Question 1

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Accepted Answer

A) People face tradeoffs. 
B) Trade can make everyone better off. 
C) Governments can sometimes improve market outcomes. 
D) Prices rise when the government prints too much money. 
A) People face tradeoffs. 
B) Trade can make everyone better off. 
C) Governments can sometimes improve market outcomes. 
D) Prices rise when the government prints too much money.

Question 2

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

Accepted Answer

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

Question 3

Which of the following is the most accurate statement?

Accepted Answer

A) The one argument for restricting trade that almost all economists accept as valid is the infant-industry argument. 
B) Almost all economists insist that it is never appropriate to protect "key" industries, even when there are legitimate concerns about national security. 
C) The idea that one nation might want to threaten another nation with a trade restriction is associated with the protection-as-a-bargaining-chip argument for restricting trade. 
D) The protection-as-a-bargaining-chip argument for restricting trade is also known as the infant-industry argument. 
A) The one argument for restricting trade that almost all economists accept as valid is the infant-industry argument. 
B) Almost all economists insist that it is never appropriate to protect "key" industries, even when there are legitimate concerns about national security. 
C) The idea that one nation might want to threaten another nation with a trade restriction is associated with the protection-as-a-bargaining-chip argument for restricting trade. 
D) The protection-as-a-bargaining-chip argument for restricting trade is also known as the infant-industry argument.

Question 4

Which of the following statements is true?

Accepted Answer

A) Free trade benefits a country when it exports but harms it when it imports. 
B) "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports. 
C) Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses. 
D) Free trade benefits a country both when it exports and when it imports. 
A) Free trade benefits a country when it exports but harms it when it imports. 
B) "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports. 
C) Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses. 
D) Free trade benefits a country both when it exports and when it imports.

Question 5

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 Boxland's gains from international trade in cardboard amount to

Accepted Answer

A) $88.75. 
B) $102.50. 
C) $122.50. 
D) $135.00. 
A) $88.75. 
B) $102.50. 
C) $122.50. 
D) $135.00.

Question 6

List five arguments given to support trade restrictions.

Accepted Answer

The jobs argument; the nationa

Question 7

Use the graph to answer the following questions about CDs.   
a.What is the equilibrium price of CDs before trade?
b.What is the equilibrium quantity of CDs before trade?
c.What is the price of CDs after trade is allowed?
d.What is the quantity of CDs exported after trade is allowed?
e.What is the amount of consumer surplus before trade?
f. What is the amount of consumer surplus after trade?
g. What is the amount of producer surplus before trade?
h. What is the amount of producer surplus after trade?
i. What is the amount of total surplus before trade?
j. What is the amount of total surplus after trade?
k. What is the change in total surplus because of trade?

Accepted Answer

a.$12
b.50
c.$15
d.3

Question 8

Without free trade, the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 9

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Accepted Answer

A) United States should protect its domestic steel industry from this unfair competition. 
B) harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel. 
C) harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. 
D) United States should subsidize the products it sells to Korea. 
A) United States should protect its domestic steel industry from this unfair competition. 
B) harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel. 
C) harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. 
D) United States should subsidize the products it sells to Korea.

Question 10

Suppose Japan exports televisions to the United States and imports sugar from Argentina. This situation suggests

Accepted Answer

A) Japan has a comparative advantage relative to the United States in producing televisions, and Argentina has a comparative advantage relative to Japan in producing sugar. 
B) Japan has a comparative advantage relative to the United States in producing sugar, and Argentina has a comparative advantage relative to Japan in producing televisions. 
C) Japan has an absolute advantage relative to the United States in producing televisions, and Argentina has an absolute advantage relative to Japan in producing sugar. 
D) Japan has an absolute advantage relative to Argentina in producing sugar, and the United States has an absolute advantage relative to Japan in producing televisions. 
A) Japan has a comparative advantage relative to the United States in producing televisions, and Argentina has a comparative advantage relative to Japan in producing sugar. 
B) Japan has a comparative advantage relative to the United States in producing sugar, and Argentina has a comparative advantage relative to Japan in producing televisions. 
C) Japan has an absolute advantage relative to the United States in producing televisions, and Argentina has an absolute advantage relative to Japan in producing sugar. 
D) Japan has an absolute advantage relative to Argentina in producing sugar, and the United States has an absolute advantage relative to Japan in producing televisions.

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. 
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.

