Question 1

When a country that imported 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 2

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 3

In recent years,which countries have taken a unilateral approach to the removal of trade restrictions?

Accepted Answer

A)  China and North Korea 
B)  Chile and South Korea 
C)  Russia and Japan 
D)  the United States and Mexico 
A)  China and North Korea 
B)  Chile and South Korea 
C)  Russia and Japan 
D)  the United States and Mexico

Question 4

Some goods can be produced at low cost only if they are produced in large quantities.This phenomenon is called

Accepted Answer

A)  marginal cost of production. 
B)  marginal benefit of size. 
C)  economies of scale. 
D)  economies of production. 
A)  marginal cost of production. 
B)  marginal benefit of size. 
C)  economies of scale. 
D)  economies of production.

Question 5

Which of the following is the most accurate statement?

Accepted Answer

A)  Protection is necessary in order for young industries to grow up and be successful. 
B)  Protection is not necessary for an industry to grow. 
C)  Protection is necessary because if young industries are not protected, they may suffer losses. 
D)  Protection may not always be necessary for infant industries, but it has proven to be useful in most cases. 
A)  Protection is necessary in order for young industries to grow up and be successful. 
B)  Protection is not necessary for an industry to grow. 
C)  Protection is necessary because if young industries are not protected, they may suffer losses. 
D)  Protection may not always be necessary for infant industries, but it has proven to be useful in most cases.

Question 6

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.
  
-Refer to Figure 9-16.The deadweight loss created by the tariff is represented by the area

Accepted Answer

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

Question 7

The world price of a pound of T-bone steak is $9.00.Before Latvia allowed trade in beef,the price of a pound of T-bone steak there was $7.50.Once Latvia began allowing trade in beef with other countries,Latvia began

Accepted Answer

A)  exporting T-bone steak and the price per pound in Latvia remained at $7.50. 
B)  exporting T-bone steak and the price per pound in Latvia increased to $9.00. 
C)  importing T-bone steak and the price per pound in Latvia remained at $7.50. 
D)  importing T-bone steak and the price per pound in Latvia increased to $9.00. 
A)  exporting T-bone steak and the price per pound in Latvia remained at $7.50. 
B)  exporting T-bone steak and the price per pound in Latvia increased to $9.00. 
C)  importing T-bone steak and the price per pound in Latvia remained at $7.50. 
D)  importing T-bone steak and the price per pound in Latvia increased to $9.00.

Question 8

Figure 9-10. The figure applies to Mexico and the good is rifles.
  
-Refer to Figure 9-10.The price and quantity of rifles in Mexico before trade is

Accepted Answer

A)  P0 and Q0. 
B)  P1 and Q1. 
C)  P2 and Q2. 
D)  P1 and Q0. 
A)  P0 and Q0. 
B)  P1 and Q1. 
C)  P2 and Q2. 
D)  P1 and Q0.

Question 9

Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches.
-Refer to Scenario 9-1.If trade in peaches is allowed,the price of peaches in the United States

Accepted Answer

A)  will increase, and this will cause consumer surplus to decrease. 
B)  will decrease, and this will cause consumer surplus to increase. 
C)  will be unaffected, and consumer surplus will be unaffected as well. 
D)  could increase or decrease or be unaffected; this cannot be determined. 
A)  will increase, and this will cause consumer surplus to decrease. 
B)  will decrease, and this will cause consumer surplus to increase. 
C)  will be unaffected, and consumer surplus will be unaffected as well. 
D)  could increase or decrease or be unaffected; this cannot be determined.

Question 10

Figure 9-5
  
-Refer to Figure 9-5.With trade,producer surplus is

Accepted Answer

A)  $80. 
B)  $150. 
C)  $210. 
D)  $245. 
A)  $80. 
B)  $150. 
C)  $210. 
D)  $245.

Question 11

The small-economy assumption is necessary to analyze the gains and losses from international trade.

