Exam 9: Application: International Trade

In general, importing will always increase the wellbeing of a country if the world price of a good is lower than the domestic price.

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium price without trade, thus reducing the gains from trade.

Suppose that Australia imposes a tariff on imported computer chips.If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million and the reduction in consumer surplus is $500 million, then the deadweight loss of the tariff is $200 million.

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

'Tariffs are needed to reduce imports during times of recession in order to increase domestic output.' This statement would be most closely associated with which argument for restricting trade?

Graph 9-9 -In Graph 9-9, the free-trade price and quantity demanded would be:

If Colombia exports coffee to the rest of the world, Colombian coffee sellers benefit from higher producer surplus.Colombian coffee buyers are worse off because of lower consumer surplus, but total surplus in Colombia increases because of trade.

Graph 9-9 -In Graph 9-9, consumer surplus with free trade would be:

Serbia has a small but growing apple juice market.In the past, Serbia has not traded much apple juice with other countries but now it is considering signing an agreement freeing up its apple juice trade with Croatia.Some apple juice growers are worried about the effect that opening up trade will have on their new industry and are meeting with the president to ask him to do something to protect them.What argument might they make to the president? Do they have a good point?

Economists like the infant industry argument because it is easy to implement in practice.

Suppose that you are advising Russian policymakers on trade issues, and the issue of protection for the Russian vodka industry comes up.You argue in favour of free trade but the policymakers are convinced that some protection is needed.They are leaning in favour of an import quota.What will you tell them about the relative effects of import quotas and equivalent tariffs on the wellbeing of Russian vodka producers, Russian vodka consumers and the Russian government budget?

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

Graph 9-9 -In Graph 9-9, producer surplus with free trade would be:

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

Australia should always be a net exporter of wheat.

Graph 9-8 -According to Graph 9-8, equilibrium price and quantity before trade would be:

As a result of Austria's tape measure trade:

A multilateral approach to free trade has the potential to increase the gains from trade more than a unilateral approach does, because the multilateral approach can reduce trade restrictions abroad as well as at home.

Which one of the According to Graph 9-1, if trade in beef is allowed, Japanese:

Graph 9-7 -According to Graph 9-7, consumer surplus after trade would be: