Question 1

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Accepted Answer

A) benefit the United States as a whole, because they generate revenue for the government. In addition, because the goods are priced below cost, the taxes do not harm domestic consumers. 
B) benefit the United States as a whole, because they generate revenue for the government and increase producer surplus. 
C) harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D) harm the United States as a whole, because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue. 
A) benefit the United States as a whole, because they generate revenue for the government. In addition, because the goods are priced below cost, the taxes do not harm domestic consumers. 
B) benefit the United States as a whole, because they generate revenue for the government and increase producer surplus. 
C) harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D) harm the United States as a whole, because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue.

Question 2

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

Accepted Answer

A) Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off. 
B) Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off. 
C) both Guatemalan producers and consumers of coffee become better off. 
D) both Guatemalan producers and consumers of coffee become worse off. 
A) Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off. 
B) Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off. 
C) both Guatemalan producers and consumers of coffee become better off. 
D) both Guatemalan producers and consumers of coffee become worse off.

Question 3

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

Accepted Answer

A) export copper. 
B) import 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. 
B) import 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 4

Which of the following is not a commonly-advanced argument for trade restrictions?

Accepted Answer

A) the jobs argument 
B) the national-security argument 
C) the infant-industry argument 
D) the efficiency argument 
A) the jobs argument 
B) the national-security argument 
C) the infant-industry argument 
D) the efficiency argument

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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 
A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.

Question 6

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

Accepted Answer

A) $845. 
B) $1,620. 
C) $1,690. 
D) $3,240. 
A) $845. 
B) $1,620. 
C) $1,690. 
D) $3,240.

Question 7

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

Accepted Answer

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

Question 8

Figure 9-13  
-Refer to Figure 9-13. With trade, the country

Accepted Answer

A) exports 200 units of the good. 
B) exports 400 units of the good. 
C) imports 400 units of the good. 
D) imports 600 units of the good. 
A) exports 200 units of the good. 
B) exports 400 units of the good. 
C) imports 400 units of the good. 
D) imports 600 units of the good.

Question 9

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars.  
-Refer to Figure 9-8. The price corresponding to the horizontal dotted line on the graph represents the price of cars

Accepted Answer

A) after trade is allowed. 
B) before trade is allowed. 
C) that maximizes total surplus when trade is allowed. 
D) that minimizes the well-being of domestic car producers when trade is allowed. 
A) after trade is allowed. 
B) before trade is allowed. 
C) that maximizes total surplus when trade is allowed. 
D) that minimizes the well-being of domestic car producers when trade is allowed.

Question 10

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

Accepted Answer

A) More Danish-produced chips are sold in Denmark. 
B) More foreign-produced chips are sold in Denmark. 
C) Danish consumers of chips become better off. 
D) Total surplus in the Danish chip market increases. 
A) More Danish-produced chips are sold in Denmark. 
B) More foreign-produced chips are sold in Denmark. 
C) Danish consumers of chips become better off. 
D) Total surplus in the Danish chip market increases.

Question 11

Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

Accepted Answer

A) producers of incense and consumers of steel 
B) consumers of all three goods 
C) consumers of incense and producers of rugs 
D) producers of steel and consumers of incense 
A) producers of incense and consumers of steel 
B) consumers of all three goods 
C) consumers of incense and producers of rugs 
D) producers of steel and consumers of incense

Question 12

Figure 9-4. The domestic country is Nicaragua.  
-Refer to Figure 9-4. With trade, Nicaragua

Accepted Answer

A) imports 150 calculators. 
B) imports 250 calculators. 
C) exports 100 calculators. 
D) exports 250 calculators. 
A) imports 150 calculators. 
B) imports 250 calculators. 
C) exports 100 calculators. 
D) exports 250 calculators.

Question 13

The principle of comparative advantage asserts that

Accepted Answer

A) not all countries can benefit from trade with other countries. 
B) the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C) countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D) countries can become better off by specializing in what they do best. 
A) not all countries can benefit from trade with other countries. 
B) the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C) countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D) countries can become better off by specializing in what they do best.

