Question 1

Figure 9-7
  
-Refer to Figure 9-7.If trade in shoes is allowed,what will happen to Korean shoe consumers and producers

Accepted Answer

A) Both consumers and producers will gain. 
B) Both consumers and producers will lose. 
C) Consumers will gain, and producers will lose. 
D) Consumers will lose, and producers will gain. 
A) Both consumers and producers will gain. 
B) Both consumers and producers will lose. 
C) Consumers will gain, and producers will lose. 
D) Consumers will lose, and producers will gain. C

Question 2

What can be said if Canada exports cars to France and imports cheese from Switzerland

Accepted Answer

A) Canada has a comparative advantage in producing cars, and Switzerland has a comparative advantage in producing cheese. 
B) Canada has a comparative advantage in producing cheese, and Switzerland has a comparative advantage in producing cars. 
C) Canada and France would both be better off if they both produce cars. 
D) Canada and France would both be better off if they both produce cheese. 
A) Canada has a comparative advantage in producing cars, and Switzerland has a comparative advantage in producing cheese. 
B) Canada has a comparative advantage in producing cheese, and Switzerland has a comparative advantage in producing cars. 
C) Canada and France would both be better off if they both produce cars. 
D) Canada and France would both be better off if they both produce cheese. A

Question 3

Figure 9-11
  
-Refer to Figure 9-11.Before the tariff is imposed,how many carnations will this country import/export

Accepted Answer

A) import 500 carnations 
B) import 400 carnations 
C) export 500 carnations 
D) export 400 carnations 
A) import 500 carnations 
B) import 400 carnations 
C) export 500 carnations 
D) export 400 carnations B

Question 4

A multilateral approach to free trade has more potential to increase the gains from trade than a unilateral approach because the multilateral approach can reduce trade restrictions abroad as well as at home.

Accepted Answer

A) True 
 B)False

Question 5

Figure 9-2
  
-Refer to Figure 9-2.Without trade,what would consumer surplus in China be

Accepted Answer

A) $800 
B) $1200 
C) $1600 
D) $1800 
A) $800 
B) $1200 
C) $1600 
D) $1800

Question 6

Canada has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.What do these taxes do to Canada as a whole

Accepted Answer

A) They benefit Canada 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) They benefit Canada as a whole, because they generate revenue for the government and increase producer surplus. 
C) They harm Canada as a whole because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D) They harm Canada as a whole because they reduce the sum of consumer and producer surplus by an amount that exceeds the increase in government revenue. 
A) They benefit Canada 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) They benefit Canada as a whole, because they generate revenue for the government and increase producer surplus. 
C) They harm Canada as a whole because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D) They harm Canada as a whole because they reduce the sum of consumer and producer surplus by an amount that exceeds the increase in government revenue.

Question 7

When a country allows trade and becomes an importer of a good,what is the result

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 8

Without free trade,the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 9

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 10

When does a country have a comparative advantage in a product

Accepted Answer

A) when it can produce a product more efficiently 
B) when its domestic price is below the world price 
C) when its domestic price is above the world price 
D) when it can benefit from importing the product 
A) when it can produce a product more efficiently 
B) when its domestic price is below the world price 
C) when its domestic price is above the world price 
D) when it can benefit from importing the product

Question 11

What is the effect of a tariff on a product

Accepted Answer

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

Question 12

Figure 9-12
  
-Refer to Figure 9-12.What would be the domestic price and domestic quantity demanded after the tariff

Accepted Answer

A) P₁, Q₁ 
B) P₁, Q₄ 
C) P₂, Q₂ 
D) P₂, Q₃ 
A) P₁, Q₁ 
B) P₁, Q₄ 
C) P₂, Q₂ 
D) P₂, Q₃

Question 13

Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,the price of wheat in Ivory Coast will increase,but by less than $1,all else equal.

Accepted Answer

A) True 
 B)False

Question 14

Figure 9-6
  
-Refer to Figure 9-6.What does the world price for wagons represent

Accepted Answer

A) demand for wagons from the rest of the world 
B) supply of wagons from the rest of the world 
C) the 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) the level of inefficiency in the domestic market caused by trade 
D) surplus in the domestic wagon market

Question 15

Figure 9-11
  
-Refer to Figure 9-11.What is the amount of deadweight loss caused by the tariff

Accepted Answer

A) $100 
B) $200 
C) $400 
D) $500 
A) $100 
B) $200 
C) $400 
D) $500

Question 16

What type of approach to achieving free trade is GATT

Accepted Answer

A) a successful unilateral approach 
B) a successful multilateral approach 
C) an unsuccessful unilateral approach 
D) an unsuccessful multilateral approach 
A) a successful unilateral approach 
B) a successful multilateral approach 
C) an unsuccessful unilateral approach 
D) an unsuccessful multilateral approach

Question 17

Figure 9-11
  
-Refer to Figure 9-11.What will happen in this market with free trade

Accepted Answer

A) The domestic price will equal the world price. 
B) Carnations will be sold at $8 in this market. 
C) There will be a shortage of 400 carnations in this market. 
D) There will be 500 carnations supplied domestically in this market. 
A) The domestic price will equal the world price. 
B) Carnations will be sold at $8 in this market. 
C) There will be a shortage of 400 carnations in this market. 
D) There will be 500 carnations supplied domestically in this market.

Question 18

Figure 9-5
  
-Figure 9-5 shows the domestic market for calculators in Haiti.What is the change in total surplus in Haiti because of trade

Accepted Answer

A) $625 
B) $865 
C) $1500 
D) $2800 
A) $625 
B) $865 
C) $1500 
D) $2800

Question 19

Figure 9-10
  
-Refer to Figure 9-10.What would be producer surplus before trade

Accepted Answer

A) $3600 
B) $4100 
C) $5400 
D) $7200 
A) $3600 
B) $4100 
C) $5400 
D) $7200

Question 20

In principle,trade can make everyone better off,since the gains to the winners exceed the losses to the losers.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

Figure 9-7 -Refer to Figure 9-7.If trade in shoes is allowed,what will happen to Korean shoe consumers and producers

What can be said if Canada exports cars to France and imports cheese from Switzerland

Figure 9-11 -Refer to Figure 9-11.Before the tariff is imposed,how many carnations will this country import/export

A multilateral approach to free trade has more potential to increase the gains from trade than a unilateral approach because the multilateral approach can reduce trade restrictions abroad as well as at home.

Figure 9-2 -Refer to Figure 9-2.Without trade,what would consumer surplus in China be

Canada has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.What do these taxes do to Canada as a whole

When a country allows trade and becomes an importer of a good,what is the result

Without free trade,the domestic price of a good must be equal to the world price of a good.

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.

When does a country have a comparative advantage in a product

What is the effect of a tariff on a product

Figure 9-12 -Refer to Figure 9-12.What would be the domestic price and domestic quantity demanded after the tariff

Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,the price of wheat in Ivory Coast will increase,but by less than $1,all else equal.

Figure 9-6 -Refer to Figure 9-6.What does the world price for wagons represent

Figure 9-11 -Refer to Figure 9-11.What is the amount of deadweight loss caused by the tariff

What type of approach to achieving free trade is GATT

Figure 9-11 -Refer to Figure 9-11.What will happen in this market with free trade

Figure 9-5 -Figure 9-5 shows the domestic market for calculators in Haiti.What is the change in total surplus in Haiti because of trade

Figure 9-10 -Refer to Figure 9-10.What would be producer surplus before trade

In principle,trade can make everyone better off,since the gains to the winners exceed the losses to the losers.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

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

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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