Question 1

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. From the figure it is apparent that

Accepted Answer

A) Guatemala will experience a shortage of coffee if trade is not allowed. 
B) Guatemala will experience a surplus of coffee if trade is not allowed. 
C) Guatemala has a comparative advantage in producing coffee, relative to the rest of the world. 
D) foreign countries have a comparative advantage in producing coffee, relative to Guatemala. 
A) Guatemala will experience a shortage of coffee if trade is not allowed. 
B) Guatemala will experience a surplus of coffee if trade is not allowed. 
C) Guatemala has a comparative advantage in producing coffee, relative to the rest of the world. 
D) foreign countries have a comparative advantage in producing coffee, relative to Guatemala.

Question 2

Scenario 9-3
Suppose domestic demand and domestic supply in a market are given by the following equations:  
-Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. 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 3

William and Jamal live in the country of Dumexia. As a result of Dumexia's legalization of international trade in bananas, William becomes better off and Jamal becomes worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

Accepted Answer

A) True 
 B)False

Question 4

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

Accepted Answer

A) national-security argument. 
B) infant-industry argument. 
C) unfair-competition argument. 
D) jobs argument. 
A) national-security argument. 
B) infant-industry argument. 
C) unfair-competition argument. 
D) jobs argument.

Question 5

When a country that imports a particular good imposes a tariff 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 6

Figure 9-11  
-Refer to Figure 9-11. Producer surplus in this market before trade is

Accepted Answer

A) C. 
B) B + C. 
C) A + B + D. 
D) B + C + D. 
A) C. 
B) B + C. 
C) A + B + D. 
D) B + C + D.

Question 7

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are

Accepted Answer

A) P1 and Q2. 
B) P1 and Q1. 
C) P0 and Q0. 
D) P3 and Q1. 
A) P1 and Q2. 
B) P1 and Q1. 
C) P0 and Q0. 
D) P3 and Q1.

Question 8

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

Accepted Answer

A) should import apples. 
B) has a comparative advantage in apples. 
C) should produce just enough apples to meet its domestic demand. 
D) should refrain altogether from producing apples. 
A) should import apples. 
B) has a comparative advantage in apples. 
C) should produce just enough apples to meet its domestic demand. 
D) should refrain altogether from producing apples.

Question 9

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. 
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.

Question 10

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

Accepted Answer

A) $810. 
B) $1,620. 
C) $3,240. 
D) $6,480. 
A) $810. 
B) $1,620. 
C) $3,240. 
D) $6,480.

Question 11

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Accepted Answer

A) export copper, since that country has a comparative advantage in copper. 
B) import copper, since that country has a comparative advantage in copper. 
C) neither export nor import copper, since that country cannot gain from trade. 
D) neither export nor import copper, since that country already produces copper at a low cost compared to other countries. 
A) export copper, since that country has a comparative advantage in copper. 
B) import copper, since that country has a comparative advantage in copper. 
C) neither export nor import copper, since that country cannot gain from trade. 
D) neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

Question 12

Workers displaced by trade eventually find jobs in

Accepted Answer

A) another country. 
B) the government sector. 
C) the industries in which the country has a comparative advantage. 
D) a different company in the same industry. 
A) another country. 
B) the government sector. 
C) the industries in which the country has a comparative advantage. 
D) a different company in the same industry.

Question 13

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

Accepted Answer

A) domestic producers become better off, and domestic consumers become worse off. 
B) domestic producers become worse off, and domestic consumers become better off. 
C) domestic producers become better off, but the effect on the well-being of domestic consumers is ambiguous. 
D) domestic consumers become worse off, but the effect on the well-being of domestic producers is ambiguous. 
A) domestic producers become better off, and domestic consumers become worse off. 
B) domestic producers become worse off, and domestic consumers become better off. 
C) domestic producers become better off, but the effect on the well-being of domestic consumers is ambiguous. 
D) domestic consumers become worse off, but the effect on the well-being of domestic producers is ambiguous.

Question 14

Figure 9-13  
-Refer to Figure 9-13. Producer surplus before trade is

Accepted Answer

A) $3,600. 
B) $4,400. 
C) $5,200. 
D) $6,600. 
A) $3,600. 
B) $4,400. 
C) $5,200. 
D) $6,600.

Question 15

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. 
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.

Question 16

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Accepted Answer

A) because it is impossible to analyze the gains and losses from international trade without making this assumption. 
B) because then we can assume that world prices of goods are unaffected by that country's participation in international trade. 
C) in order to rule out the possibility of tariffs or quotas. 
D) All of the above are correct. 
A) because it is impossible to analyze the gains and losses from international trade without making this assumption. 
B) because then we can assume that world prices of goods are unaffected by that country's participation in international trade. 
C) in order to rule out the possibility of tariffs or quotas. 
D) All of the above are correct.

Question 17

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. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $3, then the policy change results in a

Accepted Answer

A) $15.00 decrease in producer surplus. 
B) $45.00 increase in consumer surplus. 
C) $20.00 increase in total surplus. 
D) $12.50 increase in total surplus. 
A) $15.00 decrease in producer surplus. 
B) $45.00 increase in consumer surplus. 
C) $20.00 increase in total surplus. 
D) $12.50 increase in total surplus.

Question 18

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. 
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.

Question 19

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. 
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.

Question 20

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Accepted Answer

A) True 
 B)False

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. From the figure it is apparent that

William and Jamal live in the country of Dumexia. As a result of Dumexia's legalization of international trade in bananas, William becomes better off and Jamal becomes worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

When a country that imports a particular good imposes a tariff on that good,

Figure 9-11 -Refer to Figure 9-11. Producer surplus in this market before trade is

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

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

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

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Workers displaced by trade eventually find jobs in

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

Figure 9-13 -Refer to Figure 9-13. Producer surplus before trade is

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

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

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

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

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

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

Exam 9: Application: International Trade

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. From the figure it is apparent that

William and Jamal live in the country of Dumexia. As a result of Dumexia's legalization of international trade in bananas, William becomes better off and Jamal becomes worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

When a country that imports a particular good imposes a tariff on that good,

Figure 9-11 -Refer to Figure 9-11. Producer surplus in this market before trade is

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

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

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

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Workers displaced by trade eventually find jobs in

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

Figure 9-13 -Refer to Figure 9-13. Producer surplus before trade is

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

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

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

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

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

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