Question 1

The price of cotton that prevails in international markets is called the

Accepted Answer

A) export price of cotton. 
B) import price of cotton. 
C) comparative-advantage price of cotton. 
D) world price of cotton. 
A) export price of cotton. 
B) import price of cotton. 
C) comparative-advantage price of cotton. 
D) world price of cotton.

Question 2

A tariff on a product makes

Accepted Answer

A) domestic sellers better off and domestic buyers worse off. 
B) domestic sellers worse off and domestic buyers worse off. 
C) domestic sellers better off and domestic buyers better off. 
D) domestic sellers worse off and domestic buyers better off. 
A) domestic sellers better off and domestic buyers worse off. 
B) domestic sellers worse off and domestic buyers worse off. 
C) domestic sellers better off and domestic buyers better off. 
D) domestic sellers worse off and domestic buyers better off.

Question 3

Figure 9-1
  
-Refer to Figure 9-1.Without trade,producer surplus is

Accepted Answer

A) $210. 
B) $245. 
C) $455. 
D) $490. 
A) $210. 
B) $245. 
C) $455. 
D) $490.

Question 4

Figure 9-4
  
-Refer to Figure 9-4.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 5

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 6

A tax on an imported good is called a

Accepted Answer

A) quota. 
B) tariff. 
C) supply tax. 
D) trade tax. 
A) quota. 
B) tariff. 
C) supply tax. 
D) trade tax.

Question 7

According to columnist George F.Will,

Accepted Answer

A) the outsourcing of American jobs overseas will lead to significant economic problems for the United States in the long run. 
B) practices such as having X-rays analyzed in India are already starting to thwart economic growth in the United States. 
C) German labor laws give the United States a comparative advantage in producing automobiles. 
D) American labor laws give Germany a comparative advantage in producing automobiles. 
A) the outsourcing of American jobs overseas will lead to significant economic problems for the United States in the long run. 
B) practices such as having X-rays analyzed in India are already starting to thwart economic growth in the United States. 
C) German labor laws give the United States a comparative advantage in producing automobiles. 
D) American labor laws give Germany a comparative advantage in producing automobiles.

Question 8

Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners.
  
-Refer to Figure 9-9.With trade,the equilibrium price of air conditioners and the equilibrium quantity of air conditioners demanded in Kenya are

Accepted Answer

A) P₁ and Q₁. 
B) P₁ and Q₂. 
C) P₂ and Q₂. 
D) P₀ and Q₀. 
A) P₁ and Q₁. 
B) P₁ and Q₂. 
C) P₂ and Q₂. 
D) P₀ and Q₀.

Question 9

Figure 9-14
  
-Refer to Figure 9-14.With trade and without a tariff,the price and domestic quantity demanded are

Accepted Answer

A) P₁ and Q₁. 
B) P₁ and Q₄. 
C) P₂ and Q₂. 
D) P₂ and Q₃. 
A) P₁ and Q₁. 
B) P₁ and Q₄. 
C) P₂ and Q₂. 
D) P₂ and Q₃.

Question 10

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

Accepted Answer

A) everyone in the country benefits. 
B) the gains of the winners exceed the losses of the losers. 
C) the losses of the losers exceed the gains of the winners. 
D) everyone in the country loses. 
A) everyone in the country benefits. 
B) the gains of the winners exceed the losses of the losers. 
C) the losses of the losers exceed the gains of the winners. 
D) everyone in the country loses.

Question 11

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 the gains from trade?

Accepted Answer

A) Gains from trade = (1/2)(P₁ - P₀)(Q₂ - Q₁). 
B) Gains from trade = (1/2)(P₁ - P₀)(Q₂ - Q₀) 
C) Gains from trade = (1/2)(P₁ - P₀)(Q₁ + Q₂). 
D) Gains from trade = (1/2)(Q₁)(P₃ - P₁). 
A) Gains from trade = (1/2)(P₁ - P₀)(Q₂ - Q₁). 
B) Gains from trade = (1/2)(P₁ - P₀)(Q₂ - Q₀) 
C) Gains from trade = (1/2)(P₁ - P₀)(Q₁ + Q₂). 
D) Gains from trade = (1/2)(Q₁)(P₃ - P₁).

Question 12

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam

Accepted Answer

A) should import textiles. 
B) has a comparative advantage in textiles. 
C) should produce just enough textiles to meet its domestic demand. 
D) should refrain altogether from producing textiles. 
A) should import textiles. 
B) has a comparative advantage in textiles. 
C) should produce just enough textiles to meet its domestic demand. 
D) should refrain altogether from producing textiles.

