Question 1

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. The area bounded by the points Q0, P0), Q2, P1), and Q1, P1) represents

Accepted Answer

A)  Mexico's gains from trade. 
B)  the amount by which Mexico's gain in consumer surplus exceeds its loss in producer surplus due to trade. 
C)  Mexico's gain in total surplus due to trade. 
D)  All of the above are correct. 
A)  Mexico's gains from trade. 
B)  the amount by which Mexico's gain in consumer surplus exceeds its loss in producer surplus due to trade. 
C)  Mexico's gain in total surplus due to trade. 
D)  All of the above are correct.

Question 2

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

Accepted Answer

A)  0, P0), Q0, P0), Q2, P1), and 0, P1). 
B)  0, P1), 0, P2), Q0, P0), and Q1, P1). 
C)  Q0, P0), Q2, P1), and Q1, P1). 
D)  0, P0), 0, P2), and Q0, P0). 
A)  0, P0), Q0, P0), Q2, P1), and 0, P1). 
B)  0, P1), 0, P2), Q0, P0), and Q1, P1). 
C)  Q0, P0), Q2, P1), and Q1, P1). 
D)  0, P0), 0, P2), and Q0, P0).

Question 3

Tariffs and quotas are different in the sense that

Accepted Answer

A)  tariffs cause deadweight losses, while quotas do not cause deadweight losses. 
B)  tariffs raise revenue for the government, while quotas do not raise revenue for the government. 
C)  tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers. 
D)  tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of domestic producers. 
A)  tariffs cause deadweight losses, while quotas do not cause deadweight losses. 
B)  tariffs raise revenue for the government, while quotas do not raise revenue for the government. 
C)  tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers. 
D)  tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of domestic producers.

Question 4

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be

Accepted Answer

A)  better off regardless of how Colombia responds. 
B)  better off if Colombia removes the subsidies, and will be no worse off if it doesn't. 
C)  worse off if Colombia doesn't remove the subsidies in response to the threat. 
D)  worse off regardless of how Colombia responds. 
A)  better off regardless of how Colombia responds. 
B)  better off if Colombia removes the subsidies, and will be no worse off if it doesn't. 
C)  worse off if Colombia doesn't remove the subsidies in response to the threat. 
D)  worse off regardless of how Colombia responds.

Question 5

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. Without trade, producer surplus is

Accepted Answer

A)  $423. 
B)  $845. 
C)  $1,690. 
D)  $3,380. 
A)  $423. 
B)  $845. 
C)  $1,690. 
D)  $3,380.

Question 6

Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers, with the tariff, is 8 million bottles per year, then we can conclude that

Accepted Answer

A)  the quantity of wine demanded by France, with the tariff, is 18 million bottles per year. 
B)  the quantity of wine demanded by France, without the tariff, would be 24 million bottles per year. 
C)  the amount of the deadweight loss is 24 million euros per year. 
D)  the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff. 
A)  the quantity of wine demanded by France, with the tariff, is 18 million bottles per year. 
B)  the quantity of wine demanded by France, without the tariff, would be 24 million bottles per year. 
C)  the amount of the deadweight loss is 24 million euros per year. 
D)  the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff.

Question 7

Suppose Japan exports cars to Russia and imports wine from France. This situation suggests

Accepted Answer

A)  Japan has a comparative advantage relative to France in producing wine, and Russia has a comparative advantage to Japan in producing cars. 
B)  Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine. 
C)  Japan has an absolute advantage relative to Russia in producing cars, and France has an absolute advantage relative to Japan in producing wine. 
D)  Japan has an absolute advantage relative to France in producing wine, and Russia has an absolute advantage relative to Japan in producing cars. 
A)  Japan has a comparative advantage relative to France in producing wine, and Russia has a comparative advantage to Japan in producing cars. 
B)  Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine. 
C)  Japan has an absolute advantage relative to Russia in producing cars, and France has an absolute advantage relative to Japan in producing wine. 
D)  Japan has an absolute advantage relative to France in producing wine, and Russia has an absolute advantage relative to Japan in producing cars.

Question 8

Figure 9-11  
-Refer to Figure 9-11. Producer surplus in this market after trade is

Accepted Answer

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

Question 9

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil.  
-Refer to Figure 9-14. The country for which the figure is drawn

Accepted Answer

A)  has a comparative advantage relative to other countries in the production of crude oil and it will export crude oil. 
B)  has a comparative advantage relative to other countries in the production of crude oil and it will import crude oil. 
C)  has a comparative disadvantage relative to other countries in the production of crude oil and it will export crude oil. 
D)  has a comparative disadvantage relative to other countries in the production of crude oil and it will import crude oil. 
A)  has a comparative advantage relative to other countries in the production of crude oil and it will export crude oil. 
B)  has a comparative advantage relative to other countries in the production of crude oil and it will import crude oil. 
C)  has a comparative disadvantage relative to other countries in the production of crude oil and it will export crude oil. 
D)  has a comparative disadvantage relative to other countries in the production of crude oil and it will import crude oil.

