Question 1

Figure 9-5
  
-Refer to Figure 9-5.When the tariff is imposed,domestic consumers

Accepted Answer

A) lose by $500. 
B) lose by $900. 
C) gain by $500. 
D) gain by $900. 
A) lose by $500. 
B) lose by $900. 
C) gain by $500. 
D) gain by $900.

Question 2

Figure 9-6. The figure applies to the nation of Wales and the good is cheese.
  
-Refer to Figure 9-6.With trade,the Welsh price of cheese and the Welsh quantity of cheese demanded are

Accepted Answer

A) P₁ and Q₂. 
B) P₁ and Q₁. 
C) P₀ and Q₀. 
D) P₃ and Q₁. 
A) P₁ and Q₂. 
B) P₁ and Q₁. 
C) P₀ and Q₀. 
D) P₃ and Q₁.

Question 3

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.

Accepted Answer

A) True 
 B)False

Question 4

Figure 9-1
  
-Refer to Figure 9-1.With free trade,producer surplus is

Accepted Answer

A) $80.00. 
B) $210.00. 
C) $245.50. 
D) $472.50. 
A) $80.00. 
B) $210.00. 
C) $245.50. 
D) $472.50.

Question 5

When a country allows trade and becomes an importer 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 6

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

Accepted Answer

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

Question 7

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.We can conclude that producer surplus in Aquilonia is now

Accepted Answer

A) higher in the steel market, lower in the incense market, and unchanged in the rug market. 
B) higher in the incense and steel markets, and unchanged in the rug market. 
C) lower in the incense and rug markets, and higher in the steel market. 
D) lower in the incense and steel markets, and the same in the rug market. 
A) higher in the steel market, lower in the incense market, and unchanged in the rug market. 
B) higher in the incense and steel markets, and unchanged in the rug market. 
C) lower in the incense and rug markets, and higher in the steel market. 
D) lower in the incense and steel markets, and the same in the rug market.

Question 8

Figure 9-2. The domestic country is China.
  
-Refer to Figure 9-2.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 9

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 10

Figure 9-4
  
-Refer to Figure 9-4.Total surplus with trade exceeds total surplus without trade by

Accepted Answer

A) $60. 
B) $75. 
C) $135. 
D) $210. 
A) $60. 
B) $75. 
C) $135. 
D) $210.

Question 11

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.We can conclude that Aquilonia's new free-trade policy has

Accepted Answer

A) increased consumer surplus and producer surplus in the incense market. 
B) increased consumer surplus in the steel market and left producer surplus in the rug market unchanged. 
C) decreased consumer surplus in both the steel and rug markets. 
D) decreased consumer surplus in the steel market and increased total surplus in the incense market. 
A) increased consumer surplus and producer surplus in the incense market. 
B) increased consumer surplus in the steel market and left producer surplus in the rug market unchanged. 
C) decreased consumer surplus in both the steel and rug markets. 
D) decreased consumer surplus in the steel market and increased total surplus in the incense market.

Question 12

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

Accepted Answer

A) foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. 
B) foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C) the critics are correct, so countries must protect their industries with tariffs or quotas. 
D) foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs. 
A) foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. 
B) foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C) the critics are correct, so countries must protect their industries with tariffs or quotas. 
D) foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.

Question 13

When a country takes a unilateral approach to free trade,it

Accepted Answer

A) removes trade restrictions on its own. 
B) reduces its trade restrictions while other countries do the same. 
C) does not remove trade restrictions no matter what other countries do. 
D) is willing to trade with multiple countries at once. 
A) removes trade restrictions on its own. 
B) reduces its trade restrictions while other countries do the same. 
C) does not remove trade restrictions no matter what other countries do. 
D) is willing to trade with multiple countries at once.

Question 14

Within a country,the domestic price of a product will equal the world price if

Accepted Answer

A) trade restrictions are imposed on the product. 
B) the country allows free trade. 
C) the country chooses to import, but not export, the product. 
D) the country chooses to export, but not import, the product. 
A) trade restrictions are imposed on the product. 
B) the country allows free trade. 
C) the country chooses to import, but not export, the product. 
D) the country chooses to export, but not import, the product.

Question 15

Free trade causes job losses in industries in which a country does not have a comparative advantage,but it also causes job gains in industries in which the country has a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 16

When a country takes a multilateral approach to free trade,it

Accepted Answer

A) removes trade restrictions on its own. 
B) reduces its trade restrictions while other countries do the same. 
C) does not remove trade restrictions no matter what other countries do. 
D) is willing to trade with multiple countries at once. 
A) removes trade restrictions on its own. 
B) reduces its trade restrictions while other countries do the same. 
C) does not remove trade restrictions no matter what other countries do. 
D) is willing to trade with multiple countries at once.

Question 17

The infant-industry argument

Accepted Answer

A) is based on the belief that protecting industries when they are young will pay off later. 
B) is based on the belief that protecting industries producing goods and services for infants is necessary if a country is to have healthy children. 
C) has the support of most economists. 
D) is an argument that is advanced by advocates of free trade. 
A) is based on the belief that protecting industries when they are young will pay off later. 
B) is based on the belief that protecting industries producing goods and services for infants is necessary if a country is to have healthy children. 
C) has the support of most economists. 
D) is an argument that is advanced by advocates of free trade.

Question 18

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

Accepted Answer

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

Question 19

If the United States threatens to impose a tariff on German cars if Germany does not remove agricultural subsidies,the United States will be

Accepted Answer

A) better off no matter how Germany responds. 
B) better off if Germany gives in, and will be no worse off if it doesn't. 
C) worse off if Germany doesn't give in to the threat. 
D) worse off no matter how Germany responds. 
A) better off no matter how Germany responds. 
B) better off if Germany gives in, and will be no worse off if it doesn't. 
C) worse off if Germany doesn't give in to the threat. 
D) worse off no matter how Germany responds.

Question 20

Which of the following arguments for trade restrictions is often advanced?

Accepted Answer

A) Trade restrictions make all Americans better off. 
B) Trade restrictions increase economic efficiency. 
C) Trade restrictions are necessary for economic growth. 
D) Trade restrictions are sometimes necessary for national security. 
A) Trade restrictions make all Americans better off. 
B) Trade restrictions increase economic efficiency. 
C) Trade restrictions are necessary for economic growth. 
D) Trade restrictions are sometimes necessary for national security.

Exam 9: Application: International Trade

Figure 9-5 -Refer to Figure 9-5.When the tariff is imposed,domestic consumers

Figure 9-6. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-6.With trade,the Welsh price of cheese and the Welsh quantity of cheese demanded are

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.

Figure 9-1 -Refer to Figure 9-1.With free trade,producer surplus is

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

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

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.We can conclude that producer surplus in Aquilonia is now

Figure 9-2. The domestic country is China. -Refer to Figure 9-2.With trade,China will

Both tariffs and import quotas

Figure 9-4 -Refer to Figure 9-4.Total surplus with trade exceeds total surplus without trade by

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.We can conclude that Aquilonia's new free-trade policy has

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

When a country takes a unilateral approach to free trade,it

Within a country,the domestic price of a product will equal the world price if

Free trade causes job losses in industries in which a country does not have a comparative advantage,but it also causes job gains in industries in which the country has a comparative advantage.

When a country takes a multilateral approach to free trade,it

The infant-industry argument

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

If the United States threatens to impose a tariff on German cars if Germany does not remove agricultural subsidies,the United States will be

Which of the following arguments for trade restrictions is often advanced?

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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