Question 1

Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This situation suggests

Accepted Answer

A)  Russia has a comparative advantage over Brazil in producing coffee, and Ireland has a comparative advantage over Russia in producing sunflower seeds. 
B)  Russia has a comparative advantage over Ireland in producing sunflower seeds, and Brazil has a comparative advantage over Russia in producing coffee. 
C)  Russia has an absolute advantage over Ireland in producing sunflower seeds, and Brazil has an absolute advantage over Russia in producing coffee. 
D)  Russia has an absolute advantage over Brazil in producing coffee, and Ireland has an absolute advantage over Russia in producing sunflower seeds. 
A)  Russia has a comparative advantage over Brazil in producing coffee, and Ireland has a comparative advantage over Russia in producing sunflower seeds. 
B)  Russia has a comparative advantage over Ireland in producing sunflower seeds, and Brazil has a comparative advantage over Russia in producing coffee. 
C)  Russia has an absolute advantage over Ireland in producing sunflower seeds, and Brazil has an absolute advantage over Russia in producing coffee. 
D)  Russia has an absolute advantage over Brazil in producing coffee, and Ireland has an absolute advantage over Russia in producing sunflower seeds.

Question 2

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 be imported?

Accepted Answer

With trade and a tar

Question 3

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. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  $200. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  $200.

Question 4

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. Suppose the country imposes a $5 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

Question 5

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.

Question 6

When a country allows trade and becomes an exporter 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 7

If Freedonia changes its laws to allow international trade in software and the world price is lower than its domestic price, then it must be the case that

Accepted Answer

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

Question 8

Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?

Accepted Answer

A)  Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. 
B)  Domestic furniture producers will gain producer surplus. 
C)  Domestic furniture producers will have a higher rate of technological advance. 
D)  Domestic furniture producers will have more market power. 
A)  Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. 
B)  Domestic furniture producers will gain producer surplus. 
C)  Domestic furniture producers will have a higher rate of technological advance. 
D)  Domestic furniture producers will have more market power.

Question 9

A common argument in favor of restricting trade

Accepted Answer

A)  concerns the strategy of bargaining. 
B)  is that efforts should be made to get new industries started. 
C)  emphasizes the belief that all countries should play by the same rules. 
D)  All of the above are correct. 
A)  concerns the strategy of bargaining. 
B)  is that efforts should be made to get new industries started. 
C)  emphasizes the belief that all countries should play by the same rules. 
D)  All of the above are correct.

Question 10

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

Accepted Answer

A)  Incomes of domestic citizens increase, and tricycles are a normal good. 
B)  Within this country, the price of a substitute for tricycles decreases. 
C)  Within this country, the price of a complement to tricycles decreases. 
D)  Wages increase for domestic workers who produce tricycles. 
A)  Incomes of domestic citizens increase, and tricycles are a normal good. 
B)  Within this country, the price of a substitute for tricycles decreases. 
C)  Within this country, the price of a complement to tricycles decreases. 
D)  Wages increase for domestic workers who produce tricycles.

Question 11

Workers displaced by trade eventually find jobs in

Accepted Answer

A)  another country. 
B)  the government sector. 
C)  the industries in which the country has a comparative advantage. 
D)  a different company in the same industry. 
A)  another country. 
B)  the government sector. 
C)  the industries in which the country has a comparative advantage. 
D)  a different company in the same industry.

Question 12

Figure 9-4. The domestic country is Nicaragua.  
-Refer to Figure 9-4. The change in total surplus in Nicaragua because of trade is

Accepted Answer

A)  $625, and this is an increase in total surplus. 
B)  $750, and this is an increase in total surplus. 
C)  $625, and this is a decrease in total surplus. 
D)  $750, and this is a decrease in total surplus. 
A)  $625, and this is an increase in total surplus. 
B)  $750, and this is an increase in total surplus. 
C)  $625, and this is a decrease in total surplus. 
D)  $750, and this is a decrease in total surplus.

Question 13

The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Accepted Answer

A) True 
 B)False

Question 14

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)  All of the above are correct. 
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)  All of the above are correct.

Question 15

Figure 9-17  
-Refer to Figure 9-17. With trade and a tariff, total surplus is

Accepted Answer

A)  $1,224. 
B)  $1,416. 
C)  $1,512. 
D)  $1,704. 
A)  $1,224. 
B)  $1,416. 
C)  $1,512. 
D)  $1,704.

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. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $5, then the policy change results in

Accepted Answer

A)  a decrease in consumer surplus. 
B)  an increase in producer surplus. 
C)  an increase in total surplus. 
D)  All of the above are correct. 
A)  a decrease in consumer surplus. 
B)  an increase in producer surplus. 
C)  an increase in total surplus. 
D)  All of the above are correct.

Question 17

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

Accepted Answer

A)  $3,600. 
B)  $4,400. 
C)  $5,200. 
D)  $6,600. 
A)  $3,600. 
B)  $4,400. 
C)  $5,200. 
D)  $6,600.

Question 18

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is

Accepted Answer

A)  P0 and Q0. 
B)  P1 and Q1. 
C)  P2 and Q2. 
D)  P1 and Q0. 
A)  P0 and Q0. 
B)  P1 and Q1. 
C)  P2 and Q2. 
D)  P1 and Q0.

Question 19

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. Bearing in mind that this country is "small," what would happen if there were a decrease in the price of tricycle helmets within this country, given that tricycles and tricycle helmets are complements?

Accepted Answer

A)  The quantity of tricycles that this country imports would increase. 
B)  The quantity of tricycles that this country imports would decrease, but the country would still be an importer of tricycles. 
C)  This country would switch from being an importer of tricycles to an exporter of tricycles. 
D)  The domestic price without trade would move closer to the world price. 
A)  The quantity of tricycles that this country imports would increase. 
B)  The quantity of tricycles that this country imports would decrease, but the country would still be an importer of tricycles. 
C)  This country would switch from being an importer of tricycles to an exporter of tricycles. 
D)  The domestic price without trade would move closer to the world price.

Question 20

When the nation of Mooseland first permitted trade with other nations, domestic producers of sugar experienceda decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million We can conclude that

Accepted Answer

A)  Mooseland became an exporter of sugar. 
B)  the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. 
C)  consumer surplus in Mooseland increased by $7 million. 
D)  the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right. 
A)  Mooseland became an exporter of sugar. 
B)  the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. 
C)  consumer surplus in Mooseland increased by $7 million. 
D)  the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

Exam 9: Application: International Trade

Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This situation suggests

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. The amount of revenue collected by the government from the tariff is

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

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

If Freedonia changes its laws to allow international trade in software and the world price is lower than its domestic price, then it must be the case that

Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?

A common argument in favor of restricting trade

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

Workers displaced by trade eventually find jobs in

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. The change in total surplus in Nicaragua because of trade is

The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

The North American Free Trade Agreement

Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, total surplus is

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

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," what would happen if there were a decrease in the price of tricycle helmets within this country, given that tricycles and tricycle helmets are complements?

When the nation of Mooseland first permitted trade with other nations, domestic producers of sugar experienceda decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million We can conclude that

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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