of a good, then it must be the case that

Figure 9-12 -Refer to Figure 9-12. With trade, domestic production and domestic consumption, respectively, are

Trade among nations is ultimately based on

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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