Question 1

Now that Austria is open to trade, it is:

Accepted Answer

A) an importer of tape measures and a price taker 
B) an importer of tape measures but imposes a quota on imports 
C) an exporter of tape measures but imposes a quota on exports 
D) an importer of tape measures but imposes a tariff on imports 
A) an importer of tape measures and a price taker 
B) an importer of tape measures but imposes a quota on imports 
C) an exporter of tape measures but imposes a quota on exports 
D) an importer of tape measures but imposes a tariff on imports

Question 2

Graph 9-8  
-According to Graph 9-8, domestic production and domestic consumption after trade would be:

Accepted Answer

A) 600, 600 
B) 600, 300 
C) 300, 900 
D) 600, 900 
A) 600, 600 
B) 600, 300 
C) 300, 900 
D) 600, 900

Question 3

"Lower costs through economies of scale" refers to:

Accepted Answer

A) one of the reasons for restricting international trade 
B) the advantage that can sometimes arise when companies can sell to international markets 
C) the way in which big companies can dominate domestic markets when there is no trade 
D) the increased variety of goods that can be accessed in a free-trade economy 
A) one of the reasons for restricting international trade 
B) the advantage that can sometimes arise when companies can sell to international markets 
C) the way in which big companies can dominate domestic markets when there is no trade 
D) the increased variety of goods that can be accessed in a free-trade economy

Question 4

Graph 9-7  
-According to Graph 9-7, equilibrium price and quantity before trade would be:

Accepted Answer

A) $20, 2000 
B) $20, 2400 
C) $10, 2000 
D) $10, 2400 
A) $20, 2000 
B) $20, 2400 
C) $10, 2000 
D) $10, 2400

Question 5

Graph 9-6
This graph refers to the market for oil in Spain.  
-According to Graph 9-6, producer surplus plus consumer surplus in Spain after trade would be:

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 6

A multilateral approach to free trade is about involving large corporations in trade negotiations.

Accepted Answer

A) True 
 B)False

Question 7

According to this statement, if trade in corn is allowed, Australian consumers of corn:

Accepted Answer

A) will be better off 
B) will be worse off 
C) will be unaffected 
D) could be better off or worse off 
A) will be better off 
B) will be worse off 
C) will be unaffected 
D) could be better off or worse off

Question 8

Graph 9-4
This graph refers to the market for kiwifruit in New Zealand.  
-According to Graph 9-4, total surplus in New Zealand after the trade in kiwifruit 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 9

Graph 9-5
This graph refers to the market for oil in Spain.  
-According to Graph 9-5, the quantity of oil imported into Spain is:

Accepted Answer

A) q₀ 
B) Q₁ 
C) Q₂ 
D) Q₂ minus Q₁ 
A) q₀ 
B) Q₁ 
C) Q₂ 
D) Q₂ minus Q₁

Question 10

Economists contend that imposing trade restrictions in order to protect industries for national security reasons is never justified.

Accepted Answer

A) True 
 B)False

Question 11

One of the important outcomes of international trade is that countries specialise in the output of things they are best at.

Accepted Answer

A) True 
 B)False

Question 12

Import quotas make domestic buyers better off and domestic sellers worse off.

Accepted Answer

A) True 
 B)False

Question 13

Graph 9-9  
-Which of the following is NOT an argument for restricting trade?

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 14

Which of the following is NOT a claim policymakers often use to justify imposing a tariff?

Accepted Answer

A) protection is necessary in order for young industries to grow up and be successful 
B) the threat of a trade restriction will encourage other countries to remove existing trade restrictions 
C) protection is sometimes necessary because many countries protect their industries 
D) trade restrictions will cause wages in certain domestic industries to rise 
A) protection is necessary in order for young industries to grow up and be successful 
B) the threat of a trade restriction will encourage other countries to remove existing trade restrictions 
C) protection is sometimes necessary because many countries protect their industries 
D) trade restrictions will cause wages in certain domestic industries to rise

Question 15

When goods that are produced in China are sold to Australia, the goods are:

Accepted Answer

A) exported by Australia and imported by China 
B) imported by Australia and exported by China 
C) exported by Australia and exported by China 
D) imported by Australia and imported by China 
A) exported by Australia and imported by China 
B) imported by Australia and exported by China 
C) exported by Australia and exported by China 
D) imported by Australia and imported by China

Question 16

A country is deemed to have a comparative advantage in a product if:

Accepted Answer

A) the world price is lower than its domestic price 
B) the world price is higher than its domestic price 
C) the world price is equal to its domestic price 
D) none of the above 
A) the world price is lower than its domestic price 
B) the world price is higher than its domestic price 
C) the world price is equal to its domestic price 
D) none of the above

Question 17

When a government imposes a tariff on a product, the domestic price will equal the world price.

Accepted Answer

A) True 
 B)False

Question 18

According to this statement, if a quota on corn is then imposed, the price of corn in Australia:

Accepted Answer

A) will fall compared to the price with free trade 
B) will remain the same as with free trade 
C) will rise compared to the price with free trade 
D) will remain the same as before trade 
A) will fall compared to the price with free trade 
B) will remain the same as with free trade 
C) will rise compared to the price with free trade 
D) will remain the same as before trade

Question 19

When a quota is imposed on a market, the:

Accepted Answer

A) supply curve (above the world price) shifts to the right by the amount of the quota 
B) supply curve (above the world price) shifts to the left by the amount of the quota 
C) demand curve (above the world price) shifts to the right by the amount of the quota 
D) demand curve (above the world price) shifts to the left by the amount of the quota 
A) supply curve (above the world price) shifts to the right by the amount of the quota 
B) supply curve (above the world price) shifts to the left by the amount of the quota 
C) demand curve (above the world price) shifts to the right by the amount of the quota 
D) demand curve (above the world price) shifts to the left by the amount of the quota

Question 20

Sometimes countries suffer a net loss of jobs due to free trade, because they do not have a comparative advantage in producing anything.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

Now that Austria is open to trade, it is:

Graph 9-8 -According to Graph 9-8, domestic production and domestic consumption after trade would be:

"Lower costs through economies of scale" refers to:

Graph 9-7 -According to Graph 9-7, equilibrium price and quantity before trade would be:

Graph 9-6 This graph refers to the market for oil in Spain. -According to Graph 9-6, producer surplus plus consumer surplus in Spain after trade would be:

A multilateral approach to free trade is about involving large corporations in trade negotiations.

According to this statement, if trade in corn is allowed, Australian consumers of corn:

Graph 9-4 This graph refers to the market for kiwifruit in New Zealand. -According to Graph 9-4, total surplus in New Zealand after the trade in kiwifruit is:

Graph 9-5 This graph refers to the market for oil in Spain. -According to Graph 9-5, the quantity of oil imported into Spain is:

Economists contend that imposing trade restrictions in order to protect industries for national security reasons is never justified.

One of the important outcomes of international trade is that countries specialise in the output of things they are best at.

Import quotas make domestic buyers better off and domestic sellers worse off.

Graph 9-9 -Which of the following is NOT an argument for restricting trade?

Which of the following is NOT a claim policymakers often use to justify imposing a tariff?

When goods that are produced in China are sold to Australia, the goods are:

A country is deemed to have a comparative advantage in a product if:

When a government imposes a tariff on a product, the domestic price will equal the world price.

According to this statement, if a quota on corn is then imposed, the price of corn in Australia:

When a quota is imposed on a market, the:

Sometimes countries suffer a net loss of jobs due to free trade, because they do not have a comparative advantage in producing anything.

Ten Lessons From 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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