Question 1

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland.
 
-Refer to Figure 9-18. If Isoland allows international trade and the world price of peaches is $5, then

Accepted Answer

A)   producer surplus will be smaller than it would be if Isoland banned trade.
B)   consumer surplus will be smaller than it would be if Isoland banned trade.
C)   the domestic quantity of peaches demanded will exceed the domestic quantity of peaches supplied.
D)   Isoland will be an importer of peaches.E) B) and C)
F) C) and D)

Question 2

The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy. If the world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2 per pound, then Aviana should export goose meat.

Accepted Answer

A) True 
 B)False

Question 3

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Accepted Answer

A) True 
 B)False

Question 4

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. With free trade, producer surplus is

Accepted Answer

A)   $845.
B)   $1,620.
C)   $1,690.
D)   $3,240.E) B) and C)
F) None of the above

Question 5

Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,

Accepted Answer

A)   consumer surplus increases for consumers of coats in Iceland.
B)   producer surplus increases for producers of coats in Iceland.
C)   total surplus remains unchanged in the coat market in Iceland.
D)   it is reasonable to infer that Iceland has a comparative advantage over other countries in coat production.E) B) and D)
F) A) and C)

Question 6

Figure 9-12 
-Refer to Figure 9-12. Consumer surplus after trade is

Accepted Answer

A)   $6,400.
B)   $9,600.
C)   $12,800.
D)   $14,400.E) B) and C)
F) A) and D)

Question 7

A tax on an imported good is called a .

Accepted Answer

The answer of A tax on an imported good is...

Question 8

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.E) A) and D)
F) A) and C)

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 better off.
C)   the gains of the winners fall short of the losses of the losers.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 10

Figure 9-12 
-Refer to Figure 9-12. Equilibrium price and equilibrium quantity without trade are

Accepted Answer

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

Question 11

A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

Accepted Answer

A) True 
 B)False

Question 12

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Accepted Answer

A)   the country will be an exporter of the good.
B)   the country will be an importer of the good.
C)   the country will be neither an exporter nor an importer of the good.
D)   Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.E) A) and B)
F) All of the above

Question 13

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

Accepted Answer

The countr...

Question 14

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

Accepted Answer

A)   importing televisions and the price of a television in Paraguay decreased to $300.
B)   importing televisions and the price of a television in Paraguay remained at $350.
C)   exporting televisions and the price of a television in Paraguay decreased to $300.
D)   exporting televisions and the price of a television in Paraguay remained at $350.E) B) and C)
F) A) and C)

Question 15

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 be greater than the world price.
B)   will be equal to the world price.
C)   will be less than the world price.
D)   could be greater than, equal to, or less than the world price; this cannot be determined.E) All of the above
F) C) and D)

Question 16

"Trade raises the economic well­being of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods, but it is not correct for a nation that imports manufactured goods.

Accepted Answer

A) True 
 B)False

Question 17

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.E) A) and B)
F) All of the above

Question 18

NAFTA is an example of a multilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 19

Suppose Iran imposes a tariff on lumber. For the tariff to have any effect, it must be the case that

Accepted Answer

A)   Iran is an exporter of lumber.
B)   the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the tariff.
C)   the world price without the tariff is less than the price of lumber without trade.
D)   the world price without the tariff is greater than the price of lumber without trade.E) C) and D)
F) A) and D)

Question 20

The North American Free Trade Agreement

Accepted Answer

A)   is an example of the unilateral approach to free trade.
B)   eliminated tariffs on imports to North America from the rest of the world.
C)   reduced trade restrictions among Canada, Mexico and the United States.
D)   All of the above are correct.E) A) and B)
F) All of the above

Exam 9: Application: International Trade

The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy. If the world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2 per pound, then Aviana should export goose meat.

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Suppose Iran imposes a tariff on lumber. For the tariff to have any effect, it must be the case that

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A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

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

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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

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Figure 9-12 -Refer to Figure 9-12. Consumer surplus after trade is

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

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

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Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. With free trade, producer surplus is

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Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

Correct AnswerverifiedShow Answer

Figure 9-12 -Refer to Figure 9-12. Equilibrium price and equilibrium quantity without trade are

Correct AnswerverifiedShow Answer

"Trade raises the economic well­being of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods, but it is not correct for a nation that imports manufactured goods.

Correct AnswerverifiedShow Answer

Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,

Correct AnswerverifiedShow Answer

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe countr...View AnswerShow Answer

NAFTA is an example of a multilateral approach to achieving free trade.

Correct AnswerverifiedShow Answer

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Correct AnswerverifiedShow Answer

The North American Free Trade Agreement

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A tax on an imported good is called a .

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Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland. -Refer to Figure 9-18. If Isoland allows international trade and the world price of peaches is $5, then

Correct AnswerverifiedShow Answer

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"Trade raises the economic wellbeing of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods, but it is not correct for a nation that imports manufactured goods.

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The countr...
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