Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Suppose France imposes a tariff on wine of 3 euros per bottle.If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers,with the tariff,is 8 million bottles per year,then we can conclude that

Accepted Answer

A)  the quantity of wine demanded by France, with the tariff, is 18 million bottles per year. 
B)  the quantity of wine demanded by France, without the tariff, would be 24 million bottles per year. 
C)  the amount of the deadweight loss is 24 million euros per year. 
D)  the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff. 
A)  the quantity of wine demanded by France, with the tariff, is 18 million bottles per year. 
B)  the quantity of wine demanded by France, without the tariff, would be 24 million bottles per year. 
C)  the amount of the deadweight loss is 24 million euros per year. 
D)  the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff.

Question 3

In a 2007 New York Times article Paul Krugman wrote that

Accepted Answer

A)  the infant-industry argument works well as an argument in favor of protection for the U.S. steel industry. 
B)  the negative effects of third world exports on U.S. wages may be increasing. 
C)  there are social gains to the U.S. from free trade. 
D)  high wage countries account for a growing share of U.S. imports of manufactured goods. 
A)  the infant-industry argument works well as an argument in favor of protection for the U.S. steel industry. 
B)  the negative effects of third world exports on U.S. wages may be increasing. 
C)  there are social gains to the U.S. from free trade. 
D)  high wage countries account for a growing share of U.S. imports of manufactured goods.

Question 4

Figure 9-15
  
-Refer to Figure 9-15.A result of the tariff is that,relative to the free-trade situation,the quantity of saddles imported decreases by

Accepted Answer

A)  Q2 - Q1. 
B)  Q3 - Q2. 
C)  Q4 - Q3. 
D)  Q4 - Q3 + Q2 - Q1. 
A)  Q2 - Q1. 
B)  Q3 - Q2. 
C)  Q4 - Q3. 
D)  Q4 - Q3 + Q2 - Q1.

Question 5

A logical starting point from which the study of international trade begins is

Accepted Answer

A)  the recognition that not all markets are competitive. 
B)  the recognition that government intervention in markets sometimes enhances the economic welfare of the society. 
C)  the principle of absolute advantage. 
D)  the principle of comparative advantage. 
A)  the recognition that not all markets are competitive. 
B)  the recognition that government intervention in markets sometimes enhances the economic welfare of the society. 
C)  the principle of absolute advantage. 
D)  the principle of comparative advantage.

Question 6

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

Accepted Answer

A)  Canada has a comparative advantage over other countries and Canada will export tomatoes. 
B)  Canada has a comparative advantage over other countries and Canada will import tomatoes. 
C)  other countries have a comparative advantage over Canada and Canada will export tomatoes. 
D)  other countries have a comparative advantage over Canada and Canada will import tomatoes. 
A)  Canada has a comparative advantage over other countries and Canada will export tomatoes. 
B)  Canada has a comparative advantage over other countries and Canada will import tomatoes. 
C)  other countries have a comparative advantage over Canada and Canada will export tomatoes. 
D)  other countries have a comparative advantage over Canada and Canada will import tomatoes.

Question 7

Figure 9-17
  
-Refer to Figure 9-17.With free trade,total surplus is

Accepted Answer

A)  $600. 
B)  $1,200. 
C)  $1,800. 
D)  $2,400. 
A)  $600. 
B)  $1,200. 
C)  $1,800. 
D)  $2,400.

Question 8

Figure 9-12
  
-Refer to Figure 9-12.Equilibrium price and equilibrium quantity without trade are

Accepted Answer

A)  $27 and 400. 
B)  $27 and 800. 
C)  $21 and 400. 
D)  $21 and 600. 
A)  $27 and 400. 
B)  $27 and 800. 
C)  $21 and 400. 
D)  $21 and 600.

Question 9

The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy.If the world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2 per pound,then Aviana should export goose meat.

Accepted Answer

A) True 
 B)False

Question 10

The greater the elasticities of supply and demand,the smaller are the gains from trade.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

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

Question 12

Use the graph to answer the following questions about CDs.
   
a.What is the equilibrium price of CDs before trade?
b.What is the equilibrium quantity of CDs before trade?
c.What is the price of CDs after trade is allowed?
d.What is the quantity of CDs exported after trade is allowed?
e.What is the amount of consumer surplus before trade?
f.What is the amount of consumer surplus after trade?
g.What is the amount of producer surplus before trade?
h.What is the amount of producer surplus after trade?
i.What is the amount of total surplus before trade?
j.What is the amount of total surplus after trade?
k.What is the change in total surplus because of trade?

Accepted Answer

a.$12
b.50
c.$15
d.3

Question 13

Figure 9-3. The domestic country is China.
  
