Question 1

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 2

Figure 9-10
  
-Refer to Figure 9-10.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 3

Suppose Haiti has a comparative advantage over other countries in producing sugar,but other countries have an absolute advantage over Haiti in producing sugar.If trade in sugar is allowed,Haiti

Accepted Answer

A) will import sugar. 
B) will export sugar. 
C) will either export sugar or export sugar, but it is not clear from the given information. 
D) would have nothing to gain either from exporting or importing sugar. 
A) will import sugar. 
B) will export sugar. 
C) will either export sugar or export sugar, but it is not clear from the given information. 
D) would have nothing to gain either from exporting or importing sugar.

Question 4

What percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Accepted Answer

A) 54 percent 
B) 72 percent 
C) 89 percent 
D) 97 percent 
A) 54 percent 
B) 72 percent 
C) 89 percent 
D) 97 percent

Question 5

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

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 6

Figure 9-8
  
-Refer to Figure 9-8.Total surplus in this market before trade is

Accepted Answer

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

Question 7

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

Accepted Answer

A) cause these factories to pay the U.S.minimum wage. 
B) increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C) increase poverty in poor countries and benefit U.S.firms which compete with these imports. 
D) harm U.S.firms which compete with these imports. 
A) cause these factories to pay the U.S.minimum wage. 
B) increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C) increase poverty in poor countries and benefit U.S.firms which compete with these imports. 
D) harm U.S.firms which compete with these imports.

Question 8

The world price of a simple electronic calculator is $5.00.Before Singapore allowed trade in calculators,the price of a calculator there was $4.00.Once Singapore began allowing trade in calculators with other countries,Singapore began

Accepted Answer

A) importing calculators and the price of a calculator in Singapore increased to $5.00. 
B) importing calculators and the price of a calculator in Singapore remained at $4.00. 
C) exporting calculators and the price of a calculator in Singapore increased to $5.00. 
D) exporting calculators and the price of a calculator in Singapore remained at $4.00. 
A) importing calculators and the price of a calculator in Singapore increased to $5.00. 
B) importing calculators and the price of a calculator in Singapore remained at $4.00. 
C) exporting calculators and the price of a calculator in Singapore increased to $5.00. 
D) exporting calculators and the price of a calculator in Singapore remained at $4.00.

Question 9

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

Question 10

If the United States imposes a tariff on automobiles,then

Accepted Answer

A) total surplus in the American automobile market decreases. 
B) producer surplus in the American automobile market increases. 
C) U.S.imports of foreign automobiles decrease. 
D) All of the above are correct. 
A) total surplus in the American automobile market decreases. 
B) producer surplus in the American automobile market increases. 
C) U.S.imports of foreign automobiles decrease. 
D) All of the above are correct.

Question 11

Characterize the two different approaches a nation can take to achieve free trade.Does one approach have an advantage over the other?

Accepted Answer

A unilateral approach is when a country

Question 12

If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.

Accepted Answer

A) True 
 B)False

Question 13

In analyzing the gains and losses from international trade,to say that Moldova is a small country is to say that

Accepted Answer

A) Moldova can only import goods; it cannot export goods. 
B) Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. 
C) only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant. 
D) Moldova is a price taker. 
A) Moldova can only import goods; it cannot export goods. 
B) Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. 
C) only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant. 
D) Moldova is a price taker.

Question 14

Figure 9-11
  
-Refer to Figure 9-11.Equilibrium price and equilibrium quantity without trade are

Accepted Answer

A) $18 and 400. 
B) $18 and 800. 
C) $14 and 400. 
D) $14 and 600. 
A) $18 and 400. 
B) $18 and 800. 
C) $14 and 400. 
D) $14 and 600.

Question 15

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 16

Figure 9-15. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.
  
-Refer to Figure 9-15.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 17

Figure 9-14
  
-Refer to Figure 9-14.Producer surplus with trade and without a tariff is

Accepted Answer

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

Question 18

At present,the United States uses a system of quotas to limit the amount of sugar imported into the country.Which of the following statements is most likely true?

Accepted Answer

A) The quotas are probably the result of lobbying from U.S.consumers of sugar.The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers. 
B) The quotas are probably the result of lobbying from U.S.producers of sugar.The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. 
C) The quotas are probably the result of lobbying from foreign producers of sugar.The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers. 
D) U.S.lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them. 
A) The quotas are probably the result of lobbying from U.S.consumers of sugar.The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers. 
B) The quotas are probably the result of lobbying from U.S.producers of sugar.The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers. 
C) The quotas are probably the result of lobbying from foreign producers of sugar.The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers. 
D) U.S.lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them.

Question 19

When the nation of Duxembourg allows trade and becomes an importer of software,

Accepted Answer

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

Question 20

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.

Exam 9: Application: International Trade

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

Figure 9-10 -Refer to Figure 9-10.Producer surplus in this market before trade is

Suppose Haiti has a comparative advantage over other countries in producing sugar,but other countries have an absolute advantage over Haiti in producing sugar.If trade in sugar is allowed,Haiti

What percent of total world trade is accounted for by countries that belong to the World Trade Organization?

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

Figure 9-8 -Refer to Figure 9-8.Total surplus in this market before trade is

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

The world price of a simple electronic calculator is $5.00.Before Singapore allowed trade in calculators,the price of a calculator there was $4.00.Once Singapore began allowing trade in calculators with other countries,Singapore began

If the United States imposes a tariff on automobiles,then

Characterize the two different approaches a nation can take to achieve free trade.Does one approach have an advantage over the other?

If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.

In analyzing the gains and losses from international trade,to say that Moldova is a small country is to say that

Figure 9-11 -Refer to Figure 9-11.Equilibrium price and equilibrium quantity without trade are

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 9-15. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-15.The deadweight loss created by the tariff is represented by the area

Figure 9-14 -Refer to Figure 9-14.Producer surplus with trade and without a tariff is

At present,the United States uses a system of quotas to limit the amount of sugar imported into the country.Which of the following statements is most likely true?

When the nation of Duxembourg allows trade and becomes an importer of software,

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

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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