Question 1

In 2008, the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy. Of those surveyed,

Accepted Answer

A) 57 percent said free international trade helped the economy. 
B) 26 percent said free international trade helped the economy. 
C) 30 percent said free international trade hurt the economy. 
D) 16 percent said free international trade hurt the economy. 
A) 57 percent said free international trade helped the economy. 
B) 26 percent said free international trade helped the economy. 
C) 30 percent said free international trade hurt the economy. 
D) 16 percent said free international trade hurt the economy.

Question 2

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-17  
-Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff

Accepted Answer

A) decreases imports of the good by 16 units and increases domestic production of the good by 8 units. 
B) decreases imports of the good by 16 units and increases domestic production of the good by 16 units. 
C) decreases imports of the good by 24 units and increases domestic production of the good by 8 units. 
D) decreases imports of the good by 24 units and increases domestic production of the good by 24 units. 
A) decreases imports of the good by 16 units and increases domestic production of the good by 8 units. 
B) decreases imports of the good by 16 units and increases domestic production of the good by 16 units. 
C) decreases imports of the good by 24 units and increases domestic production of the good by 8 units. 
D) decreases imports of the good by 24 units and increases domestic production of the good by 24 units.

Question 4

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil.  
-Refer to Figure 9-14. The country for which the figure is drawn

Accepted Answer

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

Question 5

A possible outcome of the multilateral approach to free trade is that such an approach can

Accepted Answer

A) win political support when a unilateral approach cannot. 
B) result in more restricted trade than under a unilateral approach, when international negotiations fail. 
C) result in drastic reductions in tariffs for many countries. 
D) All of the above are correct. 
A) win political support when a unilateral approach cannot. 
B) result in more restricted trade than under a unilateral approach, when international negotiations fail. 
C) result in drastic reductions in tariffs for many countries. 
D) All of the above are correct.

Question 6

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 7

Figure 9-12  
-Refer to Figure 9-12. Producer surplus before trade is

Accepted Answer

A) $3,600. 
B) $4,600. 
C) $5,400. 
D) $6,250. 
A) $3,600. 
B) $4,600. 
C) $5,400. 
D) $6,250.

Question 8

When a country that imports a particular good imposes an import quota on that good,

Accepted Answer

A) producer surplus increases and total surplus increases in the market for that good. 
B) producer surplus increases and total surplus decreases in the market for that good. 
C) producer surplus decreases and total surplus increases in the market for that good. 
D) producer surplus decreases and total surplus decreases in the market for that good. 
A) producer surplus increases and total surplus increases in the market for that good. 
B) producer surplus increases and total surplus decreases in the market for that good. 
C) producer surplus decreases and total surplus increases in the market for that good. 
D) producer surplus decreases and total surplus decreases in the market for that good.

Question 9

The small-economy assumption is necessary to analyze the gains and losses from international trade.

Accepted Answer

A) True 
 B)False

Question 10

William and Jamal live in the country of Dumexia. As a result of Dumexia's legalization of international trade in bananas, William becomes better off and Jamal becomes worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

Accepted Answer

A) True 
 B)False

Question 11

Figure 9-17  
-Refer to Figure 9-17. With trade and a tariff, consumer surplus is

Accepted Answer

A) $808 and producer surplus is $200. 
B) $808 and producer surplus is $392. 
C) $1,024 and producer surplus is $200. 
D) $1,024 and producer surplus is $392. 
A) $808 and producer surplus is $200. 
B) $808 and producer surplus is $392. 
C) $1,024 and producer surplus is $200. 
D) $1,024 and producer surplus is $392.

Question 12

Which of the following statements is true?

Accepted Answer

A) Free trade benefits a country when it exports but harms it when it imports. 
B) "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports. 
C) Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses. 
D) Free trade benefits a country both when it exports and when it imports. 
A) Free trade benefits a country when it exports but harms it when it imports. 
B) "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports. 
C) Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses. 
D) Free trade benefits a country both when it exports and when it imports.

Question 13

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

Accepted Answer

A) Total surplus in the domestic country falls. 
B) Producer surplus in the domestic country increases. 
C) The domestic country experiences a deadweight loss. 
D) Revenue is raised for the domestic government. 
A) Total surplus in the domestic country falls. 
B) Producer surplus in the domestic country increases. 
C) The domestic country experiences a deadweight loss. 
D) Revenue is raised for the domestic government.

