Question 1

Figure 9-17
  
-Refer to Figure 9-17.When comparing no trade to free trade,the gains from trade amount to

Accepted Answer

A)  $400. 
B)  $600. 
C)  $750. 
D)  $1,000. 
A)  $400. 
B)  $600. 
C)  $750. 
D)  $1,000.

Question 2

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 country for which the figure is drawn

Accepted Answer

A)  has a comparative advantage relative to other countries in the production of cars and it will export cars. 
B)  has a comparative advantage relative to other countries in the production of cars and it will import cars. 
C)  has a comparative disadvantage relative to other countries in the production of cars and it will export cars. 
D)  has a comparative disadvantage relative to other countries in the production of cars and it will import cars. 
A)  has a comparative advantage relative to other countries in the production of cars and it will export cars. 
B)  has a comparative advantage relative to other countries in the production of cars and it will import cars. 
C)  has a comparative disadvantage relative to other countries in the production of cars and it will export cars. 
D)  has a comparative disadvantage relative to other countries in the production of cars and it will import cars.

Question 3

Assume,for the U.S.,that the domestic price of wheat without international trade is higher than the world price of wheat.This suggests that,in the production of wheat,

Accepted Answer

A)  the U.S. has a comparative advantage over other countries and the U.S. will export wheat. 
B)  the U.S. has a comparative advantage over other countries and the U.S. will import wheat. 
C)  other countries have a comparative advantage over the U.S. and the U.S. will export wheat. 
D)  other countries have a comparative advantage over the U.S. and the U.S. will import wheat. 
A)  the U.S. has a comparative advantage over other countries and the U.S. will export wheat. 
B)  the U.S. has a comparative advantage over other countries and the U.S. will import wheat. 
C)  other countries have a comparative advantage over the U.S. and the U.S. will export wheat. 
D)  other countries have a comparative advantage over the U.S. and the U.S. will import wheat.

Question 4

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.Then,relative to the no-trade situation,international trade in cardboard

Accepted Answer

A)  benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. 
B)  harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. 
C)  harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. 
D)  harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984. 
A)  benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. 
B)  harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. 
C)  harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. 
D)  harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984.

Question 5

Figure 9-1
The figure illustrates the market for wool in Scotland.
  
-Refer to Figure 9-1.In the absence of trade,total surplus in Scotland is represented by the area

Accepted Answer

A)  A + B + C. 
B)  A + B + C + D + F. 
C)  A + B + C + D + F + G. 
D)  A + B + C + D + F + G + H. 
A)  A + B + C. 
B)  A + B + C + D + F. 
C)  A + B + C + D + F + G. 
D)  A + B + C + D + F + G + H.

Question 6

Figure 9-5
  
-Refer to Figure 9-5.Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of wagons to an exporter of wagons?

Accepted Answer

A)  Incomes of domestic citizens increase, and wagons are a normal good. 
B)  Within this country, the price of a substitute for wagons decreases. 
C)  Within this country, the price of a complement to wagons decreases. 
D)  Wages increase for domestic workers who produce wagons. 
A)  Incomes of domestic citizens increase, and wagons are a normal good. 
B)  Within this country, the price of a substitute for wagons decreases. 
C)  Within this country, the price of a complement to wagons decreases. 
D)  Wages increase for domestic workers who produce wagons.

Question 7

The two basic approaches that a country can take as a means to achieve free trade are the

Accepted Answer

A)  unilateral approach and the multilateral approach. 
B)  short-run approach and the long-run approach. 
C)  continental approach and the global approach. 
D)  industry approach and the security approach. 
A)  unilateral approach and the multilateral approach. 
B)  short-run approach and the long-run approach. 
C)  continental approach and the global approach. 
D)  industry approach and the security approach.

Question 8

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

Accepted Answer

A) True 
 B)False

Question 9

If a country allows free trade and imports cars,then it is the case that the gains to domestic producers outweigh the losses to domestic consumers.

Accepted Answer

A) True 
 B)False

Question 10

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

Accepted Answer

A)  foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. 
B)  foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C)  the critics are correct, so countries must protect their industries with tariffs or quotas. 
D)  foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs. 
A)  foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. 
B)  foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C)  the critics are correct, so countries must protect their industries with tariffs or quotas. 
D)  foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.

Question 11

Figure 9-4. The domestic country is Nicaragua.
  
-Refer to Figure 9-4.Which of the following statements is accurate?

Accepted Answer

A)  Consumer surplus with trade is $3,200. 
B)  Producer surplus with trade is $375. 
C)  The gains from trade amount to $800. 
D)  The gains from trade are represented on the graph by the area bounded by the points (0, $12), (300, $12), (300, $7) and (0, $7). 
A)  Consumer surplus with trade is $3,200. 
B)  Producer surplus with trade is $375. 
C)  The gains from trade amount to $800. 
D)  The gains from trade are represented on the graph by the area bounded by the points (0, $12), (300, $12), (300, $7) and (0, $7).

