Question 1

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Accepted Answer

A) True 
 B)False

Question 2

Countries that restrict foreign trade are likely to

Accepted Answer

A) forgo the additional surplus that trade allows, but will probably enjoy economies of scale. 
B) forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change. 
C) forgo the additional surplus that trade allows, but will have a lower rate of unemployment. 
D) have more firms with domestic market power. 
A) forgo the additional surplus that trade allows, but will probably enjoy economies of scale. 
B) forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change. 
C) forgo the additional surplus that trade allows, but will have a lower rate of unemployment. 
D) have more firms with domestic market power.

Question 3

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. With trade, Vietnam will

Accepted Answer

A) export 1,000 units of rice. 
B) export 1,500 units of rice. 
C) import 1,000 units of rice. 
D) import 1,500 units of rice. 
A) export 1,000 units of rice. 
B) export 1,500 units of rice. 
C) import 1,000 units of rice. 
D) import 1,500 units of rice.

Question 4

What is the fundamental basis for trade among nations?

Accepted Answer

A) shortages or surpluses in nations that do not trade 
B) misguided economic policies 
C) absolute advantage 
D) comparative advantage 
A) shortages or surpluses in nations that do not trade 
B) misguided economic policies 
C) absolute advantage 
D) comparative advantage

Question 5

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

Accepted Answer

A) may prompt Russian farmers to invoke the infant-industry argument. 
B) increase the consumer surplus of Russian buyers of wheat. 
C) decrease the total surplus of the Russian people. 
D) All of the above are correct. 
A) may prompt Russian farmers to invoke the infant-industry argument. 
B) increase the consumer surplus of Russian buyers of wheat. 
C) decrease the total surplus of the Russian people. 
D) All of the above are correct.

Question 6

The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia are now better off.

Accepted Answer

A) True 
 B)False

Question 7

Figure 9-4. The domestic country is Nicaragua.  
-Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is

Accepted Answer

A) $375. 
B) $2,000. 
C) $2,250. 
D) $8,700. 
A) $375. 
B) $2,000. 
C) $2,250. 
D) $8,700.

Question 8

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. With trade, the equilibrium price of rifles and the equilibrium quantity of rifles demanded in Mexico 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

The world price of a ton of steel is $650. Before Russia allowed trade in steel, the price of a ton of steel there was $1,000. Once Russia allowed trade in steel with other countries, Russia began

Accepted Answer

A) exporting steel and the price per ton in Russia decreased to $650. 
B) exporting steel and the price per ton in Russia remained at $1,000. 
C) importing steel and the price per ton in Russia decreased to $650. 
D) importing steel and the price per ton in Russia remained at $1,000. 
A) exporting steel and the price per ton in Russia decreased to $650. 
B) exporting steel and the price per ton in Russia remained at $1,000. 
C) importing steel and the price per ton in Russia decreased to $650. 
D) importing steel and the price per ton in Russia remained at $1,000.

Question 10

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

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 11

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Accepted Answer

A) Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off. 
B) Turkish consumers of wheat become worse off and Turkish producers of wheat become better off. 
C) Turkish consumers of wheat become better off and Turkish producers of wheat become worse off. 
D) Turkish consumers of wheat become better off and Turkish producers of wheat become better off. 
A) Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off. 
B) Turkish consumers of wheat become worse off and Turkish producers of wheat become better off. 
C) Turkish consumers of wheat become better off and Turkish producers of wheat become worse off. 
D) Turkish consumers of wheat become better off and Turkish producers of wheat become better off.

Question 12

Figure 9-9  
-Refer to Figure 9-9. Producer surplus in this market after 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 13

Figure 9-5  
-Refer to Figure 9-5. With trade, consumer surplus is

Accepted Answer

A) $245. 
B) $362.50. 
C) $367.50. 
D) $607.50. 
A) $245. 
B) $362.50. 
C) $367.50. 
D) $607.50.

