Question 1

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. At the world price and with free trade,

Accepted Answer

A)   the domestic quantity of calculators demanded is greater than the domestic quantity of calculators supplied.
B)   the calculator market is in equilibrium.
C)   the domestic demand for calculators is perfectly inelastic.
D)   both domestic producers of calculators and domestic consumers of calculators are better off than they were without free trade.E) A) and C)
F) A) and D)

Question 2

Trade raises the economic well-being of a nation in the sense that

Accepted Answer

A)   the gains of the winners exceed the losses of the losers.
B)   everyone in an economy gains from trade.
C)   since countries can choose what products to trade, they will pick those products that are most beneficial to society.
D)   the nation joins the international community when it begins to engage in trade.E) C) and D)
F) B) and C)

Question 3

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A)   protectionism based on the national-security argument.
B)   protectionism based on the infant-industry argument.
C)   protectionism based on the unfair-competition argument.
D)   keeping world markets relatively open.E) A) and B)
F) A) and C)

Question 4

The price of a good that prevails in a world market is called the

Accepted Answer

A)   absolute price.
B)   relative price.
C)   comparative price.
D)   world price.E) All of the above
F) B) and C)

Question 5

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 much is total surplus?

Accepted Answer

With trade...

Question 6

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

Accepted Answer

A)   Incomes of domestic citizens increase, and tricycles are a normal good.
B)   Within this country, the price of a substitute for tricycles decreases.
C)   Within this country, the price of a complement to tricycles decreases.
D)   Wages increase for domestic workers who produce tricycles.E) A) and B)
F) None of the above

Question 7

The history of the textile industry raises important questions for economic policy.

Accepted Answer

A) True 
 B)False

Question 8

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. Suppose the government imposes a tariff of $20 per unit. The deadweight loss caused by the tariff is

Accepted Answer

A)   $6,000.
B)   $9,000.
C)   $12,000.
D)   $15,000.E) A) and B)
F) C) and D)

Question 9

Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight loss of the tariff is $300 million.

Accepted Answer

A) True 
 B)False

Question 10

Figure 9-10. The figure applies to Mexico and the good is rifles. 
-Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

Accepted Answer

A)   the number of rifles bought and sold in Mexico.
B)   the number of rifles produced in Mexico.
C)   the number of rifles exported by Mexico.
D)   the number of rifles imported by Mexico.E) A) and C)
F) A) and D)

Question 11

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, consumer surplus is

Accepted Answer

A)   $625 and producer surplus is $25.
B)   $625 and producer surplus is $225.
C)   $1,225 and producer surplus is $25.
D)   $1,225 and producer surplus is $225.E) B) and C)
F) A) and D)

Question 12

When a country allows trade and becomes an exporter of a good,

Accepted Answer

A)   the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good.
B)   the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good.
C)   the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good.
D)   the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good.E) C) and D)
F) None of the above

Question 13

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Without trade, producer surplus amounts to

Accepted Answer

A)   $810.
B)   $1,620.
C)   $3,240.
D)   $6,480.E) C) and D)
F) All of the above

Question 14

When a country takes a unilateral approach to free trade, it

Accepted Answer

A)   removes trade restrictions on its own.
B)   reduces its trade restrictions while other countries do the same.
C)   does not remove trade restrictions no matter what other countries do.
D)   is willing to trade with multiple countries at once.E) A) and B)
F) C) and D)

Question 15

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. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A)   domestic producers of cardboard become better off and domestic consumers of cardboard become better off.
B)   domestic producers of cardboard become better off and domestic consumers of cardboard become worse off.
C)   domestic producers of cardboard become worse off and domestic consumers of cardboard become better off.
D)   domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.E) None of the above
F) C) and D)

Question 16

If Freedonia changes its laws to allow international trade in software and the world price is lower than its domestic price, then it must be the case that