-Refer to Figure 9-3.With no international trade,

Accepted Answer

A)  the equilibrium price is $12 and the equilibrium quantity is 300. 
B)  the equilibrium price is $16 and the equilibrium quantity is 200. 
C)  the equilibrium price is $16 and the equilibrium quantity is 300. 
D)  the equilibrium price is $16 and the equilibrium quantity is 450. 
A)  the equilibrium price is $12 and the equilibrium quantity is 300. 
B)  the equilibrium price is $16 and the equilibrium quantity is 200. 
C)  the equilibrium price is $16 and the equilibrium quantity is 300. 
D)  the equilibrium price is $16 and the equilibrium quantity is 450.

Question 14

The nation of Woodland forbids international trade.In Woodland,you can exchange 1 pound of chicken for 5 pounds of salt.In other countries,you can exchange 1 pound of chicken for 7 pounds of salt.These facts indicate that

Accepted Answer

A)  Woodland has a comparative advantage, relative to other countries, in producing chicken. 
B)  other countries have an absolute advantage, relative to Woodland, in producing chicken. 
C)  the price of chicken in Woodland exceeds the world price of chicken. 
D)  if Woodland were to allow trade, it would export salt. 
A)  Woodland has a comparative advantage, relative to other countries, in producing chicken. 
B)  other countries have an absolute advantage, relative to Woodland, in producing chicken. 
C)  the price of chicken in Woodland exceeds the world price of chicken. 
D)  if Woodland were to allow trade, it would export salt.

Question 15

Both tariffs and import quotas

Accepted Answer

A)  increase the quantity of imports and raise the domestic price of the good. 
B)  increase the quantity of imports and lower the domestic price of the good. 
C)  decrease the quantity of imports and raise the domestic price of the good. 
D)  decrease the quantity of imports and lower the domestic price of the good. 
A)  increase the quantity of imports and raise the domestic price of the good. 
B)  increase the quantity of imports and lower the domestic price of the good. 
C)  decrease the quantity of imports and raise the domestic price of the good. 
D)  decrease the quantity of imports and lower the domestic price of the good.

Question 16

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price,then it must be the case that

Accepted Answer

A)  both consumer surplus and producer surplus increase. 
B)  consumer surplus increases and producer surplus decreases. 
C)  consumer surplus decreases and producer surplus increases. 
D)  both consumer surplus and producer surplus decrease. 
A)  both consumer surplus and producer surplus increase. 
B)  consumer surplus increases and producer surplus decreases. 
C)  consumer surplus decreases and producer surplus increases. 
D)  both consumer surplus and producer surplus decrease.

Question 17

Figure 9-1
The figure illustrates the market for wool in Scotland.
  
-Refer to Figure 9-1.In the absence of trade,the equilibrium price of wool in Scotland is

Accepted Answer

A)  $15. 
B)  $45. 
C)  $55. 
D)  $70. 
A)  $15. 
B)  $45. 
C)  $55. 
D)  $70.

Question 18

The North American Free Trade Agreement

Accepted Answer

A)  is an example of the unilateral approach to free trade. 
B)  eliminated tariffs on imports to North America from the rest of the world. 
C)  reduced trade restrictions among Canada, Mexico and the United States. 
D)  All of the above are correct. 
A)  is an example of the unilateral approach to free trade. 
B)  eliminated tariffs on imports to North America from the rest of the world. 
C)  reduced trade restrictions among Canada, Mexico and the United States. 
D)  All of the above are correct.

Question 19

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

Accepted Answer

A)  $245. 
B)  $362.50. 
C)  $367.50. 
D)  $607.50. 
A)  $245. 
B)  $362.50. 
C)  $367.50. 
D)  $607.50.

Question 20

William and Jamal live in the country of Dumexia.As a result of Dumexia's legalization of international trade in bananas,William becomes better off and Jamal becomes worse off.It follows that William is a seller,and Jamal is a buyer,of bananas.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade.

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

Suppose France imposes a tariff on wine of 3 euros per bottle.If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers,with the tariff,is 8 million bottles per year,then we can conclude that

In a 2007 New York Times article Paul Krugman wrote that

Figure 9-15 -Refer to Figure 9-15.A result of the tariff is that,relative to the free-trade situation,the quantity of saddles imported decreases by

A logical starting point from which the study of international trade begins is

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

Figure 9-17 -Refer to Figure 9-17.With free trade,total surplus is

Figure 9-12 -Refer to Figure 9-12.Equilibrium price and equilibrium quantity without trade are

The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy.If the world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2 per pound,then Aviana should export goose meat.

The greater the elasticities of supply and demand,the smaller are the gains from trade.

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

Figure 9-3. The domestic country is China. -Refer to Figure 9-3.With no international trade,

The nation of Woodland forbids international trade.In Woodland,you can exchange 1 pound of chicken for 5 pounds of salt.In other countries,you can exchange 1 pound of chicken for 7 pounds of salt.These facts indicate that

Both tariffs and import quotas

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price,then it must be the case that

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1.In the absence of trade,the equilibrium price of wool in Scotland is

The North American Free Trade Agreement

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

William and Jamal live in the country of Dumexia.As a result of Dumexia's legalization of international trade in bananas,William becomes better off and Jamal becomes worse off.It follows that William is a seller,and Jamal is a buyer,of bananas.

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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