Deck 19: International Trade

Question 1

Consider a market in a small country with a domestic demand curve of P = 28 - q and a domestic supply curve of P = 3q.The world price is $9 per unit.If the country opens itself up to international trade:

A)PS decreases by $35.
B)PS decreases by $55.
C)PS decreases by $70.
D)PS decreases by $75.
E)None of the above.

Answer 1

PS decreases by $55.

Question 2

Consider a market in a small country with a domestic demand curve of P = 60 - 2q and P = q.The world price for the good is $5.The government imposes an import tariff of $10 per unit.Which statement is true?

A)Imports fall by 15 units due to the imposition of the tariff.
B)Imports fall by 25 units due to the imposition of the tariff.
C)Imports fall by 10 units due to the imposition of the tariff.
D)Imports fall by 5 units due to the imposition of the tariff.
E)None of the above.

Answer 2

Imports fall by 15 units due to the imposition of the tariff.

Question 3

Consider a market in a small country with a domestic demand curve of P = 28 - q and a domestic supply curve of P = 3q.The world price is $9 per unit.If the country opens itself up to international trade:

A)Total surplus increases by $60.
B)Total surplus increases by $56.
C)Total surplus increases by $88.
D)Total surplus increases by $36.
E)None of the above.

Answer 3

Total surplus increases by $88.

Question 4

Consider a market in a small country with a domestic demand curve of P = 60 - 2q and P = q.The world price for the good is $5.The government imposes an import tariff of $10 per unit.The DWL from the imposition of the tariff is:

A)$50
B)$25
C)$75
D)$30
E)None of the above.

Question 5

Consider a market in a small country with a domestic demand curve of P = 10 - q and a domestic supply curve of P = q.The world price for the good is $8 per unit.If the government bans international trade, what is the amount of surplus forgone?

A)$5
B)$6
C)$7
D)$8
E)$9

Question 6

Consider a market in a small country with a domestic demand curve of P = 28 - q and a domestic supply curve of P = 3q.The world price is $9 per unit.If the country opens itself up to international trade:

A)There will be 16 unit of the good imported.
B)There will be 20 unit of the good imported.
C)There will be 9 unit of the good imported.
D)There will be 10 unit of the good exported.
E)None of the above.

Question 7

Consider a market in a small country with a domestic demand curve of P = 10 - q and a domestic supply curve of P = q.The world price for the good is $8 per unit.If the government opens the market up to international trade:

A)Consumer surplus increases by $10 and producer surplus increases by $20.
B)Consumer surplus falls by $8 and producer surplus increases by $9.
C)Consumer surplus falls by $10.5 and producer surplus increases by $19.5.
D)Consumer surplus falls by $9 and producer surplus increases by $9.
E)Consumer surplus falls by $5 and producer surplus increases by $10.

Question 8

Consider a market in a small country with a domestic demand curve of P = 28 - q and a domestic supply curve of P = 3q.The world price is $9 per unit.If the country opens itself up to international trade:

A)CS increases by $55.
B)CS increases by $37.
C)CS increases by $98.
D)CS increases by $143.
E)None of the above.

Question 9

Consider a market in a small country with a domestic demand curve of P = 60 -2q and P = q.The world price for the good is $5.The government imposes an import tariff of $10 per unit, what is the tariff revenue collected by the government?

A)$50
B)$25
C)$75
D)$30
E)None of the above.

Question 10

Which statement is true?

A)In a small country, if the world price is below the domestic no-trade price, the country has a comparative advantage in that good.
B)In a small country, if the world price is above the domestic no-trade price, the country has a comparative disadvantage in that good.
C)In a small country, if the world price is below the domestic no-trade price, the country has a comparative disadvantage in that good.
D)Both a and b are true.
E)None of the above statements above.