Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Some time ago,the nation of Republica opened up its paper market to international trade.Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

Accepted Answer

A)  The price of paper in Republica decreased as a result of the policy change. 
B)  Republica began exporting paper as a result of the policy change. 
C)  The domestic demand curve for paper shifted to the right as a result of the policy change. 
D)  The domestic quantity of paper demanded increased as a result of the policy change. 
A)  The price of paper in Republica decreased as a result of the policy change. 
B)  Republica began exporting paper as a result of the policy change. 
C)  The domestic demand curve for paper shifted to the right as a result of the policy change. 
D)  The domestic quantity of paper demanded increased as a result of the policy change.

Question 3

Assume,for Taiwan,that the domestic price of soybeans without international trade is lower than the world price of soybeans.This suggests that,in the production of soybeans,

Accepted Answer

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

Question 4

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
  
-Refer to Figure 9-7.Which of the following is a valid equation for Welsh consumer surplus with trade?

Accepted Answer

A)  Consumer surplus with trade = (1/2)(Q0)(P1 - P0). 
B)  Consumer surplus with trade = (1/2)(Q0)(P3 - P0). 
C)  Consumer surplus with trade = (1/2)(Q1)(P3 - P1). 
D)  None of the above is correct. 
A)  Consumer surplus with trade = (1/2)(Q0)(P1 - P0). 
B)  Consumer surplus with trade = (1/2)(Q0)(P3 - P0). 
C)  Consumer surplus with trade = (1/2)(Q1)(P3 - P1). 
D)  None of the above is correct.

Question 5

Import quotas and tariffs produce similar results.Which of the following is not one of those results?

Accepted Answer

A)  The domestic price of the good increases. 
B)  Consumer surplus of domestic consumers increases. 
C)  Producer surplus of domestic producers increases. 
D)  A deadweight loss is experienced by the domestic country. 
A)  The domestic price of the good increases. 
B)  Consumer surplus of domestic consumers increases. 
C)  Producer surplus of domestic producers increases. 
D)  A deadweight loss is experienced by the domestic country.

Question 6

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

Accepted Answer

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

Question 7

If the demand curve and the supply curve for a good are straight lines,then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by

Accepted Answer

A)  the area of one triangle. 
B)  the area of one rectangle. 
C)  the combined areas of two different triangles. 
D)  the combined areas of two different rectangles. 
A)  the area of one triangle. 
B)  the area of one rectangle. 
C)  the combined areas of two different triangles. 
D)  the combined areas of two different rectangles.

Question 8

If a country's domestic price of a good is lower than the world price,then that country has a comparative advantage in producing that good.

Accepted Answer

A) True 
 B)False

Question 9

Figure 9-5
  
-Refer to Figure 9-5.If this country allows free trade in wagons,

Accepted Answer

A)  consumers will gain and producers will lose. 
B)  consumers will lose and producers will gain. 
C)  both consumers and producers will gain. 
D)  both consumers and producers will lose. 
A)  consumers will gain and producers will lose. 
B)  consumers will lose and producers will gain. 
C)  both consumers and producers will gain. 
D)  both consumers and producers will lose.

Question 10

Figure 9-5
  
-Refer to Figure 9-5.The increase in total surplus resulting from trade is

Accepted Answer

A)  $60, since producer surplus increases by $180 and consumer surplus falls by $240. 
B)  $60, since consumer surplus increases by $180 and producer surplus falls by $240. 
C)  $75, since consumer surplus increases by $240 and producer surplus falls by $165. 
D)  $75, since consumer surplus increases by $300 and producer surplus falls by $225. 
A)  $60, since producer surplus increases by $180 and consumer surplus falls by $240. 
B)  $60, since consumer surplus increases by $180 and producer surplus falls by $240. 
C)  $75, since consumer surplus increases by $240 and producer surplus falls by $165. 
D)  $75, since consumer surplus increases by $300 and producer surplus falls by $225.

Question 11

Trade raises the economic well-being of a nation in the sense that

Accepted Answer

A)  the gains of the winners exceed the losses of the losers. 
B)  everyone in an economy gains from trade. 
C)  since countries can choose what products to trade, they will pick those products that are most beneficial to society. 
D)  the nation joins the international community when it begins to engage in trade. 
A)  the gains of the winners exceed the losses of the losers. 
B)  everyone in an economy gains from trade. 
C)  since countries can choose what products to trade, they will pick those products that are most beneficial to society. 
D)  the nation joins the international community when it begins to engage in trade.