Question 12

A possible outcome of the multilateral approach to free trade is that such an approach can

Accepted Answer

A)  win political support when a unilateral approach cannot. 
B)  result in more restricted trade than under a unilateral approach, when international negotiations fail. 
C)  result in drastic reductions in tariffs for many countries. 
D)  All of the above are correct. 
A)  win political support when a unilateral approach cannot. 
B)  result in more restricted trade than under a unilateral approach, when international negotiations fail. 
C)  result in drastic reductions in tariffs for many countries. 
D)  All of the above are correct.

Question 13

Figure 9-17
  
-Refer to Figure 9-17.Without trade,consumer surplus is

Accepted Answer

A)  $400 and producer surplus is $200. 
B)  $400 and producer surplus is $800. 
C)  $1,600 and producer surplus is $200. 
D)  $1,600 and producer surplus is $800. 
A)  $400 and producer surplus is $200. 
B)  $400 and producer surplus is $800. 
C)  $1,600 and producer surplus is $200. 
D)  $1,600 and producer surplus is $800.

Question 14

An import quota

Accepted Answer

A)  is preferable to a tariff since an import quota does not create a deadweight loss. 
B)  is a tax on imported goods. 
C)  reduces the welfare of domestic consumers. 
D)  reduces the welfare of domestic producers. 
A)  is preferable to a tariff since an import quota does not create a deadweight loss. 
B)  is a tax on imported goods. 
C)  reduces the welfare of domestic consumers. 
D)  reduces the welfare of domestic producers.

Question 15

Figure 9-15
  
-Refer to Figure 9-15.Consumer surplus with the tariff is

Accepted Answer

A)  A. 
B)  A + B. 
C)  A + C + G. 
D)  A + B + C + D +E + F. 
A)  A. 
B)  A + B. 
C)  A + C + G. 
D)  A + B + C + D +E + F.

Question 16

Tariffs and quotas are different in the sense that

Accepted Answer

A)  tariffs cause deadweight losses, while quotas do not cause deadweight losses. 
B)  tariffs raise revenue for the government, while quotas do not raise revenue for the government. 
C)  tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers. 
D)  tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of domestic producers. 
A)  tariffs cause deadweight losses, while quotas do not cause deadweight losses. 
B)  tariffs raise revenue for the government, while quotas do not raise revenue for the government. 
C)  tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers. 
D)  tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of domestic producers.

Question 17

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

Accepted Answer

A)  $80.00. 
B)  $210.00. 
C)  $245.50. 
D)  $472.50. 
A)  $80.00. 
B)  $210.00. 
C)  $245.50. 
D)  $472.50.

Question 18

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.When the country for which the figure is drawn allows international trade in crude oil,

Accepted Answer

A)  consumer surplus changes from the area A + B + D to the area A. 
B)  producer surplus changes from the area C to the area B + C + D. 
C)  total surplus decreases by the area D. 
D)  All of the above are correct. 
A)  consumer surplus changes from the area A + B + D to the area A. 
B)  producer surplus changes from the area C to the area B + C + D. 
C)  total surplus decreases by the area D. 
D)  All of the above are correct.

Question 19

Figure 9-2
  
-Refer to Figure 9-2.The world price for baskets represents

Accepted Answer

A)  the demand for baskets from the rest of the world. 
B)  the supply of baskets 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 baskets from the rest of the world. 
B)  the supply of baskets 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 20

Assume the nation of Cropland does not trade with the rest of the world.By comparing the world price of corn to the price of corn in Cropland,we can determine whether

Accepted Answer

A)  consumer surplus exceeds producer surplus in Cropland. 
B)  Cropland has an absolute advantage in producing corn. 
C)  Cropland has a comparative advantage in producing corn. 
D)  All of the above are correct. 
A)  consumer surplus exceeds producer surplus in Cropland. 
B)  Cropland has an absolute advantage in producing corn. 
C)  Cropland has a comparative advantage in producing corn. 
D)  All of the above are correct.

Exam 9: Application: International Trade.

Figure 9-17 -Refer to Figure 9-17.When comparing no trade to free trade,the gains from trade amount to

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 country for which the figure is drawn

Assume,for the U.S.,that the domestic price of wheat without international trade is higher than the world price of wheat.This suggests that,in the production of wheat,

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1.In the absence of trade,total surplus in Scotland is represented by the area

Figure 9-5 -Refer to Figure 9-5.Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of wagons to an exporter of wagons?

The two basic approaches that a country can take as a means to achieve free trade are the

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

If a country allows free trade and imports cars,then it is the case that the gains to domestic producers outweigh the losses to domestic consumers.

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4.Which of the following statements is accurate?

A possible outcome of the multilateral approach to free trade is that such an approach can

Figure 9-17 -Refer to Figure 9-17.Without trade,consumer surplus is

An import quota

Figure 9-15 -Refer to Figure 9-15.Consumer surplus with the tariff is

Tariffs and quotas are different in the sense that

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

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.When the country for which the figure is drawn allows international trade in crude oil,

Figure 9-2 -Refer to Figure 9-2.The world price for baskets represents

Assume the nation of Cropland does not trade with the rest of the world.By comparing the world price of corn to the price of corn in Cropland,we can determine whether

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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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