Question 1

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

Accepted Answer

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

Question 2

Figure 9-25
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit.  
-Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. With trade and a tariff, total surplus is

Accepted Answer

A) $1,700. 
B) $1,800. 
C) $1,900. 
D) $2,000. 
A) $1,700. 
B) $1,800. 
C) $1,900. 
D) $2,000.

Question 3

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. 
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.

Question 4

Figure 9-11  
-Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is

Accepted Answer

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

Question 5

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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Accepted Answer

With trade, consumer surplus f

Question 6

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 produces which of the following results for Boxland?

Accepted Answer

A) It decreases consumer surplus, increases producer surplus, and decreases total surplus. 
B) It decreases consumer surplus, increases producer surplus, and increases total surplus. 
C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus. 
D) It increases consumer surplus, increases producer surplus, and increases total surplus. 
A) It decreases consumer surplus, increases producer surplus, and decreases total surplus. 
B) It decreases consumer surplus, increases producer surplus, and increases total surplus. 
C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus. 
D) It increases consumer surplus, increases producer surplus, and increases total surplus.

Question 7

Suppose Ecuador imposes a tariff on imported bananas. If the increase in producer surplus is $50 million, the reduction in consumer surplus is $150 million, and the deadweight loss of the tariff is $30 million, then the tariff generates $130 million in revenue for the government.

Accepted Answer

A) True 
 B)False

Question 8

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. In the absence of trade, the equilibrium price of coffee in Guatemala is

Accepted Answer

A) $30. 
B) $90. 
C) $110. 
D) $140. 
A) $30. 
B) $90. 
C) $110. 
D) $140.

Question 9

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. With free trade, the country

Accepted Answer

A) exports 20 units of the good. 
B) imports 20 units of the good. 
C) exports 30 units of the good. 
D) imports 30 units of the good. 
A) exports 20 units of the good. 
B) imports 20 units of the good. 
C) exports 30 units of the good. 
D) imports 30 units of the good.

Question 10

​Figure 9-26
The diagram below illustrates the market for baseballs in the U.S.  
-Refer to figure 9-26. After the opening of the baseball market to international trade, producer surplus in the U.S.

Accepted Answer

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

Question 11

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

Accepted Answer

A) The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases. 
B) The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
C) The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
D) The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change. 
A) The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases. 
B) The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
C) The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
D) The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change.

Question 12

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, U.S. producers of peaches

Accepted Answer

A) will be better off. 
B) will be worse off. 
C) will be unaffected. 
D) will experience a decrease in their collective producer surplus. 
A) will be better off. 
B) will be worse off. 
C) will be unaffected. 
D) will experience a decrease in their collective producer surplus.

Question 13

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

Accepted Answer

A) cause these factories to pay the U.S. minimum wage. 
B) increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C) increase poverty in poor countries and benefit U.S. firms which compete with these imports. 
D) harm U.S. firms which compete with these imports. 
A) cause these factories to pay the U.S. minimum wage. 
B) increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C) increase poverty in poor countries and benefit U.S. firms which compete with these imports. 
D) harm U.S. firms which compete with these imports.

Question 14

Figure 9-3. The domestic country is China.  
-Refer to Figure 9-3. With trade, China will

Accepted Answer

A) import 100 pencil sharpeners. 
B) import 250 pencil sharpeners. 
C) export 150 pencil sharpeners. 
D) export 250 pencil sharpeners. 
A) import 100 pencil sharpeners. 
B) import 250 pencil sharpeners. 
C) export 150 pencil sharpeners. 
D) export 250 pencil sharpeners.

Question 15

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, the domestic price and domestic quantity demanded are

Accepted Answer

A) $30 and 1,200. 
B) $40 and 800. 
C) $30 and 800. 
D) $40 and 1,600. 
A) $30 and 1,200. 
B) $40 and 800. 
C) $30 and 800. 
D) $40 and 1,600.

Question 16

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges,

Accepted Answer

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

Question 17

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

Accepted Answer

A) The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers. 
B) The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. 
C) The quotas are probably the result of lobbying from foreign producers of sugar. The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers. 
D) U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them. 
A) The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers. 
B) The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. 
C) The quotas are probably the result of lobbying from foreign producers of sugar. The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers. 
D) U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them.

Question 18

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. The deadweight loss caused by the tariff is

Accepted Answer

A) $25. 
B) $50. 
C) $75. 
D) $100. 
A) $25. 
B) $50. 
C) $75. 
D) $100.

Question 19

When a country allows international trade and becomes an importer of a good,

Accepted Answer

A) domestic producers of the good become better off. 
B) domestic consumers of the good become better off. 
C) the gains of the winners fall short of the losses of the losers. 
D) All of the above are correct. 
A) domestic producers of the good become better off. 
B) domestic consumers of the good become better off. 
C) the gains of the winners fall short of the losses of the losers. 
D) All of the above are correct.

Question 20

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. Consumer surplus with free trade is

Accepted Answer

A) $4,000. 
B) $8,000. 
C) $16,000. 
D) $18,000. 
A) $4,000. 
B) $8,000. 
C) $16,000. 
D) $18,000.

Exam 9: Application: International Trade

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

Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. With trade and a tariff, total surplus is

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

Figure 9-11 -Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is

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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Suppose Ecuador imposes a tariff on imported bananas. If the increase in producer surplus is $50 million, the reduction in consumer surplus is $150 million, and the deadweight loss of the tariff is $30 million, then the tariff generates $130 million in revenue for the government.

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. In the absence of trade, the equilibrium price of coffee in Guatemala is

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. With free trade, the country

​Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to figure 9-26. After the opening of the baseball market to international trade, producer surplus in the U.S.

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

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, U.S. producers of peaches

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With trade, China will

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, the domestic price and domestic quantity demanded are

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges,

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

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. The deadweight loss caused by the tariff is

When a country allows international trade and becomes an importer of a good,

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. Consumer surplus with free trade is

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

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

Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to figure 9-26. After the opening of the baseball market to international trade, producer surplus in the U.S.