Accepted Answer

A)   both consumer surplus and producer surplus increase.
B)   consumer surplus increases and producer surplus decreases.
C)   consumer surplus decreases and producer surplus increases.
D)   both consumer surplus and producer surplus decrease.E) A) and D)
F) B) and C)

Question 17

The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

Accepted Answer

A)   Farmland has a comparative advantage, relative to other countries, in producing beef.
B)   other countries have an absolute advantage, relative to Farmland, in producing beef.
C)   the price of beef in Farmland exceeds the world price of beef.
D)   if Farmland were to allow trade, it would export pepper.E) B) and C)
F) A) and D)

Question 18

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

Accepted Answer

A)   $14,400.
B)   $16,800.
C)   $21,600.
D)   $24,800.E) C) and D)
F) All of the above

Question 19

Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

Accepted Answer

A) True 
 B)False

Question 20

Figure 9-15 
-Refer to Figure 9-15. For the saddle market, area E represents

Accepted Answer

A)   government's revenue from the tariff.
B)   producer surplus after the tariff becomes effective.
C)   the decrease in consumer surplus, relative to the free-trade situation, as a result of the tariff.
D)   the decrease in total surplus, relative to the free-trade situation, as a result of the tariff.E) All of the above
F) A) and D)

Exam 9: Application: International Trade

In a December 2007 New York Times column Paul Krugman argued in favor of

Correct Answer
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Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

Correct Answer
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Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

Correct Answer
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When a country allows trade and becomes an exporter of a good,

Correct Answer
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The price of a good that prevails in a world market is called the

Correct Answer
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Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. At the world price and with free trade,

Correct Answer
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If Freedonia changes its laws to allow international trade in software and the world price is lower than its domestic price, then it must be the case that

Correct Answer
verified

The history of the textile industry raises important questions for economic policy.

Correct Answer
verified

The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

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. Suppose the world price in this market is $6. If the country allows free trade, how much is total surplus?

Correct Answer
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With trade...
View Answer

When a country takes a unilateral approach to free trade, it

Correct Answer
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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, consumer surplus is

Correct Answer
verified

Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight loss of the tariff is $300 million.

Correct Answer
verified

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

Correct Answer
verified

Figure 9-15 -Refer to Figure 9-15. For the saddle market, area E represents

Correct Answer
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Figure 9-12 -Refer to Figure 9-12. Consumer surplus before trade is

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. Suppose the government imposes a tariff of $20 per unit. The deadweight loss caused by the tariff is

Correct Answer
verified

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Without trade, producer surplus amounts to

Correct Answer
verified

Trade raises the economic well-being of a nation in the sense that

Correct Answer
verified

Exam 9: Application: International Trade

In a December 2007 New York Times column Paul Krugman argued in favor of

Correct AnswerverifiedShow Answer

Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

Correct AnswerverifiedShow Answer

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

Correct AnswerverifiedShow Answer

When a country allows trade and becomes an exporter of a good,

Correct AnswerverifiedShow Answer

The price of a good that prevails in a world market is called the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. At the world price and with free trade,

Correct AnswerverifiedShow Answer

If Freedonia changes its laws to allow international trade in software and the world price is lower than its domestic price, then it must be the case that

Correct AnswerverifiedShow Answer

The history of the textile industry raises important questions for economic policy.

Correct AnswerverifiedShow Answer

The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

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. Suppose the world price in this market is $6. If the country allows free trade, how much is total surplus?

Correct AnswerverifiedWith trade...View AnswerShow Answer

When a country takes a unilateral approach to free trade, it

Correct AnswerverifiedShow Answer

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, consumer surplus is

Correct AnswerverifiedShow Answer

Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight loss of the tariff is $300 million.

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15. For the saddle market, area E represents

Correct AnswerverifiedShow Answer

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

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. Suppose the government imposes a tariff of $20 per unit. The deadweight loss caused by the tariff is

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Without trade, producer surplus amounts to

Correct AnswerverifiedShow Answer

Trade raises the economic well-being of a nation in the sense that

Correct AnswerverifiedShow Answer

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With trade...
View Answer

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