Question 1

A tariff on a product

Accepted Answer

A)  enhances the economic well-being of the domestic economy. 
B)  increases the domestic quantity supplied. 
C)  increases the domestic quantity demanded. 
D)  results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus. 
A)  enhances the economic well-being of the domestic economy. 
B)  increases the domestic quantity supplied. 
C)  increases the domestic quantity demanded. 
D)  results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus.

Question 2

Without free trade, the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how many units will domestic consumers demand, and how many units will domestic producers supply?

Accepted Answer

Domestic consumers w

Question 4

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.  
-Refer to Figure 9-16. The tariff

Accepted Answer

A)  decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases total surplus by the area D + F. 
B)  increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F. 
C)  creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F. 
D)  increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F. 
A)  decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases total surplus by the area D + F. 
B)  increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F. 
C)  creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F. 
D)  increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.

Question 5

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. The size of the tariff on roses is

Accepted Answer

A)  $4. 
B)  $2. 
C)  $8. 
D)  $1. 
A)  $4. 
B)  $2. 
C)  $8. 
D)  $1.

Question 6

When a country allows trade and becomes an importer of bottled water, which of the following is not a consequence?

Accepted Answer

A)  The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water. 
B)  The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water. 
C)  The price paid by domestic consumers of bottled water decreases. 
D)  The price received by domestic producers of bottled water decreases. 
A)  The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water. 
B)  The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water. 
C)  The price paid by domestic consumers of bottled water decreases. 
D)  The price received by domestic producers of bottled water decreases.

Question 7

Figure 9-12  
-Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are

Accepted Answer

A)  $54 and 800. 
B)  $54 and 1,600. 
C)  $42 and 800. 
D)  $42 and 1,200. 
A)  $54 and 800. 
B)  $54 and 1,600. 
C)  $42 and 800. 
D)  $42 and 1,200.

Question 8

Figure 9-23
The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit.  
-Refer to Figure 9-23. With free trade, the domestic price and domestic quantity demanded are

Accepted Answer

A)  $90 and 5. 
B)  $90 and 10. 
C)  $120 and 5. 
D)  $120 and 18. 
A)  $90 and 5. 
B)  $90 and 10. 
C)  $120 and 5. 
D)  $120 and 18.

Question 9

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

Accepted Answer

A)  domestic producers of the good become better off. 
B)  domestic consumers of the good become worse off. 
C)  the gains of the winners exceed the losses of the losers. 
D)  All of the above are correct. 
A)  domestic producers of the good become better off. 
B)  domestic consumers of the good become worse off. 
C)  the gains of the winners exceed the losses of the losers. 
D)  All of the above are correct.

Question 10

Most economists view the United States' experience with trade as

Accepted Answer

A)  one from which no firm conclusions about the virtues of free trade can be reached, due to the relatively short history of international trade in the U.S. 
B)  one from which no firm conclusions about the virtues of free trade can be reached, due to the lack of trade within the U.S. throughout most of the early history of the U.S. 
C)  an ongoing experiment that confirms the virtues of free trade. 
D)  an ongoing experiment that calls into serious question the notion that free trade enhances the economic well- being of a nation. 
A)  one from which no firm conclusions about the virtues of free trade can be reached, due to the relatively short history of international trade in the U.S. 
B)  one from which no firm conclusions about the virtues of free trade can be reached, due to the lack of trade within the U.S. throughout most of the early history of the U.S. 
C)  an ongoing experiment that confirms the virtues of free trade. 
D)  an ongoing experiment that calls into serious question the notion that free trade enhances the economic well- being of a nation.

Question 11

Economists view free trade as a way to raise living standards both at home and abroad.

Accepted Answer

A) True 
 B)False

Question 12

Figure 9-9  
-Refer to Figure 9-9. The change in total surplus in this market because of trade is

Accepted Answer

A)  D, and this area represents a loss of total surplus because of trade. 
B)  D, and this area represents a gain in total surplus because of trade. 
C)  B + D, and this area represents a loss of total surplus because of trade. 
D)  B + D, and this area represents a gain in total surplus because of trade. 
A)  D, and this area represents a loss of total surplus because of trade. 
B)  D, and this area represents a gain in total surplus because of trade. 
C)  B + D, and this area represents a loss of total surplus because of trade. 
D)  B + D, and this area represents a gain in total surplus because of trade.

