Question 1

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. With trade, Guatemala will

Accepted Answer

A)  export 22 units of coffee. 
B)  export 10 units of coffee. 
C)  import 30 units of coffee. 
D)  import 12 units of coffee. 
A)  export 22 units of coffee. 
B)  export 10 units of coffee. 
C)  import 30 units of coffee. 
D)  import 12 units of coffee.

Question 2

If Argentina exports oranges to the rest of the world, Argentina's producers of oranges are worse off, and Argentina's consumers of oranges are better off, as a result of trade.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

Accepted Answer

A)  increases by the area B + D. 
B)  increases by the area C + F. 
C)  decreases by the area B + D. 
D)  decreases by the area D + G. 
A)  increases by the area B + D. 
B)  increases by the area C + F. 
C)  decreases by the area B + D. 
D)  decreases by the area D + G.

Question 4

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

Accepted Answer

A)  both domestic producers and domestic consumers become better off. 
B)  domestic producers become better off, and domestic consumers become worse off. 
C)  domestic producers become worse off, and domestic consumers become better off. 
D)  both domestic producers and domestic consumers become worse off. 
A)  both domestic producers and domestic consumers become better off. 
B)  domestic producers become better off, and domestic consumers become worse off. 
C)  domestic producers become worse off, and domestic consumers become better off. 
D)  both domestic producers and domestic consumers become worse off.

Question 5

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

Accepted Answer

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

Question 6

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular 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 7

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Accepted Answer

A)  benefit the United States as a whole, because they generate revenue for the government. In addition, because the goods are priced below cost, the taxes do not harm domestic consumers. 
B)  benefit the United States as a whole, because they generate revenue for the government and increase producer surplus. 
C)  harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D)  harm the United States as a whole, because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue. 
A)  benefit the United States as a whole, because they generate revenue for the government. In addition, because the goods are priced below cost, the taxes do not harm domestic consumers. 
B)  benefit the United States as a whole, because they generate revenue for the government and increase producer surplus. 
C)  harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D)  harm the United States as a whole, because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue.

Question 8

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

Accepted Answer

A)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases. 
B)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
C)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
D)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change. 
A)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases. 
B)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
C)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
D)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change.

Question 9

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Accepted Answer

A) True 
 B)False

Question 10

If the world price of coffee is lower than Colombia's domestic price of coffee without trade, then Colombia

Accepted Answer

A)  should import coffee. 
B)  has a comparative advantage in coffee. 
C)  should produce just enough coffee to satisfy domestic demand. 
D)  should produce no coffee domestically. 
A)  should import coffee. 
B)  has a comparative advantage in coffee. 
C)  should produce just enough coffee to satisfy domestic demand. 
D)  should produce no coffee domestically.

Question 11

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

Accepted Answer

A)  imports 200 roses. 
B)  imports 400 roses. 
C)  exports 200 roses. 
D)  exports 400 roses. 
A)  imports 200 roses. 
B)  imports 400 roses. 
C)  exports 200 roses. 
D)  exports 400 roses.

Question 12

Which of the following statements is true?

Accepted Answer

A)  Free trade benefits a country when it exports but harms it when it imports. 
B)  "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports. 
C)  Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses. 
D)  Free trade benefits a country both when it exports and when it imports. 
A)  Free trade benefits a country when it exports but harms it when it imports. 
B)  "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports. 
C)  Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses. 
D)  Free trade benefits a country both when it exports and when it imports.

Question 13

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. Suppose the world price of cardboard is $45. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A)  domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B)  domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C)  domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D)  domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 
A)  domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B)  domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C)  domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D)  domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.

Question 14

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

Accepted Answer

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

Question 15

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, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

With trade

Question 16

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

Accepted Answer

A)  $3,240. 
B)  $6,480. 
C)  $6,760. 
D)  $13,520. 
A)  $3,240. 
B)  $6,480. 
C)  $6,760. 
D)  $13,520.

Question 17

Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is
$52 per bushel. The U.S. is a price-taker in the market for peaches.
-Refer to Scenario 9-1. If trade in peaches is allowed, the

Accepted Answer

A)  price paid by American consumers of peaches is unchanged relative to the no-trade situation. 
B)  total well-being of American producers of peaches is diminished relative to the no-trade situation. 
C)  total well-being of American consumers of peaches is enhanced relative to the no-trade situation. 
D)  total well-being of the United States is enhanced relative to the no-trade situation. 
A)  price paid by American consumers of peaches is unchanged relative to the no-trade situation. 
B)  total well-being of American producers of peaches is diminished relative to the no-trade situation. 
C)  total well-being of American consumers of peaches is enhanced relative to the no-trade situation. 
D)  total well-being of the United States is enhanced relative to the no-trade situation.

Question 18

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. Suppose the world price of cardboard is $60. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A)  domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B)  domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C)  domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D)  domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 
A)  domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B)  domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C)  domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D)  domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.

Question 19

The General Agreement on Tariffs and Trade GATT) was initiated in response to

Accepted Answer

A)  in increase in exports of low-priced goods from developing countries to developed countries. 
B)  the replacement of manufacturing jobs with service jobs in developed countries. 
C)  economic dislocations caused by the North American Free Trade Agreement NAFT
A)  in the 1990s. 
D)  high tariffs imposed during the Great Depression of the 1930s. 
A)  in increase in exports of low-priced goods from developing countries to developed countries. 
B)  the replacement of manufacturing jobs with service jobs in developed countries. 
C)  economic dislocations caused by the North American Free Trade Agreement NAFT
A)  in the 1990s. 
D)  high tariffs imposed during the Great Depression of the 1930s.

Question 20

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 deadweight loss caused by the tariff is

Accepted Answer

A)  $25. 
B)  $50. 
C)  $75. 
D)  $100. 
A)  $25. 
B)  $50. 
C)  $75. 
D)  $100.

Exam 9: Application: International Trade

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. With trade, Guatemala will

If Argentina exports oranges to the rest of the world, Argentina's producers of oranges are worse off, and Argentina's consumers of oranges are better off, as a result of trade.

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

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

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

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

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

If the world price of coffee is lower than Colombia's domestic price of coffee without trade, then Colombia

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

Which of the following statements is true?

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

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

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the

The General Agreement on Tariffs and Trade GATT) was initiated in response to

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 deadweight loss caused by the tariff 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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