Question 12

​The small country assumption is made in developing models of international trade because it applies to US markets.

Accepted Answer

A) True 
 B)False

Question 13

Using the graph below, answer the following questions about hammers.   
a.What is the equilibrium price of hammers before trade?
b.What is the equilibrium quantity of hammers before trade?
c.What is the price of hammers after trade is allowed?
d.What is the quantity of hammers imported after trade is allowed?
e.What is the amount of consumer surplus before trade?
f. What is the amount of consumer surplus after trade?
g. What is the amount of producer surplus before trade?
h. What is the amount of producer surplus after trade?
i. What is the amount of total surplus before trade?
j. What is the amount of total surplus after trade?
k. What is the change in total surplus because of trade?

Accepted Answer

a.$14
b.90
c.$10
d.8

Question 14

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

Accepted Answer

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

Question 15

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, the price of peaches in the United States

Accepted Answer

A) will be greater than the world price. 
B) will be equal to the world price. 
C) will be less than the world price. 
D) could be greater than, equal to, or less than the world price; this cannot be determined. 
A) will be greater than the world price. 
B) will be equal to the world price. 
C) will be less than the world price. 
D) could be greater than, equal to, or less than the world price; this cannot be determined.

Question 16

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. The world price for calculators represents

Accepted Answer

A) the demand for calculators from the rest of the world. 
B) the supply of calculators from the rest of the world. 
C) the level of inefficiency in the domestic market caused by trade. 
D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage. 
A) the demand for calculators from the rest of the world. 
B) the supply of calculators from the rest of the world. 
C) the level of inefficiency in the domestic market caused by trade. 
D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.

Question 17

Patterns of trade among nations are primarily determined by

Accepted Answer

A) cultural considerations. 
B) political considerations. 
C) comparative advantage. 
D) differences in the income elasticity of demand among nations. 
A) cultural considerations. 
B) political considerations. 
C) comparative advantage. 
D) differences in the income elasticity of demand among nations.

Question 18

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 and international trade is allowed. Then Boxland's consumers demand

Accepted Answer

A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 
B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. 
D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 
A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 
B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. 
D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard.

Question 19

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

Accepted Answer

A) domestic producers gain and domestic consumers lose. 
B) domestic producers lose and domestic consumers gain. 
C) domestic producers and domestic consumers both gain. 
D) domestic producers and domestic consumers both lose. 
A) domestic producers gain and domestic consumers lose. 
B) domestic producers lose and domestic consumers gain. 
C) domestic producers and domestic consumers both gain. 
D) domestic producers and domestic consumers both lose.

Question 20

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. A result of this country allowing international trade in crude oil is as follows:

Accepted Answer

A) The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel. 
B) The effect on the well-being of domestic crude-oil consumers is unclear in that they now buy more crude oil, but at a higher price per barrel. 
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases, while the effect on domestic consumer surplus is unclear. 
D) All of the above are correct. 
A) The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel. 
B) The effect on the well-being of domestic crude-oil consumers is unclear in that they now buy more crude oil, but at a higher price per barrel. 
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases, while the effect on domestic consumer surplus is unclear. 
D) All of the above are correct.

With which of the Ten Principles of Economics is the study of international trade most closely connected?

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

Which of the following is the most accurate statement?

Which of the following statements is true?

List five arguments given to support trade restrictions.

Without free trade, the domestic price of a good must be equal to the world price of a good.

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Suppose Japan exports televisions to the United States and imports sugar from Argentina. This situation suggests

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

The small country assumption is made in developing models of international trade because it applies to US markets.

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

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, the price of peaches in the United States

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. The world price for calculators represents

Patterns of trade among nations are primarily determined by

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

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. A result of this country allowing international trade in crude oil is as follows:

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

With which of the Ten Principles of Economics is the study of international trade most closely connected?

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

Which of the following is the most accurate statement?

Which of the following statements is true?

List five arguments given to support trade restrictions.

Without free trade, the domestic price of a good must be equal to the world price of a good.

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Suppose Japan exports televisions to the United States and imports sugar from Argentina. This situation suggests

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

​The small country assumption is made in developing models of international trade because it applies to US markets.

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

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, the price of peaches in the United States

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. The world price for calculators represents

Patterns of trade among nations are primarily determined by

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

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. A result of this country allowing international trade in crude oil is as follows:

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

The small country assumption is made in developing models of international trade because it applies to US markets.