Question 1

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 2

Figure 9-13. On the diagram below, Q represents the quantity of computers and P represents the price of computers.
  
-Refer to Figure 9-13.A result of this country allowing international trade in computers is as follows:

Accepted Answer

A) The well-being of domestic computer producers is now higher in that they now sell more computers at a higher price per computer. 
B) The effect on the well-being of domestic computer consumers is unclear in that they now buy more computers, but at a higher price per computer. 
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases, while the effect on domestic consumer surplus is unclear. 
D) All of the above are correct. 
A) The well-being of domestic computer producers is now higher in that they now sell more computers at a higher price per computer. 
B) The effect on the well-being of domestic computer consumers is unclear in that they now buy more computers, but at a higher price per computer. 
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases, while the effect on domestic consumer surplus is unclear. 
D) All of the above are correct.

Question 3

Figure 9-14
  
-Refer to Figure 9-14.For the saddle market,area B represents

Accepted Answer

A) government's revenue from the tariff. 
B) the deadweight loss of the tariff. 
C) the increase in producer surplus, relative to the free-trade situation, as a result of the tariff. 
D) None of the above is correct. 
A) government's revenue from the tariff. 
B) the deadweight loss of the tariff. 
C) the increase in producer surplus, relative to the free-trade situation, as a result of the tariff. 
D) None of the above is correct.

Question 4

Figure 9-12
  
-Refer to Figure 9-12.Consumer surplus after trade is

Accepted Answer

A) $3,600. 
B) $5,400. 
C) $7,200. 
D) $8,100. 
A) $3,600. 
B) $5,400. 
C) $7,200. 
D) $8,100.

Question 5

Figure 9-6. The figure applies to the nation of Wales and the good is cheese.
  
-Refer to Figure 9-6.Which of the following is a valid equation for Welsh producer surplus with trade?

Accepted Answer

A) Producer surplus with trade = (1/2)P₀Q₀. 
B) Producer surplus with trade = (1/2)P₁Q₁. 
C) Producer surplus with trade = (1/2)P₁Q₂. 
D) None of the above is correct. 
A) Producer surplus with trade = (1/2)P₀Q₀. 
B) Producer surplus with trade = (1/2)P₁Q₁. 
C) Producer surplus with trade = (1/2)P₁Q₂. 
D) None of the above is correct.

Question 6

A tariff

Accepted Answer

A) lowers the domestic price of the exported good below the world price. 
B) keeps the domestic price of the exported good the same as the world price. 
C) raises the domestic price of the imported good above the world price. 
D) lowers the domestic price of the imported good below the world price. 
A) lowers the domestic price of the exported good below the world price. 
B) keeps the domestic price of the exported good the same as the world price. 
C) raises the domestic price of the imported good above the world price. 
D) lowers the domestic price of the imported good below the world price.

Question 7

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 8

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Accepted Answer

A) True 
 B)False

Question 9

Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany

Accepted Answer

A) may prompt German farmers to invoke the unfair-competition argument. 
B) increase the consumer surplus of German buyers of wheat. 
C) increase the total surplus of the German people. 
D) All of the above are correct. 
A) may prompt German farmers to invoke the unfair-competition argument. 
B) increase the consumer surplus of German buyers of wheat. 
C) increase the total surplus of the German people. 
D) All of the above are correct.

Question 10

Figure 9-5
  
-Refer to Figure 9-5.The amount of revenue collected by the government from the tariff is

Accepted Answer

A) $200. 
B) $400. 
C) $500. 
D) $600. 
A) $200. 
B) $400. 
C) $500. 
D) $600.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Figure 9-4
  
-Refer to Figure 9-4.With trade,the price of wagons in this country is

Accepted Answer

A) $8, with 70 wagons being produced in this country, 20 of which are exported. 
B) $8, with 90 wagons being produced in this country, 50 of which are exported. 
C) $5, with 40 wagons being produced in this country and another 30 wagons being imported. 
D) $5, with 40 wagons being produced in this country and another 50 wagons being imported. 
A) $8, with 70 wagons being produced in this country, 20 of which are exported. 
B) $8, with 90 wagons being produced in this country, 50 of which are exported. 
C) $5, with 40 wagons being produced in this country and another 30 wagons being imported. 
D) $5, with 40 wagons being produced in this country and another 50 wagons being imported.