Question 13

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.These taxes

Accepted Answer

A) benefit the United States as a whole, because they generate revenue for the government.In addition, because the goods are priced below cost, the taxes do not harm domestic consumers. 
B) benefit the United States as a whole, because they generate revenue for the government and increase producer surplus. 
C) harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D) harm the United States as a whole, because they reduce the sum of consumer and producer surplus by an amount that exceeds the increase in government revenue. 
A) benefit the United States as a whole, because they generate revenue for the government.In addition, because the goods are priced below cost, the taxes do not harm domestic consumers. 
B) benefit the United States as a whole, because they generate revenue for the government and increase producer surplus. 
C) harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D) harm the United States as a whole, because they reduce the sum of consumer and producer surplus by an amount that exceeds the increase in government revenue.

Question 14

Figure 9-5
  
-Refer to Figure 9-5.The imposition of a tariff on carnations

Accepted Answer

A) increases the number of carnations imported by 100. 
B) increases the number of carnations imported by 200. 
C) decreases the number of carnations imported by 200. 
D) decreases the number of carnations imported by 400. 
A) increases the number of carnations imported by 100. 
B) increases the number of carnations imported by 200. 
C) decreases the number of carnations imported by 200. 
D) decreases the number of carnations imported by 400.

Question 15

Trade among nations is ultimately based on

Accepted Answer

A) absolute advantage. 
B) strategic advantage. 
C) comparative advantage. 
D) technical advantage. 
A) absolute advantage. 
B) strategic advantage. 
C) comparative advantage. 
D) technical advantage.

Question 16

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

Accepted Answer

A) domestic producers of the good become better off. 
B) domestic consumers of the good become worse off. 
C) the gains of the winners exceed the losses of the losers. 
D) All of the above are correct. 
A) domestic producers of the good become better off. 
B) domestic consumers of the good become worse off. 
C) the gains of the winners exceed the losses of the losers. 
D) All of the above are correct.

Question 17

Figure 9-4
  
-Refer to Figure 9-4.Bearing in mind that this country is "small," what would happen if there were a decrease in the price of wagon wheels within this country,given that wagons and wagon wheels are complements?

Accepted Answer

A) The quantity of wagons that this country imports would increase. 
B) The quantity of wagons that this country imports would decrease, but the country would still be an importer of wagons. 
C) This country would switch from being an importer of wagons to an exporter of wagons. 
D) The domestic price without trade would move closer to the world price. 
A) The quantity of wagons that this country imports would increase. 
B) The quantity of wagons that this country imports would decrease, but the country would still be an importer of wagons. 
C) This country would switch from being an importer of wagons to an exporter of wagons. 
D) The domestic price without trade would move closer to the world price.

Question 18

Senator Blowhard represents a state in which many textile firms are located.He wants to impose tariffs on all imported textiles.Which of the following is the least likely consequence of such tariffs?

Accepted Answer

A) Domestic textile buyers will lose consumer surplus, have less variety, and will pay higher prices. 
B) Domestic textile sellers will gain producer surplus. 
C) Domestic textile sellers will have a higher rate of technological advance. 
D) Domestic textile sellers will have more market power. 
A) Domestic textile buyers will lose consumer surplus, have less variety, and will pay higher prices. 
B) Domestic textile sellers will gain producer surplus. 
C) Domestic textile sellers will have a higher rate of technological advance. 
D) Domestic textile sellers will have more market power.

Question 19

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Accepted Answer

A) True 
 B)False

Question 20

Suppose Scotland goes from being an isolated country to being an exporter of wool.As a result,

Accepted Answer

A) consumer surplus of Scottish consumers of wool increases. 
B) producer surplus of Scottish producers of wool increases. 
C) total surplus of Scottish wool consumers and producers remains constant. 
D) it is reasonable to infer that other countries have a comparative advantage over Scotland in wool production. 
A) consumer surplus of Scottish consumers of wool increases. 
B) producer surplus of Scottish producers of wool increases. 
C) total surplus of Scottish wool consumers and producers remains constant. 
D) it is reasonable to infer that other countries have a comparative advantage over Scotland in wool production.

Exam 9: Application: International Trade

The price of cotton that prevails in international markets is called the

A tariff on a product makes

Figure 9-1 -Refer to Figure 9-1.Without trade,producer surplus is

Figure 9-4 -Refer to Figure 9-4.If this country allows free trade in wagons,

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

A tax on an imported good is called a

According to columnist George F.Will,

Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners. -Refer to Figure 9-9.With trade,the equilibrium price of air conditioners and the equilibrium quantity of air conditioners demanded in Kenya are

Figure 9-14 -Refer to Figure 9-14.With trade and without a tariff,the price and domestic quantity demanded are

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

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 the gains from trade?

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.These taxes

Figure 9-5 -Refer to Figure 9-5.The imposition of a tariff on carnations

Trade among nations is ultimately based on

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

Figure 9-4 -Refer to Figure 9-4.Bearing in mind that this country is "small," what would happen if there were a decrease in the price of wagon wheels within this country,given that wagons and wagon wheels are complements?

Senator Blowhard represents a state in which many textile firms are located.He wants to impose tariffs on all imported textiles.Which of the following is the least likely consequence of such tariffs?

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Suppose Scotland goes from being an isolated country to being an exporter of wool.As a result,

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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