Accepted Answer

A) True 
 B)False

Question 12

The before-trade price of fish in Denmark is $10.00 per pound.The world price of fish is $6.00 per pound.Denmark is a price-taker in the fish market.If Denmark begins to allow trade in fish,its consumers of fish will become

Accepted Answer

A)  better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off. 
B)  worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off. 
C)  worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off 
D)  better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off 
A)  better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off. 
B)  worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off. 
C)  worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off 
D)  better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off

Question 13

Figure 9-5
  
-Refer to Figure 9-5.The horizontal line at the world price of wagons represents the

Accepted Answer

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

Question 14

A tariff is a tax placed on

Accepted Answer

A)  an exported good and it lowers the domestic price of the good below the world price. 
B)  an exported good and it ensures that the domestic price of the good stays the same as the world price. 
C)  an imported good and it lowers the domestic price of the good below the world price. 
D)  an imported good and it raises the domestic price of the good above the world price. 
A)  an exported good and it lowers the domestic price of the good below the world price. 
B)  an exported good and it ensures that the domestic price of the good stays the same as the world price. 
C)  an imported good and it lowers the domestic price of the good below the world price. 
D)  an imported good and it raises the domestic price of the good above the world price.

Question 15

Figure 9-11
  
-Refer to Figure 9-11.Producer surplus in this market before trade is

Accepted Answer

A)  C. 
B)  B + C. 
C)  A + B + D. 
D)  B + C + D. 
A)  C. 
B)  B + C. 
C)  A + B + D. 
D)  B + C + D.

Question 16

After a certain nation changed its policy from one that banned international trade in wheat to one that allowed international trade in wheat,the nation began importing wheat.As a result,total surplus in the wheat market increased by $10 million.Which of the following changes could have occurred as well?

Accepted Answer

A)  The price of wheat in that nation increased with the adoption of the new policy. 
B)  The domestic quantity of wheat supplied increased with the adoption of the new policy. 
C)  Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. 
D)  Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million. 
A)  The price of wheat in that nation increased with the adoption of the new policy. 
B)  The domestic quantity of wheat supplied increased with the adoption of the new policy. 
C)  Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. 
D)  Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million.

Question 17

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 18

The price of a good that prevails in a world market is called the

Accepted Answer

A)  absolute price. 
B)  relative price. 
C)  comparative price. 
D)  world price. 
A)  absolute price. 
B)  relative price. 
C)  comparative price. 
D)  world price.

Question 19

Figure 9-2
  
-Refer to Figure 9-2.If this country chooses to trade,the price of baskets in this country will be

Accepted Answer

A)  $10 and 40 baskets will be sold domestically. 
B)  $10 and 105 baskets will be sold domestically. 
C)  $7 and 70 baskets will be sold domestically. 
D)  $7 and 40 baskets will be sold domestically. 
A)  $10 and 40 baskets will be sold domestically. 
B)  $10 and 105 baskets will be sold domestically. 
C)  $7 and 70 baskets will be sold domestically. 
D)  $7 and 40 baskets will be sold domestically.

Question 20

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Accepted Answer

A)  A multilateral approach can reduce trade restrictions abroad as well as at home. 
B)  A multilateral approach has the potential to result in freer trade. 
C)  A multilateral approach requires the agreement of two or more nations. 
D)  A multilateral approach may have political advantages. 
A)  A multilateral approach can reduce trade restrictions abroad as well as at home. 
B)  A multilateral approach has the potential to result in freer trade. 
C)  A multilateral approach requires the agreement of two or more nations. 
D)  A multilateral approach may have political advantages.

Exam 9: Application: International Trade.

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

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

In recent years,which countries have taken a unilateral approach to the removal of trade restrictions?

Some goods can be produced at low cost only if they are produced in large quantities.This phenomenon is called

Which of the following is the most accurate statement?

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16.The deadweight loss created by the tariff is represented by the area

The world price of a pound of T-bone steak is $9.00.Before Latvia allowed trade in beef,the price of a pound of T-bone steak there was $7.50.Once Latvia began allowing trade in beef with other countries,Latvia began

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10.The price and quantity of rifles in Mexico before trade is

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1.If trade in peaches is allowed,the price of peaches in the United States

Figure 9-5 -Refer to Figure 9-5.With trade,producer surplus is

The small-economy assumption is necessary to analyze the gains and losses from international trade.

The before-trade price of fish in Denmark is $10.00 per pound.The world price of fish is $6.00 per pound.Denmark is a price-taker in the fish market.If Denmark begins to allow trade in fish,its consumers of fish will become

Figure 9-5 -Refer to Figure 9-5.The horizontal line at the world price of wagons represents the

A tariff is a tax placed on

Figure 9-11 -Refer to Figure 9-11.Producer surplus in this market before trade is

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?

The price of a good that prevails in a world market is called the

Figure 9-2 -Refer to Figure 9-2.If this country chooses to trade,the price of baskets in this country will be

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

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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