Question 1

Figure 9-3. The domestic country is China.  
-Refer to Figure 9-3. With trade, China will

Accepted Answer

A)  import 100 pencil sharpeners. 
B)  import 250 pencil sharpeners. 
C)  export 150 pencil sharpeners. 
D)  export 250 pencil sharpeners. 
A)  import 100 pencil sharpeners. 
B)  import 250 pencil sharpeners. 
C)  export 150 pencil sharpeners. 
D)  export 250 pencil sharpeners.

Question 2

When a country allows trade and becomes an importer of jet skis,

Accepted Answer

A)  domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country rises. 
B)  domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country falls. 
C)  domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country rises. 
D)  domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country falls. 
A)  domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country rises. 
B)  domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country falls. 
C)  domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country rises. 
D)  domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country falls.

Question 3

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. If Isoland allows international trade and if the world price of peaches is $5, then

Accepted Answer

A)  Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B)  Isoland will import peaches. 
C)  consumer surplus with trade exceeds consumer surplus without trade. 
D)  All of the above are correct. 
A)  Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B)  Isoland will import peaches. 
C)  consumer surplus with trade exceeds consumer surplus without trade. 
D)  All of the above are correct.

Question 4

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

Accepted Answer

A)  The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers. 
B)  The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. 
C)  The quotas are probably the result of lobbying from foreign producers of sugar. The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers. 
D)  U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them. 
A)  The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers. 
B)  The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. 
C)  The quotas are probably the result of lobbying from foreign producers of sugar. The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers. 
D)  U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them.

Question 5

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

Accepted Answer

The equilibrium pric

Question 6

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. If Boxland prohibits international trade in cardboard, then the equilibrium price of a ton of cardboard is

Accepted Answer

A)  $36 and the equilibrium quantity of cardboard is 74 tons. 
B)  $44 and the equilibrium quantity of cardboard is 88 tons. 
C)  $52 and the equilibrium quantity of cardboard is 96 tons. 
D)  $60 and the equilibrium quantity of cardboard is 100 tons. 
A)  $36 and the equilibrium quantity of cardboard is 74 tons. 
B)  $44 and the equilibrium quantity of cardboard is 88 tons. 
C)  $52 and the equilibrium quantity of cardboard is 96 tons. 
D)  $60 and the equilibrium quantity of cardboard is 100 tons.

Question 7

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Accepted Answer

A)  because it is impossible to analyze the gains and losses from international trade without making this assumption. 
B)  because then we can assume that world prices of goods are unaffected by that country's participation in international trade. 
C)  in order to rule out the possibility of tariffs or quotas. 
D)  All of the above are correct. 
A)  because it is impossible to analyze the gains and losses from international trade without making this assumption. 
B)  because then we can assume that world prices of goods are unaffected by that country's participation in international trade. 
C)  in order to rule out the possibility of tariffs or quotas. 
D)  All of the above are correct.

Question 8

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. With free trade and a $5 per unit tariff, the country

Accepted Answer

A)  exports 20 units of the good. 
B)  imports 20 units of the good. 
C)  exports 40 units of the good. 
D)  imports 40 units of the good. 
A)  exports 20 units of the good. 
B)  imports 20 units of the good. 
C)  exports 40 units of the good. 
D)  imports 40 units of the good.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

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 much are consumer surplus, producer surplus, and total surplus with trade?

Accepted Answer

With trade, consumer

Question 12

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

Accepted Answer

A)  imports Q2 - Q1 units of cheese. 
B)  exports Q2 - Q1 units of cheese. 
C)  imports Q2 - Q0 units of cheese. 
D)  exports Q2 - Q0 units of cheese. 
A)  imports Q2 - Q1 units of cheese. 
B)  exports Q2 - Q1 units of cheese. 
C)  imports Q2 - Q0 units of cheese. 
D)  exports Q2 - Q0 units of cheese.

Question 13

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

Accepted Answer

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

Question 14

Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

Accepted Answer

A) True 
 B)False

Question 15

When a country takes a unilateral 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 16

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Accepted Answer

A)  the domestic price of coffee will be greater than the world price of coffee. 
B)  the domestic price of coffee will be lower than the world price of coffee. 
C)  the domestic price of coffee will equal the world price of coffee. 
D)  The world price of coffee does not matter; the domestic price of coffee prevails. 
A)  the domestic price of coffee will be greater than the world price of coffee. 
B)  the domestic price of coffee will be lower than the world price of coffee. 
C)  the domestic price of coffee will equal the world price of coffee. 
D)  The world price of coffee does not matter; the domestic price of coffee prevails.

Question 17

Figure 9-17  
-Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff

Accepted Answer

A)  decreases imports of the good by 16 units and increases domestic production of the good by 8 units. 
B)  decreases imports of the good by 16 units and increases domestic production of the good by 16 units. 
C)  decreases imports of the good by 24 units and increases domestic production of the good by 8 units. 
D)  decreases imports of the good by 24 units and increases domestic production of the good by 24 units. 
A)  decreases imports of the good by 16 units and increases domestic production of the good by 8 units. 
B)  decreases imports of the good by 16 units and increases domestic production of the good by 16 units. 
C)  decreases imports of the good by 24 units and increases domestic production of the good by 8 units. 
D)  decreases imports of the good by 24 units and increases domestic production of the good by 24 units.

Question 18

If a country allows trade and, for a certain good, the domestic price without trade is higher 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 19

A tariff

Accepted Answer

A)  lowers the domestic price of the exported good below the world price. 
B)  keeps the domestic price of the exported good the same as the world price. 
C)  raises the domestic price of the imported good above the world price. 
D)  lowers the domestic price of the imported good below the world price. 
A)  lowers the domestic price of the exported good below the world price. 
B)  keeps the domestic price of the exported good the same as the world price. 
C)  raises the domestic price of the imported good above the world price. 
D)  lowers the domestic price of the imported good below the world price.

Question 20

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

Accepted Answer

A)  domestic producers become better off, and domestic consumers become worse off. 
B)  domestic producers become worse off, and domestic consumers become better off. 
C)  domestic consumers become better off, but the effect on the well-being of domestic producers is ambiguous. 
D)  domestic producers become worse off, but the effect on the well-being of domestic consumers is ambiguous. 
A)  domestic producers become better off, and domestic consumers become worse off. 
B)  domestic producers become worse off, and domestic consumers become better off. 
C)  domestic consumers become better off, but the effect on the well-being of domestic producers is ambiguous. 
D)  domestic producers become worse off, but the effect on the well-being of domestic consumers is ambiguous.

Exam 9: Application: International Trade

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With trade, China will

When a country allows trade and becomes an importer of jet skis,

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. If Isoland allows international trade and if the world price of peaches is $5, then

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

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

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

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. With free trade and a $5 per unit tariff, the country

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

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 9-27 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 much are consumer surplus, producer surplus, and total surplus with trade?

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

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

Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

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

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Figure 9-17 -Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff

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

A tariff

When a country allows 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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