Question 1

A common argument in favor of restricting international trade in good x is based on the premise that

Accepted Answer

A)   international trade reduces total surplus in countries that export good x.
B)   international trade reduces total surplus in countries that import good x.
C)   international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another.
D)   trade restrictions can be useful when one country bargains with its trading partners.E) None of the above
F) C) and D)

Question 2

If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the tariff.

Accepted Answer

A) True 
 B)False

Question 3

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began

Accepted Answer

A)   exporting almonds and the price per pound in Uruguay remained at $3.00.
B)   exporting almonds and the price per pound in Uruguay increased to $4.50.
C)   importing almonds and the price per pound in Uruguay remained at $3.00.
D)   importing almonds and the price per pound in Uruguay increased to $4.50.E) None of the above
F) All of the above

Question 4

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Accepted Answer

A)   foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding.
B)   foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs.
C)   the critics are correct, so countries must protect their industries with tariffs or quotas.
D)   foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.E) None of the above
F) C) and D)

Question 5

The principle of comparative advantage asserts that

Accepted Answer

A)   not all countries can benefit from trade with other countries.
B)   the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good.
C)   countries can become better off by exporting goods, but they cannot become better off by importing goods.
D)   countries can become better off by specializing in what they do best.E) A) and B)
F) A) and C)

Question 6

Figure 9-11 
-Refer to Figure 9-11. The change in total surplus in this market because of trade is

Accepted Answer

A)   A, and this area represents a loss of total surplus.
B)   B, and this area represents a gain in total surplus.
C)   C, and this area represents a loss of total surplus.
D)   D, and this area represents a gain in total surplus.E) B) and C)
F) B) and D)

Question 7

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

Question 8

Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market. 
-Refer to Figure 9-28. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

Accepted Answer

Consumer surplus is ...

Question 9

In a December 2007 New York Times column, Paul Krugman noted that

Accepted Answer

A)   it is difficult to find instances of trade between high-wage countries in the modern era.
B)   it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern era.
C)   the United States now imports more oil and other raw materials from other advanced countries than from the third world.
D)   the United States now imports more manufactured goods from the third world than from other advanced countries.E) A) and B)
F) B) and D)

Question 10

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Accepted Answer

A) True 
 B)False

Question 11

The world price of cotton is the highest price of cotton observed anywhere in the world.

Accepted Answer

A) True 
 B)False

Question 12

If the United States imports televisions and the U.S. government imposes a tariff on televisions, then

Accepted Answer

A)   total surplus in the American television market decreases.
B)   producer surplus in the American television market increases.
C)   U.S. imports of foreign televisions decrease.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 13

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-22. With free trade, consumer surplus is

Accepted Answer

A)   $48,000 and producer surplus is $48,000.
B)   $18,000 and producer surplus is $12,000.
C)   $108,000 and producer surplus is $12,000.
D)   $18,000 and producer surplus is $48,000.E) A) and B)
F) A) and C)

Question 14

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, relative to the no-trade situation, international trade in cardboard

Accepted Answer

A)   benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660.
B)   harms Boxlandian consumers by $736 and harms Boxlandian producers by $598.
C)   harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864.
D)   harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984.E) C) and D)
F) None of the above

Question 15

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. 
-Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area

Accepted Answer

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

Question 16

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Accepted Answer

A) True 
 B)False

Question 17

Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

Accepted Answer

A)   producers of incense and consumers of steel
B)   consumers of all three goods
C)   consumers of incense and producers of rugs
D)   producers of steel and consumers of incenseE) None of the above
F) B) and C)

Question 18

Figure 9-4. The domestic country is Nicaragua. 
-Refer to Figure 9-4. Which of the following statements is accurate?

Accepted Answer

A)   Consumer surplus with trade is $3,200.
B)   Producer surplus with trade is $375.
C)   The gains from trade amount to $800.
D)   The gains from trade are represented on the graph by the area bounded by the points 0, $12) , 300, $12) , 300, $7)  and 0, $7) .E) A) and D)
F) A) and C)

Question 19

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Accepted Answer

A)   People face tradeoffs.
B)   Trade can make everyone better off.
C)   Governments can sometimes improve market outcomes.
D)   Prices rise when the government prints too much money.E) All of the above
F) A) and B)

Question 20

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, then it will be an exporter of peaches if and only if the world price of peaches is

Accepted Answer

A)   above $2.
B)   below $4.
C)   above $4.
D)   below $7.E) A) and B)
F) A) and C)

Exam 9: Application: International Trade

A common argument in favor of restricting international trade in good x is based on the premise that

Correct Answer
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Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. With free trade, consumer surplus is

Correct Answer
verified

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, then it will be an exporter of peaches if and only if the world price of peaches is

Correct Answer
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Figure 9-11 -Refer to Figure 9-11. The change in total surplus in this market because of trade is

Correct Answer
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The world price of cotton is the highest price of cotton observed anywhere in the world.

Correct Answer
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Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area

Correct Answer
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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

Correct Answer
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If the United States imports televisions and the U.S. government imposes a tariff on televisions, then

Correct Answer
verified

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Correct Answer
verified

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Correct Answer
verified

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Correct Answer
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The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began

Correct Answer
verified

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Correct Answer
verified

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. Which of the following statements is accurate?

Correct Answer
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Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

Correct Answer
verified
Consumer surplus is ...
View Answer

Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

Correct Answer
verified

In a December 2007 New York Times column, Paul Krugman noted that

Correct Answer
verified

The principle of comparative advantage asserts that

Correct Answer
verified

Correct Answer
verified

If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the tariff.

Correct Answer
verified

Exam 9: Application: International Trade

A common argument in favor of restricting international trade in good x is based on the premise that

Correct AnswerverifiedShow Answer

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. With free trade, consumer surplus is

Correct AnswerverifiedShow Answer

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, then it will be an exporter of peaches if and only if the world price of peaches is

Correct AnswerverifiedShow Answer

Figure 9-11 -Refer to Figure 9-11. The change in total surplus in this market because of trade is

Correct AnswerverifiedShow Answer

The world price of cotton is the highest price of cotton observed anywhere in the world.

Correct AnswerverifiedShow Answer

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the United States imports televisions and the U.S. government imposes a tariff on televisions, then

Correct AnswerverifiedShow Answer

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Correct AnswerverifiedShow Answer

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Correct AnswerverifiedShow Answer

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Correct AnswerverifiedShow Answer

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began

Correct AnswerverifiedShow Answer

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Correct AnswerverifiedShow Answer

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. Which of the following statements is accurate?

Correct AnswerverifiedShow Answer

Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

Correct AnswerverifiedConsumer surplus is ...View AnswerShow Answer

Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

Correct AnswerverifiedShow Answer

In a December 2007 New York Times column, Paul Krugman noted that

Correct AnswerverifiedShow Answer

The principle of comparative advantage asserts that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the tariff.

Correct AnswerverifiedShow Answer

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Consumer surplus is ...
View Answer

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