Question 1

Figure 9-1
  
-Refer to Figure 9-1.This country

Accepted Answer

A) has a comparative advantage in baskets. 
B) should export baskets. 
C) is a price taker in the world economy. 
D) All of the above are correct. 
A) has a comparative advantage in baskets. 
B) should export baskets. 
C) is a price taker in the world economy. 
D) All of the above are correct.

Question 2

Figure 9-4
  
-Refer to Figure 9-4.Without trade,total surplus amounts to

Accepted Answer

A) $122.50. 
B) $245. 
C) $367.50. 
D) $612.50. 
A) $122.50. 
B) $245. 
C) $367.50. 
D) $612.50.

Question 3

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 4

Figure 9-4
  
-Refer to Figure 9-4.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 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

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of beans increases to equal the world price of beans,then

Accepted Answer

A) that country becomes an exporter of beans. 
B) that country has a comparative advantage in producing beans. 
C) at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. 
D) All of the above are correct. 
A) that country becomes an exporter of beans. 
B) that country has a comparative advantage in producing beans. 
C) at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. 
D) All of the above are correct.

Question 7

Figure 9-14
  
-Refer to Figure 9-14.The amount of government revenue created by the tariff is

Accepted Answer

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

Question 8

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.The country for which the figure is drawn

Accepted Answer

A) has a comparative advantage relative to other countries in the production of computers and it will export computers. 
B) has a comparative advantage relative to other countries in the production of computers and it will import computers. 
C) has a comparative disadvantage relative to other countries in the production of computers and it will export computers. 
D) has a comparative disadvantage relative to other countries in the production of computers and it will import computers. 
A) has a comparative advantage relative to other countries in the production of computers and it will export computers. 
B) has a comparative advantage relative to other countries in the production of computers and it will import computers. 
C) has a comparative disadvantage relative to other countries in the production of computers and it will export computers. 
D) has a comparative disadvantage relative to other countries in the production of computers and it will import computers.

Question 9

A country has a comparative advantage in a product if the world price is

Accepted Answer

A) lower than that country's domestic price without trade. 
B) higher than that country's domestic price without trade. 
C) equal to that country's domestic price without trade. 
D) not subject to manipulation by organizations that govern international trade. 
A) lower than that country's domestic price without trade. 
B) higher than that country's domestic price without trade. 
C) equal to that country's domestic price without trade. 
D) not subject to manipulation by organizations that govern international trade.

Question 10

Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.Which groups in Aquilonia are better off as a result of the new free-trade policy?

Accepted Answer

A) producers of incense and consumers of steel 
B) consumers of all three goods 
C) consumers of incense and producers of rugs 
D) producers of steel and consumers of incense 
A) producers of incense and consumers of steel 
B) consumers of all three goods 
C) consumers of incense and producers of rugs 
D) producers of steel and consumers of incense

Question 11

Figure 9-3. The domestic country is Jamaica.
  
-Refer to Figure 9-3.Which of the following statements is accurate?

Accepted Answer

A) Consumer surplus with trade is $3,200. 
B) Producer surplus with trade is $375. 
C) The gains from trade amount to $800. 
D) The gains from trade are represented on the graph by the area bounded by the points (0, $12), (300, $12), (300, $7) and (0, $7). 
A) Consumer surplus with trade is $3,200. 
B) Producer surplus with trade is $375. 
C) The gains from trade amount to $800. 
D) The gains from trade are represented on the graph by the area bounded by the points (0, $12), (300, $12), (300, $7) and (0, $7).

Question 12

When a country allows trade and becomes an importer of steel,

Accepted Answer

A) the losses of the domestic producers of steel exceed the gains of the domestic consumers of steel. 
B) the losses of the domestic consumers of steel exceed the gains of the domestic producers of steel. 
C) the gains of the domestic producers of steel exceed the losses of the domestic consumers of steel. 
D) the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel. 
A) the losses of the domestic producers of steel exceed the gains of the domestic consumers of steel. 
B) the losses of the domestic consumers of steel exceed the gains of the domestic producers of steel. 
C) the gains of the domestic producers of steel exceed the losses of the domestic consumers of steel. 
D) the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel.

Question 13

When a nation first begins to trade with other countries and the nation becomes an importer of soybeans,

Accepted Answer

A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. 
B) this is an indication that the nation has a comparative advantage in producing soybeans. 
C) the nation's producers of soybeans become worse off and the nation's consumers of soybeans become better off. 
D) All of the above are correct. 
A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. 
B) this is an indication that the nation has a comparative advantage in producing soybeans. 
C) the nation's producers of soybeans become worse off and the nation's consumers of soybeans become better off. 
D) All of the above are correct.

Question 14

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

Accepted Answer

A) True 
 B)False

Question 15

Countries usually impose restrictions on trade with other countries in order to protect

Accepted Answer

A) foreign producers. 
B) foreign consumers. 
C) domestic producers. 
D) domestic consumers. 
A) foreign producers. 
B) foreign consumers. 
C) domestic producers. 
D) domestic consumers.

Question 16

A quota is

Accepted Answer

A) a tax placed on imports. 
B) a limit on the quantity of imports. 
C) a tax on exports to other countries. 
D) an excess of exports over imports. 
A) a tax placed on imports. 
B) a limit on the quantity of imports. 
C) a tax on exports to other countries. 
D) an excess of exports over imports.

Question 17

Figure 9-10
  
-Refer to Figure 9-10.Producer surplus plus consumer 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 18

Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners.
  
-Refer to Figure 9-9.The price and quantity of air conditioners in Kenya 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 19

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 20

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

Accepted Answer

A) both domestic producers and domestic consumers become better off. 
B) domestic producers become better off, and domestic consumers become worse off. 
C) domestic producers become worse off, and domestic consumers become better off. 
D) both domestic producers and domestic consumers become worse off. 
A) both domestic producers and domestic consumers become better off. 
B) domestic producers become better off, and domestic consumers become worse off. 
C) domestic producers become worse off, and domestic consumers become better off. 
D) both domestic producers and domestic consumers become worse off.

Exam 9: Application: International Trade

Figure 9-1 -Refer to Figure 9-1.This country

Figure 9-4 -Refer to Figure 9-4.Without trade,total surplus amounts to

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

Figure 9-4 -Refer to Figure 9-4.The horizontal line at the world price of wagons represents the

Which of the following is the most accurate statement?

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of beans increases to equal the world price of beans,then

Figure 9-14 -Refer to Figure 9-14.The amount of government revenue created by the tariff is

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.The country for which the figure is drawn

A country has a comparative advantage in a product if the world price is

Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.Which groups in Aquilonia are better off as a result of the new free-trade policy?

Figure 9-3. The domestic country is Jamaica. -Refer to Figure 9-3.Which of the following statements is accurate?

When a country allows trade and becomes an importer of steel,

When a nation first begins to trade with other countries and the nation becomes an importer of soybeans,

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

Countries usually impose restrictions on trade with other countries in order to protect

A quota is

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

Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners. -Refer to Figure 9-9.The price and quantity of air conditioners in Kenya 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?

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

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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