Question 12

The nation of Falconia forbids international trade.In Falconia,you can obtain a computer by trading 3 bicycles.In other countries,you can obtain a computer by trading 5 bicycles.These facts indicate that

Accepted Answer

A)  if Falconia were to allow trade, it would export computers. 
B)  Falconia has an absolute advantage, relative to other countries, in producing computers. 
C)  Falconia has a comparative advantage, relative to other countries, in producing bicycles. 
D)  All of the above are correct. 
A)  if Falconia were to allow trade, it would export computers. 
B)  Falconia has an absolute advantage, relative to other countries, in producing computers. 
C)  Falconia has a comparative advantage, relative to other countries, in producing bicycles. 
D)  All of the above are correct.

Question 13

If the world price of a good is greater than the domestic price in a country that can engage in international trade,then that country becomes an importer of that good.

Accepted Answer

A) True 
 B)False

Question 14

Figure 9-3. The domestic country is China.
  
-Refer to Figure 9-3.With trade,China will

Accepted Answer

A)  import 100 pencil sharpeners. 
B)  import 250 pencil sharpeners. 
C)  export 150 pencil sharpeners. 
D)  export 250 pencil sharpeners. 
A)  import 100 pencil sharpeners. 
B)  import 250 pencil sharpeners. 
C)  export 150 pencil sharpeners. 
D)  export 250 pencil sharpeners.

Question 15

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 tariff

Accepted Answer

A)  decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
B)  decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F. 
C)  increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
D)  increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F. 
A)  decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
B)  decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F. 
C)  increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
D)  increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F.

Question 16

For a country that is considering the adoption of either a tariff or an import quota on a particular good,an important difference is that

Accepted Answer

A)  an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus. 
B)  an import quota has no effect on producer surplus, while a tariff decreases producer surplus. 
C)  a tariff raises total surplus, while an import quota does not. 
D)  a tariff raises revenue for that country's government, while an import quota does not. 
A)  an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus. 
B)  an import quota has no effect on producer surplus, while a tariff decreases producer surplus. 
C)  a tariff raises total surplus, while an import quota does not. 
D)  a tariff raises revenue for that country's government, while an import quota does not.

Question 17

If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price,

Accepted Answer

A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither. 
A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

Question 18

Finland allows trade with the rest of the world.We can determine whether Finland has a comparative advantage in producing pork if we

Accepted Answer

A)  know whether Finland imports or exports pork. 
B)  compare the world price of pork to the price of pork that would prevail in Finland if trade with the rest of the world were not allowed. 
C)  compare the quantity of pork consumed in Finland with the quantity of pork that would be consumed in Finland if trade with the rest of the world were not allowed. 
D)  All of the above are correct. 
A)  know whether Finland imports or exports pork. 
B)  compare the world price of pork to the price of pork that would prevail in Finland if trade with the rest of the world were not allowed. 
C)  compare the quantity of pork consumed in Finland with the quantity of pork that would be consumed in Finland if trade with the rest of the world were not allowed. 
D)  All of the above are correct.

Question 19

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
  
-Refer to Figure 9-7.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

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

Question 20

According to the principle of comparative advantage,all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade.

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

Some time ago,the nation of Republica opened up its paper market to international trade.Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

Assume,for Taiwan,that the domestic price of soybeans without international trade is lower than the world price of soybeans.This suggests that,in the production of soybeans,

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.Which of the following is a valid equation for Welsh consumer surplus with trade?

Import quotas and tariffs produce similar results.Which of the following is not one of those results?

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

If the demand curve and the supply curve for a good are straight lines,then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by

If a country's domestic price of a good is lower than the world price,then that country has a comparative advantage in producing that good.

Figure 9-5 -Refer to Figure 9-5.If this country allows free trade in wagons,

Figure 9-5 -Refer to Figure 9-5.The increase in total surplus resulting from trade is

Trade raises the economic well-being of a nation in the sense that

The nation of Falconia forbids international trade.In Falconia,you can obtain a computer by trading 3 bicycles.In other countries,you can obtain a computer by trading 5 bicycles.These facts indicate that

If the world price of a good is greater than the domestic price in a country that can engage in international trade,then that country becomes an importer of that good.

Figure 9-3. The domestic country is China. -Refer to Figure 9-3.With trade,China will

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 tariff

For a country that is considering the adoption of either a tariff or an import quota on a particular good,an important difference is that

If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price,

Finland allows trade with the rest of the world.We can determine whether Finland has a comparative advantage in producing pork if we

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

According to the principle of comparative advantage,all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

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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