Question 13

GATT is an example of a successful unilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 14

An important factor in the decline of the U.S.textile industry over the past 100 or so years is

Accepted Answer

A) foreign competitors that could produce quality textile goods at low cost. 
B) lower prices of goods that are substitutes for clothing. 
C) a decrease in Americans' demand for clothing, due to increased incomes and the fact that clothing is an inferior good. 
D) the fact that the minimum wage in the U.S.has failed to keep pace with the cost of living. 
A) foreign competitors that could produce quality textile goods at low cost. 
B) lower prices of goods that are substitutes for clothing. 
C) a decrease in Americans' demand for clothing, due to increased incomes and the fact that clothing is an inferior good. 
D) the fact that the minimum wage in the U.S.has failed to keep pace with the cost of living.

Question 15

Figure 9-10
  
-Refer to Figure 9-10.Producer surplus plus consumer surplus in this market after trade is

Accepted Answer

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

Question 16

When a country allows trade and becomes an exporter of a good,

Accepted Answer

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

Question 17

Figure 9-2. The domestic country is China.
  
-Refer to Figure 9-2.If China were to abandon a no-trade policy in favor of a free-trade policy,

Accepted Answer

A) Chinese producers of pencil sharpeners would become worse off. 
B) Chinese consumers of pencil sharpeners would become better off. 
C) total surplus in the Chinese economy would increase. 
D) All of the above are correct. 
A) Chinese producers of pencil sharpeners would become worse off. 
B) Chinese consumers of pencil sharpeners would become better off. 
C) total surplus in the Chinese economy would increase. 
D) All of the above are correct.

Question 18

When the nation of Econoland allows trade and becomes an exporter of televisions,

Accepted Answer

A) residents of Econoland who produce televisions become worse off; residents of Econoland who buy televisions become better off; and the economic well-being of Econoland rises. 
B) residents of Econoland who produce televisions become worse off; residents of Econoland who buy televisions become better off; and the economic well-being of Econoland falls. 
C) residents of Econoland who produce televisions become better off; residents of Econoland who buy televisions become worse off; and the economic well-being of Econoland rises. 
D) residents of Econoland who produce televisions become better off; residents of Econoland who buy televisions become worse off; and the economic well-being of Econoland falls. 
A) residents of Econoland who produce televisions become worse off; residents of Econoland who buy televisions become better off; and the economic well-being of Econoland rises. 
B) residents of Econoland who produce televisions become worse off; residents of Econoland who buy televisions become better off; and the economic well-being of Econoland falls. 
C) residents of Econoland who produce televisions become better off; residents of Econoland who buy televisions become worse off; and the economic well-being of Econoland rises. 
D) residents of Econoland who produce televisions become better off; residents of Econoland who buy televisions become worse off; and the economic well-being of Econoland falls.

Question 19

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

Question 20

Countries that restrict foreign trade are likely to

Accepted Answer

A) forgo the additional surplus that trade allows, but will probably enjoy economies of scale. 
B) forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change. 
C) forgo the additional surplus that trade allows, but will have a lower rate of unemployment. 
D) have more firms with domestic market power. 
A) forgo the additional surplus that trade allows, but will probably enjoy economies of scale. 
B) forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change. 
C) forgo the additional surplus that trade allows, but will have a lower rate of unemployment. 
D) have more firms with domestic market power.

Exam 9: Application: International Trade

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 9-13. On the diagram below, Q represents the quantity of computers and P represents the price of computers. -Refer to Figure 9-13.A result of this country allowing international trade in computers is as follows:

Figure 9-14 -Refer to Figure 9-14.For the saddle market,area B represents

Figure 9-12 -Refer to Figure 9-12.Consumer surplus after trade is

Figure 9-6. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-6.Which of the following is a valid equation for Welsh producer surplus with trade?

A tariff

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

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany

Figure 9-5 -Refer to Figure 9-5.The amount of revenue collected by the government from the tariff is

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

Figure 9-4 -Refer to Figure 9-4.With trade,the price of wagons in this country is

GATT is an example of a successful unilateral approach to achieving free trade.

An important factor in the decline of the U.S.textile industry over the past 100 or so years is

Figure 9-10 -Refer to Figure 9-10.Producer surplus plus consumer surplus in this market after trade is

When a country allows trade and becomes an exporter of a good,

Figure 9-2. The domestic country is China. -Refer to Figure 9-2.If China were to abandon a no-trade policy in favor of a free-trade policy,

When the nation of Econoland allows trade and becomes an exporter of televisions,

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.

Countries that restrict foreign trade are likely to

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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