Question 10

A possible outcome of the multilateral approach to free trade is that such an approach can

Accepted Answer

A)  win political support when a unilateral approach cannot. 
B)  result in more restricted trade than under a unilateral approach, when international negotiations fail. 
C)  result in drastic reductions in tariffs for many countries. 
D)  All of the above are correct. 
A)  win political support when a unilateral approach cannot. 
B)  result in more restricted trade than under a unilateral approach, when international negotiations fail. 
C)  result in drastic reductions in tariffs for many countries. 
D)  All of the above are correct.

Question 11

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, how much are consumer surplus, producer surplus, and total surplus in this market?

Accepted Answer

Consumer surplus is

Question 12

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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Accepted Answer

With trade, consumer surplus f

Question 13

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

Accepted Answer

A)  producer surplus increases and total surplus increases in the market for that good. 
B)  producer surplus increases and total surplus decreases in the market for that good. 
C)  producer surplus decreases and total surplus increases in the market for that good. 
D)  producer surplus decreases and total surplus decreases in the market for that good. 
A)  producer surplus increases and total surplus increases in the market for that good. 
B)  producer surplus increases and total surplus decreases in the market for that good. 
C)  producer surplus decreases and total surplus increases in the market for that good. 
D)  producer surplus decreases and total surplus decreases in the market for that good.

Question 14

Figure 9-9  
-Refer to Figure 9-9. Total surplus in this market after 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 15

For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

Accepted Answer

A) True 
 B)False

Question 16

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 price of peaches in the United States

Accepted Answer

A)  will increase, and this will cause consumer surplus to decrease. 
B)  will decrease, and this will cause consumer surplus to increase. 
C)  will be unaffected, and consumer surplus will be unaffected as well. 
D)  could increase or decrease or be unaffected; this cannot be determined. 
A)  will increase, and this will cause consumer surplus to decrease. 
B)  will decrease, and this will cause consumer surplus to increase. 
C)  will be unaffected, and consumer surplus will be unaffected as well. 
D)  could increase or decrease or be unaffected; this cannot be determined.

Question 17

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. With trade and a tariff, total surplus is

Accepted Answer

A)  $750. 
B)  $900. 
C)  $950. 
D)  $1,550. 
A)  $750. 
B)  $900. 
C)  $950. 
D)  $1,550.

Question 18

Domestic producers of a good become worse off, and domestic consumers of a good become better 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)  the country in question has a comparative advantage, relative to other countries, 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)  the country in question has a comparative advantage, relative to other countries, in producing the good. 
D)  total surplus does not change as a result.

Question 19

When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

Accepted Answer

A)  The price paid by domestic consumers of the good increases. 
B)  The price received by domestic producers of the good increases. 
C)  The losses of domestic consumers of the good exceed the gains of domestic producers of the good. 
D)  The gains of domestic producers of the good exceed the losses of domestic consumers of the good. 
A)  The price paid by domestic consumers of the good increases. 
B)  The price received by domestic producers of the good increases. 
C)  The losses of domestic consumers of the good exceed the gains of domestic producers of the good. 
D)  The gains of domestic producers of the good exceed the losses of domestic consumers of the good.

Question 20

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

Accepted Answer

A)  $3,240. 
B)  $6,480. 
C)  $7,760. 
D)  $15,520. 
A)  $3,240. 
B)  $6,480. 
C)  $7,760. 
D)  $15,520.

Exam 9: Application: International Trade

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The area bounded by the points Q0, P0), Q2, P1), and Q1, P1) represents

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

Tariffs and quotas are different in the sense that

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. Without trade, producer surplus is

Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers, with the tariff, is 8 million bottles per year, then we can conclude that

Suppose Japan exports cars to Russia and imports wine from France. This situation suggests

Figure 9-11 -Refer to Figure 9-11. Producer surplus in this market after trade is

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14. The country for which the figure is drawn

A possible outcome of the multilateral approach to free trade is that such an approach can

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, how much are consumer surplus, producer surplus, and total surplus in this market?

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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

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

Figure 9-9 -Refer to Figure 9-9. Total surplus in this market after trade is

For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

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 price of peaches in the United States

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. With trade and a tariff, total surplus is

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

When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

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