Question 1

For any country that allows free trade,

Accepted Answer

A) domestic quantity demanded is equal to domestic quantity supplied at the world price. 
B) domestic quantity demanded is greater than domestic quantity supplied at the world price. 
C) both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported. 
D) the domestic price is equal to the world price. 
A) domestic quantity demanded is equal to domestic quantity supplied at the world price. 
B) domestic quantity demanded is greater than domestic quantity supplied at the world price. 
C) both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported. 
D) the domestic price is equal to the world price.

Question 2

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Accepted Answer

A) representatives of industry. 
B) representatives of the defense establishment. 
C) members of households. 
D) foreign government officials. 
A) representatives of industry. 
B) representatives of the defense establishment. 
C) members of households. 
D) foreign government officials.

Question 3

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Accepted Answer

A) A multilateral approach can reduce trade restrictions abroad as well as at home. 
B) A multilateral approach has the potential to result in freer trade. 
C) A multilateral approach requires the agreement of two or more nations. 
D) A multilateral approach may have political advantages. 
A) A multilateral approach can reduce trade restrictions abroad as well as at home. 
B) A multilateral approach has the potential to result in freer trade. 
C) A multilateral approach requires the agreement of two or more nations. 
D) A multilateral approach may have political advantages.

Question 4

A tax on an imported good is called a ______ .

Accepted Answer

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

Question 5

Trade decisions are based on the principle of absolute advantage.

Accepted Answer

A) True 
 B)False

Question 6

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Accepted Answer

A) The domestic price of the good increases. 
B) Consumer surplus of domestic consumers increases. 
C) Producer surplus of domestic producers increases. 
D) A deadweight loss is experienced by the domestic country. 
A) The domestic price of the good increases. 
B) Consumer surplus of domestic consumers increases. 
C) Producer surplus of domestic producers increases. 
D) A deadweight loss is experienced by the domestic country.

Question 7

Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that

Accepted Answer

A) if Canada were to allow trade, it would export hockey sticks. 
B) Canada has an absolute advantage, relative to other countries, in producing hockey sticks. 
C) Canada has a comparative advantage, relative to other countries, in producing baseball bats. 
D) All of the above are correct. 
A) if Canada were to allow trade, it would export hockey sticks. 
B) Canada has an absolute advantage, relative to other countries, in producing hockey sticks. 
C) Canada has a comparative advantage, relative to other countries, in producing baseball bats. 
D) All of the above are correct.

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

Question 9

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. 
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.

Question 10

Most economists view the United States' experience with trade as

Accepted Answer

A) one from which no firm conclusions about the virtues of free trade can be reached, due to the relatively short history of international trade in the U.S. 
B) one from which no firm conclusions about the virtues of free trade can be reached, due to the lack of trade within the U.S. throughout most of the early history of the U.S. 
C) an ongoing experiment that confirms the virtues of free trade. 
D) an ongoing experiment that calls into serious question the notion that free trade enhances the economic well-being of a nation. 
A) one from which no firm conclusions about the virtues of free trade can be reached, due to the relatively short history of international trade in the U.S. 
B) one from which no firm conclusions about the virtues of free trade can be reached, due to the lack of trade within the U.S. throughout most of the early history of the U.S. 
C) an ongoing experiment that confirms the virtues of free trade. 
D) an ongoing experiment that calls into serious question the notion that free trade enhances the economic well-being of a nation.

Question 11

Figure 9-13  
-Refer to Figure 9-13. Consumer surplus after trade is

Accepted Answer

A) $3,600. 
B) $5,400. 
C) $7,200. 
D) $8,100. 
A) $3,600. 
B) $5,400. 
C) $7,200. 
D) $8,100.

Question 12

Honduras is an importer of goose-down pillows. The world price of these pillows is $50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras

Accepted Answer

A) remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases. 
B) increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
C) increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
D) increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same. 
A) remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases. 
B) increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
C) increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
D) increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.

Question 13

Figure 9-21
The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit.  
-Refer to Figure 9-21. Producer surplus with free trade is

Accepted Answer

A) $14,000. 
B) $18,000. 
C) $24,000. 
D) $32,000. 
A) $14,000. 
B) $18,000. 
C) $24,000. 
D) $32,000.

Question 14

When a country that imports a particular good imposes an import quota on that 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 15

​Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

Accepted Answer

A) True 
 B)False

Question 16

Figure 9-17  
-Refer to Figure 9-17. The deadweight loss caused by the tariff is

Accepted Answer

A) $24. 
B) $72. 
C) $96. 
D) $144. 
A) $24. 
B) $72. 
C) $96. 
D) $144.

Question 17

The small-economy assumption is necessary to analyze the gains and losses from international trade.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

Accepted Answer

A) increases by the area B + D. 
B) increases by the area C + F. 
C) decreases by the area B + D. 
D) decreases by the area D + G. 
A) increases by the area B + D. 
B) increases by the area C + F. 
C) decreases by the area B + D. 
D) decreases by the area D + G.

Question 20

Figure 9-12  
-Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are

Accepted Answer

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

Exam 9: Application: International Trade

For any country that allows free trade,

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

A tax on an imported good is called a ______ .

Trade decisions are based on the principle of absolute advantage.

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that

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

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

Most economists view the United States' experience with trade as

Figure 9-13 -Refer to Figure 9-13. Consumer surplus after trade is

Honduras is an importer of goose-down pillows. The world price of these pillows is $50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras

Figure 9-21 The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-21. Producer surplus with free trade is

When a country that imports a particular good imposes an import quota on that good,

​Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

Figure 9-17 -Refer to Figure 9-17. The deadweight loss caused by the tariff is

The small-economy assumption is necessary to analyze the gains and losses from international trade.

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.

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

Figure 9-12 -Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are

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 Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Since a tariff can increase employment in an industry, the result is a net increase in total surplus.