Question 1

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.  
-Refer to Figure 9-16. The tariff

Accepted Answer

A) decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
B) decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F. 
C) increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
D) increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F. 
A) decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
B) decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F. 
C) increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
D) increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F.

Question 2

The nation of Isolani forbids international trade. In Isolani, you can exchange 1 car for 5 motorcycles. In other countries, you can exchange 1 car for 4 motorcycles. These facts indicate that

Accepted Answer

A) other countries have an absolute advantage, relative to Isolani, in producing cars. 
B) Isolani has a comparative advantage, relative to other countries, in producing cars. 
C) if Isolani were to allow trade, it would import motorcycles. 
D) the world price of motorcycles exceeds the price of motorcycles in Isolani. 
A) other countries have an absolute advantage, relative to Isolani, in producing cars. 
B) Isolani has a comparative advantage, relative to other countries, in producing cars. 
C) if Isolani were to allow trade, it would import motorcycles. 
D) the world price of motorcycles exceeds the price of motorcycles in Isolani.

Question 3

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

Accepted Answer

A) $320. 
B) $640. 
C) $845. 
D) $1,690. 
A) $320. 
B) $640. 
C) $845. 
D) $1,690.

Question 4

Figure 9-15  
-Refer to Figure 9-15. With the tariff, the price paid and quantity demanded by domestic buyers are

Accepted Answer

A) P1 and Q1. 
B) P1 and Q4. 
C) P2 and Q2. 
D) P2 and Q3. 
A) P1 and Q1. 
B) P1 and Q4. 
C) P2 and Q2. 
D) P2 and Q3.

Question 5

A tariff is a tax placed on

Accepted Answer

A) an exported good and it lowers the domestic price of the good below the world price. 
B) an exported good and it ensures that the domestic price of the good stays the same as the world price. 
C) an imported good and it lowers the domestic price of the good below the world price. 
D) an imported good and it raises the domestic price of the good above the world price. 
A) an exported good and it lowers the domestic price of the good below the world price. 
B) an exported good and it ensures that the domestic price of the good stays the same as the world price. 
C) an imported good and it lowers the domestic price of the good below the world price. 
D) an imported good and it raises the domestic price of the good above the world price.

Question 6

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. With free trade, domestic production and domestic consumption, respectively, are

Accepted Answer

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

Question 7

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach, because the multilateral approach can reduce trade restrictions abroad as well as at home.

Accepted Answer

A) True 
 B)False

Question 8

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles,

Accepted Answer

A) Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B) Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C) other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D) other countries have a comparative advantage over Vietnam and Vietnam will export textiles. 
A) Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B) Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C) other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D) other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

Question 9

After a certain nation changed its policy from one that banned international trade in wheat to one that allowed international trade in wheat, the nation began importing wheat. As a result, total surplus in the wheat market increased by $10 million. Which of the following changes could have occurred as well?

Accepted Answer

A) The price of wheat in that nation increased with the adoption of the new policy. 
B) The domestic quantity of wheat supplied increased with the adoption of the new policy. 
C) Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. 
D) Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million. 
A) The price of wheat in that nation increased with the adoption of the new policy. 
B) The domestic quantity of wheat supplied increased with the adoption of the new policy. 
C) Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. 
D) Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million.

Question 10

Suppose in the country of Jumanji that the price of coffee with no trade allowed is below the world price of coffee. If Jumanji allows free trade, will Jumanji be an importer or an exporter of coffee?

Accepted Answer

Jumanji wi

Question 11

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, how many units will domestic consumers demand, and how many units will domestic producers produce?

Accepted Answer

Domestic consumers w

Question 12

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular 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 13

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 14

Figure 9-3. The domestic country is China.  
-Refer to Figure 9-3. With trade, producer surplus in China is

Accepted Answer

A) $800. 
B) $1,200. 
C) $1,800. 
D) $2,700. 
A) $800. 
B) $1,200. 
C) $1,800. 
D) $2,700.

Question 15

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, by how much do consumer surplus, producer surplus, and producer surplus change?

Accepted Answer

With trade, consumer surplus i

Question 16

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

Accepted Answer

A) True 
 B)False

Question 17

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. 
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.

Question 18

Relative to a situation in which domestic firms do not compete with foreign firms, firms in countries that engage in free trade

Accepted Answer

A) can realize economies of scale more fully. 
B) have greater market power. 
C) experience larger producer surplus. 
D) All of the above are correct. 
A) can realize economies of scale more fully. 
B) have greater market power. 
C) experience larger producer surplus. 
D) All of the above are correct.

Question 19

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil.  
-Refer to Figure 9-14. When the country for which the figure is drawn allows international trade in crude oil,

Accepted Answer

A) consumer surplus changes from the area A + B + D to the area A. 
B) producer surplus changes from the area C to the area B + C + D. 
C) total surplus decreases by the area D. 
D) All of the above are correct. 
A) consumer surplus changes from the area A + B + D to the area A. 
B) producer surplus changes from the area C to the area B + C + D. 
C) total surplus decreases by the area D. 
D) All of the above are correct.

Question 20

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

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.

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The tariff

The nation of Isolani forbids international trade. In Isolani, you can exchange 1 car for 5 motorcycles. In other countries, you can exchange 1 car for 4 motorcycles. These facts indicate that

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

Figure 9-15 -Refer to Figure 9-15. With the tariff, the price paid and quantity demanded by domestic buyers are

A tariff is a tax placed on

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. With free trade, domestic production and domestic consumption, respectively, are

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach, because the multilateral approach can reduce trade restrictions abroad as well as at home.

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles,

Suppose in the country of Jumanji that the price of coffee with no trade allowed is below the world price of coffee. If Jumanji allows free trade, will Jumanji be an importer or an exporter of coffee?

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

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.

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With trade, producer surplus in China is

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, by how much do consumer surplus, producer surplus, and producer surplus change?

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

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

Relative to a situation in which domestic firms do not compete with foreign firms, firms in countries that engage in free trade

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14. When the country for which the figure is drawn allows international trade in crude oil,

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

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 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The tariff

The nation of Isolani forbids international trade. In Isolani, you can exchange 1 car for 5 motorcycles. In other countries, you can exchange 1 car for 4 motorcycles. These facts indicate that

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

Figure 9-15 -Refer to Figure 9-15. With the tariff, the price paid and quantity demanded by domestic buyers are

A tariff is a tax placed on

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. With free trade, domestic production and domestic consumption, respectively, are

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach, because the multilateral approach can reduce trade restrictions abroad as well as at home.

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles,

Suppose in the country of Jumanji that the price of coffee with no trade allowed is below the world price of coffee. If Jumanji allows free trade, will Jumanji be an importer or an exporter of coffee?

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

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.

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With trade, producer surplus in China is

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, by how much do consumer surplus, producer surplus, and producer surplus change?

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

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

Relative to a situation in which domestic firms do not compete with foreign firms, firms in countries that engage in free trade

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14. When the country for which the figure is drawn allows international trade in crude oil,

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

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