Question 1

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Accepted Answer

A) True 
 B)False

Question 2

Free trade allows firms to realize economies of scale, resulting in higher costs of production.

Accepted Answer

A) True 
 B)False

Question 3

When a country allows trade and becomes an importer of bottled water, which of the following is not a consequence?

Accepted Answer

A) Domestic producers become worse off, and domestic consumers become better off. 
B) The price received by domestic producers of bottled water increases. 
C) The price paid by domestic consumers of bottled water decreases. 
D) The price received by domestic producers of bottled water decreases. 
A) Domestic producers become worse off, and domestic consumers become better off. 
B) The price received by domestic producers of bottled water increases. 
C) The price paid by domestic consumers of bottled water decreases. 
D) The price received by domestic producers of bottled water decreases.

Question 4

A country has a comparative advantage in a product if the world price is _____ than that country's domestic price without trade.

Accepted Answer

The answer of A country has a comparative advantage in...

Question 5

Figure 9-2   ​
-Refer to Figure 9-2. With trade, total surplus is

Accepted Answer

A) $9,720. 
B) $3,000. 
C) $23,280. 
D) $19,440. 
A) $9,720. 
B) $3,000. 
C) $23,280. 
D) $19,440.

Question 6

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Accepted Answer

A) True 
 B)False

Question 7

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 8

According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Accepted Answer

A) True 
 B)False

Question 9

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel, then the domestic price of steel will increase as a result.

Accepted Answer

A) True 
 B)False

Question 10

The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of wine imported, and increase the quantity of wine produced domestically.

Accepted Answer

A) True 
 B)False

Question 11

In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that

Accepted Answer

A) Moldova can only import goods; it cannot export goods. 
B) Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. 
C) only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant. 
D) Moldova is a price taker. 
A) Moldova can only import goods; it cannot export goods. 
B) Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. 
C) only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant. 
D) Moldova is a price taker.

Question 12

Figure 9-2   ​
-Refer to Figure 9-2. Without trade, producer surplus amounts to

Accepted Answer

A) $19,440. 
B) $23,280. 
C) $9,720. 
D) $3,000. 
A) $19,440. 
B) $23,280. 
C) $9,720. 
D) $3,000.

Question 13

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Accepted Answer

A) True 
 B)False

Question 14

The rules established under the General Agreement on Tariffs and Trade (GATT) are enforced by an international body called the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 15

Figure 9-6  
-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.

Question 16

If Argentina exports oranges to the rest of the world, Argentina's producers of oranges are worse off, and Argentina's consumers of oranges are better off, as a result of trade.

Accepted Answer

A) True 
 B)False

Question 17

NAFTA is an example of a multilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 18

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Accepted Answer

A) True 
 B)False

Question 19

Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed. If the world price of oranges is $10 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of oranges?

Accepted Answer

Nash will

Question 20

When markets open up to international trade, we know that consumer surplus will rise.
​

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Free trade allows firms to realize economies of scale, resulting in higher costs of production.

When a country allows trade and becomes an importer of bottled water, which of the following is not a consequence?

A country has a comparative advantage in a product if the world price is _____ than that country's domestic price without trade.

Figure 9-2 ​ -Refer to Figure 9-2. With trade, total surplus is

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that 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.

According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel, then the domestic price of steel will increase as a result.

The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of wine imported, and increase the quantity of wine produced domestically.

In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that

Figure 9-2 ​ -Refer to Figure 9-2. Without trade, producer surplus amounts to

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

The rules established under the General Agreement on Tariffs and Trade (GATT) are enforced by an international body called the World Trade Organization (WTO).

Figure 9-6 -When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

If Argentina exports oranges to the rest of the world, Argentina's producers of oranges are worse off, and Argentina's consumers of oranges are better off, as a result of trade.

NAFTA is an example of a multilateral approach to achieving free trade.

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed. If the world price of oranges is $10 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of oranges?

When markets open up to international trade, we know that consumer surplus will rise. ​

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

Applications: 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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Figure 9-2 -Refer to Figure 9-2. With trade, total surplus is

Figure 9-2 -Refer to Figure 9-2. Without trade, producer surplus amounts to

When markets open up to international trade, we know that consumer surplus will rise.