Question 1

When a government imposes a tariff on a product, the domestic price will equal the world price.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  exports 160 tricycles. 
B)  exports 320 tricycles. 
C)  imports 160 tricycles. 
D)  imports 320 tricycles. 
A)  exports 160 tricycles. 
B)  exports 320 tricycles. 
C)  imports 160 tricycles. 
D)  imports 320 tricycles.

Question 3

Trade enhances the economic well-being of a nation in the sense that

Accepted Answer

A)  both domestic producers and domestic consumers of a good become better off with trade, regardless of whether the nation imports or exports the good in question. 
B)  the gains of domestic producers of a good exceed the losses of domestic consumers of a good, regardless of whether the nation imports or exports the good in question. 
C)  trade results in an increase in total surplus. 
D)  trade puts downward pressure on the prices of all goods. 
A)  both domestic producers and domestic consumers of a good become better off with trade, regardless of whether the nation imports or exports the good in question. 
B)  the gains of domestic producers of a good exceed the losses of domestic consumers of a good, regardless of whether the nation imports or exports the good in question. 
C)  trade results in an increase in total surplus. 
D)  trade puts downward pressure on the prices of all goods.

Question 4

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. The deadweight loss caused by the tariff is

Accepted Answer

A)  $6,000. 
B)  $9,000. 
C)  $12,000. 
D)  $15,000. 
A)  $6,000. 
B)  $9,000. 
C)  $12,000. 
D)  $15,000.

Question 5

Figure 9-17  
-Refer to Figure 9-17. With free trade, the country imports

Accepted Answer

A)  16 units of the good. 
B)  24 units of the good. 
C)  60 units of the good. 
D)  64 units of the good. 
A)  16 units of the good. 
B)  24 units of the good. 
C)  60 units of the good. 
D)  64 units of the good.

Question 6

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric

Question 7

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Accepted Answer

A)  export copper. 
B)  import copper. 
C)  neither export nor import copper, since that country cannot gain from trade. 
D)  neither export nor import copper, since that country already produces copper at a low cost compared to other countries. 
A)  export copper. 
B)  import copper. 
C)  neither export nor import copper, since that country cannot gain from trade. 
D)  neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

Question 8

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

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 9

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

Accepted Answer

A)  the country becomes an importer of the good as a result. 
B)  the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C)  other countries have a comparative advantage, relative to the country in question, in producing the good. 
D)  total surplus does not change as a result. 
A)  the country becomes an importer of the good as a result. 
B)  the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C)  other countries have a comparative advantage, relative to the country in question, in producing the good. 
D)  total surplus does not change as a result.

Question 10

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

Accepted Answer

A)  Wheatland has a comparative advantage, relative to other countries, in producing corn. 
B)  other countries have a comparative advantage, relative to Wheatland, in producing fish. 
C)  the price of fish in Wheatland exceeds the world price of fish. 
D)  if Wheatland were to allow trade, it would import corn. 
A)  Wheatland has a comparative advantage, relative to other countries, in producing corn. 
B)  other countries have a comparative advantage, relative to Wheatland, in producing fish. 
C)  the price of fish in Wheatland exceeds the world price of fish. 
D)  if Wheatland were to allow trade, it would import corn.

Question 11

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

Accepted Answer

A)  national-security argument. 
B)  infant-industry argument. 
C)  unfair-competition argument. 
D)  jobs argument. 
A)  national-security argument. 
B)  infant-industry argument. 
C)  unfair-competition argument. 
D)  jobs argument.

Question 12

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Accepted Answer

A)  United States should protect its domestic steel industry from this unfair competition. 
B)  harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel. 
C)  harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. 
D)  United States should subsidize the products it sells to Korea. 
A)  United States should protect its domestic steel industry from this unfair competition. 
B)  harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel. 
C)  harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. 
D)  United States should subsidize the products it sells to Korea.

Question 13

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus with trade?

Accepted Answer

A)  Consumer surplus with trade = 1/2)Q0)P1 - P0). 
B)  Consumer surplus with trade = 1/2)Q0)P3 - P0). 
C)  Consumer surplus with trade = 1/2)Q1)P3 - P1). 
D)  None of the above is correct. 
A)  Consumer surplus with trade = 1/2)Q0)P1 - P0). 
B)  Consumer surplus with trade = 1/2)Q0)P3 - P0). 
C)  Consumer surplus with trade = 1/2)Q1)P3 - P1). 
D)  None of the above is correct.

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. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

Accepted Answer

With trade, consumer

Question 15

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. The increase in total surplus resulting from trade is

Accepted Answer

A)  $640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120. 
B)  $1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240. 
C)  $2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000. 
D)  $2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480. 
A)  $640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120. 
B)  $1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240. 
C)  $2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000. 
D)  $2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480.

Question 16

Figure 9-15  
-Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Accepted Answer

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

Question 17

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

Accepted Answer

A)  $6,000. 
B)  $9,000. 
C)  $12,000. 
D)  $15,000. 
A)  $6,000. 
B)  $9,000. 
C)  $12,000. 
D)  $15,000.

Question 18

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles.  
-Refer to Figure 9-19. With free trade, consumer surplus in the textile market amounts to

Accepted Answer

A)  $210. 
B)  $320. 
C)  $405. 
D)  $910. 
A)  $210. 
B)  $320. 
C)  $405. 
D)  $910.

Question 19

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Accepted Answer

A) True 
 B)False

Question 20

Figure 9-12  
-Refer to Figure 9-12. Producer surplus before trade is

Accepted Answer

A)  $14,400. 
B)  $16,800. 
C)  $21,600. 
D)  $24,800. 
A)  $14,400. 
B)  $16,800. 
C)  $21,600. 
D)  $24,800.

Exam 9: Application: International Trade

When a government imposes a tariff on a product, the domestic price will equal the world price.

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

Trade enhances the economic well-being of a nation in the sense that

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. The deadweight loss caused by the tariff is

Figure 9-17 -Refer to Figure 9-17. With free trade, the country imports

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus with trade?

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. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The increase in total surplus resulting from trade is

Figure 9-15 -Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19. With free trade, consumer surplus in the textile market amounts to

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Figure 9-12 -Refer to Figure 9-12. Producer surplus before trade is

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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