Question 13

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Accepted Answer

A)  demand for tricycles from the rest of the world. 
B)  supply of tricycles from the rest of the world. 
C)  level of inefficiency in the domestic market caused by trade. 
D)  surplus in the domestic tricycle market. 
A)  demand for tricycles from the rest of the world. 
B)  supply of tricycles from the rest of the world. 
C)  level of inefficiency in the domestic market caused by trade. 
D)  surplus in the domestic tricycle market.

Question 14

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-26. Suppose the world price in this market is $7. 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 9-17  
-Refer to Figure 9-17. When comparing no trade to free trade, the gains from trade amount to

Accepted Answer

A)  $400. 
B)  $600. 
C)  $750. 
D)  $1,000. 
A)  $400. 
B)  $600. 
C)  $750. 
D)  $1,000.

Question 16

A tariff on a product makes

Accepted Answer

A)  domestic sellers better off and domestic buyers worse off. 
B)  domestic sellers worse off and domestic buyers worse off. 
C)  domestic sellers better off and domestic buyers better off. 
D)  domestic sellers worse off and domestic buyers better off. 
A)  domestic sellers better off and domestic buyers worse off. 
B)  domestic sellers worse off and domestic buyers worse off. 
C)  domestic sellers better off and domestic buyers better off. 
D)  domestic sellers worse off and domestic buyers better off.

Question 17

Suppose in the country of Nash that the price of corn is $4 per bushel with no trade allowed. If the world price of corn is $3 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of corn?

Accepted Answer

Nash will

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 $45 and international trade is allowed. Then Boxland's consumers demand

Accepted Answer

A)  110 tons of cardboard and Boxland's producers supply 75 tons of cardboard. 
B)  110 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
C)  96 tons of cardboard and Boxland's producers supply 75 tons of cardboard. 
D)  96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
A)  110 tons of cardboard and Boxland's producers supply 75 tons of cardboard. 
B)  110 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
C)  96 tons of cardboard and Boxland's producers supply 75 tons of cardboard. 
D)  96 tons of cardboard and Boxland's producers supply 96 tons of cardboard.

Question 19

Using the graph, assume that the government imposes a $1 tariff on hammers. Answer the following questions given this information.   
a. What is the domestic price and quantity demanded of hammers after the tariff is imposed?
b. What is the quantity of hammers imported before the tariff?
c. What is the quantity of hammers imported after the tariff?
d. What would be the amount of consumer surplus before the tariff?
e. What would be the amount of consumer surplus after the tariff?
f. What would be the amount of producer surplus before the tariff?
g. What would be the amount of producer surplus after the tariff?
h. What would be the amount of government revenue because of the tariff?
i. What would be the total amount of deadweight loss due to the tariff?

Accepted Answer

a.$6.84
b.66
c.44
d.

Question 20

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

Accepted Answer

A)  More Danish-produced chips are sold in Denmark. 
B)  More foreign-produced chips are sold in Denmark. 
C)  Danish consumers of chips become better off. 
D)  Total surplus in the Danish chip market increases. 
A)  More Danish-produced chips are sold in Denmark. 
B)  More foreign-produced chips are sold in Denmark. 
C)  Danish consumers of chips become better off. 
D)  Total surplus in the Danish chip market increases.

Exam 9: Application: International Trade

A tariff on a product

Without free trade, the domestic price of a good must be equal to the world price of a good.

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The tariff

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The size of the tariff on roses is

When a country allows trade and becomes an importer of bottled water, which of the following is not a consequence?

Figure 9-12 -Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are

Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. With free trade, the domestic price and domestic quantity demanded are

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

Most economists view the United States' experience with trade as

Economists view free trade as a way to raise living standards both at home and abroad.

Figure 9-9 -Refer to Figure 9-9. The change in total surplus in this market because of trade is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

Figure 9-17 -Refer to Figure 9-17. When comparing no trade to free trade, the gains from trade amount to

A tariff on a product makes

Suppose in the country of Nash that the price of corn is $4 per bushel with no trade allowed. If the world price of corn is $3 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of corn?

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

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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