Question 14

​We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

Accepted Answer

A) True 
 B)False

Question 15

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Accepted Answer

A) True 
 B)False

Question 16

Jamaica has a comparative advantage in the production of aluminum, but currently allows no international trade in aluminum. We can conclude that

Accepted Answer

A) ​the domestic price of aluminum in Jamaica is higher than the world price for aluminum. 
B) ​Jamaica has an absolute advantage in the production of aluminum. 
C) ​Jamaica should import aluminum. 
D) ​the domestic price of aluminum in Jamaica is lower than the world price for aluminum. 
A) ​the domestic price of aluminum in Jamaica is higher than the world price for aluminum. 
B) ​Jamaica has an absolute advantage in the production of aluminum. 
C) ​Jamaica should import aluminum. 
D) ​the domestic price of aluminum in Jamaica is lower than the world price for aluminum.

Question 17

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Accepted Answer

A) demand for tricycles from the rest of the world. 
B) supply of tricycles from the rest of the world. 
C) level of inefficiency in the domestic market caused by trade. 
D) surplus in the domestic tricycle market. 
A) demand for tricycles from the rest of the world. 
B) supply of tricycles from the rest of the world. 
C) level of inefficiency in the domestic market caused by trade. 
D) surplus in the domestic tricycle market.

Question 18

When, in our analysis of the gains and losses from international trade, we assume that a country is small, we are in effect assuming that the country

Accepted Answer

A) cannot experience significant gains or losses by trading with other countries. 
B) cannot have a significant comparative advantage over other countries. 
C) cannot affect world prices by trading with other countries. 
D) All of the above are correct. 
A) cannot experience significant gains or losses by trading with other countries. 
B) cannot have a significant comparative advantage over other countries. 
C) cannot affect world prices by trading with other countries. 
D) All of the above are correct.

Question 19

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

Accepted Answer

A) consumer surplus increases and total surplus increases in the market for that good. 
B) consumer surplus increases and total surplus decreases in the market for that good. 
C) consumer surplus decreases and total surplus increases in the market for that good. 
D) consumer surplus decreases and total surplus decreases in the market for that good. 
A) consumer surplus increases and total surplus increases in the market for that good. 
B) consumer surplus increases and total surplus decreases in the market for that good. 
C) consumer surplus decreases and total surplus increases in the market for that good. 
D) consumer surplus decreases and total surplus decreases in the market for that good.

Question 20

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. Bearing in mind that this country is "small," what would happen if there were a decrease in the price of tricycle helmets within this country, given that tricycles and tricycle helmets are complements?

Accepted Answer

A) The quantity of tricycles that this country imports would increase. 
B) The quantity of tricycles that this country imports would decrease, but the country would still be an importer of tricycles. 
C) This country would switch from being an importer of tricycles to an exporter of tricycles. 
D) The domestic price without trade would move closer to the world price. 
A) The quantity of tricycles that this country imports would increase. 
B) The quantity of tricycles that this country imports would decrease, but the country would still be an importer of tricycles. 
C) This country would switch from being an importer of tricycles to an exporter of tricycles. 
D) The domestic price without trade would move closer to the world price.

Exam 9: Application: International Trade

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

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

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

Which of the following is not a commonly-advanced argument for trade restrictions?

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

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

Figure 9-13 -Refer to Figure 9-13. With trade, the country

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8. The price corresponding to the horizontal dotted line on the graph represents the price of cars

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. With trade, Nicaragua

The principle of comparative advantage asserts that

​We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Jamaica has a comparative advantage in the production of aluminum, but currently allows no international trade in aluminum. We can conclude that

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

When, in our analysis of the gains and losses from international trade, we assume that a country is small, we are in effect assuming that the country

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

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," what would happen if there were a decrease in the price of tricycle helmets within this country, given that tricycles and tricycle helmets are complements?

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

We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.