Question 14

In September 2009, China took steps toward imposing tariffs on American exports of

Accepted Answer

A) automotive products and chicken in response to President Obama's decision to impose tariffs on toys imported from China. 
B) airplanes and beef in response to President Obama's decision to impose tariffs on toys imported from China. 
C) automotive products and chicken in response to President Obama's decision to impose tariffs on tires imported from China. 
D) airplanes and beef in response to President Obama's decision to impose tariffs on tires imported from China. 
A) automotive products and chicken in response to President Obama's decision to impose tariffs on toys imported from China. 
B) airplanes and beef in response to President Obama's decision to impose tariffs on toys imported from China. 
C) automotive products and chicken in response to President Obama's decision to impose tariffs on tires imported from China. 
D) airplanes and beef in response to President Obama's decision to impose tariffs on tires imported from China.

Question 15

Figure 9-12  
-Refer to Figure 9-12. With trade allowed, this country

Accepted Answer

A) exports 200 units of the good. 
B) exports 400 units of the good. 
C) imports 200 units of the good. 
D) exports 800 units of the good. 
A) exports 200 units of the good. 
B) exports 400 units of the good. 
C) imports 200 units of the good. 
D) exports 800 units of the good.

Question 16

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Accepted Answer

A) both consumer surplus and producer surplus increase. 
B) consumer surplus increases and producer surplus decreases. 
C) consumer surplus decreases and producer surplus increases. 
D) both consumer surplus and producer surplus decrease. 
A) both consumer surplus and producer surplus increase. 
B) consumer surplus increases and producer surplus decreases. 
C) consumer surplus decreases and producer surplus increases. 
D) both consumer surplus and producer surplus decrease.

Question 17

Using the graph, assume that the government imposes a $1 tariff on hammers. Answer the following questions given this information.   
a. What is the domestic price and quantity demanded of hammers after the tariff is imposed?
b. What is the quantity of hammers imported before the tariff?
c. What is the quantity of hammers imported after the tariff?
d. What would be the amount of consumer surplus before the tariff?
e. What would be the amount of consumer surplus after the tariff?
f. What would be the amount of producer surplus before the tariff?
g. What would be the amount of producer surplus after the tariff?
h. What would be the amount of government revenue because of the tariff?
i. What would be the total amount of deadweight loss due to the tariff?

Accepted Answer

a.$6, 84
b.66
c.44
d

Question 18

Figure 9-17  
-Refer to Figure 9-17. When the country moves from no trade to free trade, consumer surplus

Accepted Answer

A) increases by $1,200 and producer surplus increases by $600. 
B) increases by $1,200 and producer surplus decreases by $600. 
C) decreases by $1,350 and producer surplus increases by $450. 
D) decreases by $1,350 and producer surplus decreases by $450. 
A) increases by $1,200 and producer surplus increases by $600. 
B) increases by $1,200 and producer surplus decreases by $600. 
C) decreases by $1,350 and producer surplus increases by $450. 
D) decreases by $1,350 and producer surplus decreases by $450.

Question 19

Figure 9-4. The domestic country is Nicaragua.  
-Refer to Figure 9-4. With trade, Nicaragua

Accepted Answer

A) imports 150 calculators. 
B) imports 250 calculators. 
C) exports 100 calculators. 
D) exports 250 calculators. 
A) imports 150 calculators. 
B) imports 250 calculators. 
C) exports 100 calculators. 
D) exports 250 calculators.

Question 20

Figure 9-2  
-Refer to Figure 9-2. 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.

Exam 9: Application: International Trade

In 2008, the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy. Of those surveyed,

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

Figure 9-17 -Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14. The country for which the figure is drawn

A possible outcome of the multilateral approach to free trade is that such an approach can

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.

Figure 9-12 -Refer to Figure 9-12. Producer surplus before trade is

When a country that imports a particular good imposes an import quota on that good,

The small-economy assumption is necessary to analyze the gains and losses from international trade.

William and Jamal live in the country of Dumexia. As a result of Dumexia's legalization of international trade in bananas, William becomes better off and Jamal becomes worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, consumer surplus is

Which of the following statements is true?

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

In September 2009, China took steps toward imposing tariffs on American exports of

Figure 9-12 -Refer to Figure 9-12. With trade allowed, this country

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Figure 9-17 -Refer to Figure 9-17. When the country moves from no trade to free trade, consumer surplus

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. With trade, Nicaragua

Figure 9-2 -Refer to Figure 9-2. This country

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

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 Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

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