Question 14

In September 2009, President Obama

Accepted Answer

A) imposed a tariff on tires imported from China; in doing so, the president reneged on an agreement into which the U.S. had entered in 2001. 
B) imposed a tariff on tires imported from China; the tariff was in accordance with an agreement into which the U.S. had entered in 2001. 
C) removed a tariff on tires imported from China; the tariff had been imposed by President George W. Bush. 
D) removed a tariff on tires imported from China; the tariff had been imposed by President Bill Clinton. 
A) imposed a tariff on tires imported from China; in doing so, the president reneged on an agreement into which the U.S. had entered in 2001. 
B) imposed a tariff on tires imported from China; the tariff was in accordance with an agreement into which the U.S. had entered in 2001. 
C) removed a tariff on tires imported from China; the tariff had been imposed by President George W. Bush. 
D) removed a tariff on tires imported from China; the tariff had been imposed by President Bill Clinton.

Question 15

Scenario 9-2
For a small country called Boxland, the equation of the domestic demand curve for cardboard is
S1U1B1 S1U1B0
S1U1B1 S1U1B0
 $Q ^ { D } = 200 - 2 P$ ,
where $Q ^ { D }$ represents the domestic quantity of cardboard demanded, in tons, and $P$ represents the price of a ton of cardboard.For Boxland, the equation of the domestic supply curve for cardboard is
S1U1B1 S1U1B0
S1U1B1 S1U1B0
 $Q ^ { S } = - 60 + 3 P$ ,
where $Q ^ { s }$ represents the domestic quantity of cardboard supplied, in tons, and $P$ again represents the price of a ton of cardboard.
-Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard

Accepted Answer

A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. 
B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. 
C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. 
D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. 
A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. 
B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. 
C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. 
D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00.

Question 16

The nation of Pineland forbids international trade. In Pineland, you can buy 1 pound of fish for 2 pounds of pineapples. In other countries, you can buy 1 pound of fish for 1.5 pounds of pineapples. These facts indicate that

Accepted Answer

A) Pineland has a comparative advantage, relative to other countries, in producing fish. 
B) other countries have a comparative advantage, relative to Pineland, in producing pineapples. 
C) the price of pineapples in Pineland exceeds the world price of pineapples. 
D) if Pineland were to allow trade, it would import fish. 
A) Pineland has a comparative advantage, relative to other countries, in producing fish. 
B) other countries have a comparative advantage, relative to Pineland, in producing pineapples. 
C) the price of pineapples in Pineland exceeds the world price of pineapples. 
D) if Pineland were to allow trade, it would import fish.

Question 17

A common argument in favor of restricting international trade in good x is based on the premise that

Accepted Answer

A) international trade reduces total surplus in countries that export good x. 
B) international trade reduces total surplus in countries that import good x. 
C) international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another. 
D) trade restrictions can be useful when one country bargains with its trading partners. 
A) international trade reduces total surplus in countries that export good x. 
B) international trade reduces total surplus in countries that import good x. 
C) international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another. 
D) trade restrictions can be useful when one country bargains with its trading partners.

Question 18

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

Accepted Answer

A) Consumer surplus decreases by $100; producer surplus increases by $100; and government revenue from the tariff amounts to $50. 
B) Consumer surplus decreases by $200; producer surplus increases by $100; and government revenue from the tariff amounts to $50. 
C) Consumer surplus increases by $100; producer surplus decreases by $200; and government revenue from the tariff amounts to $50. 
D) Consumer surplus decreases by $50; producer surplus increases by $200; and government revenue from the tariff amounts to $150. 
A) Consumer surplus decreases by $100; producer surplus increases by $100; and government revenue from the tariff amounts to $50. 
B) Consumer surplus decreases by $200; producer surplus increases by $100; and government revenue from the tariff amounts to $50. 
C) Consumer surplus increases by $100; producer surplus decreases by $200; and government revenue from the tariff amounts to $50. 
D) Consumer surplus decreases by $50; producer surplus increases by $200; and government revenue from the tariff amounts to $150.

Question 19

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 20

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular 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.

Exam 9: Application: International Trade

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Countries that restrict foreign trade are likely to

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. With trade, Vietnam will

What is the fundamental basis for trade among nations?

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia are now better off.

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. With trade, the equilibrium price of rifles and the equilibrium quantity of rifles demanded in Mexico are

The world price of a ton of steel is $650. Before Russia allowed trade in steel, the price of a ton of steel there was $1,000. Once Russia allowed trade in steel with other countries, Russia began

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

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

Figure 9-5 -Refer to Figure 9-5. With trade, consumer surplus is

In September 2009, President Obama

The nation of Pineland forbids international trade. In Pineland, you can buy 1 pound of fish for 2 pounds of pineapples. In other countries, you can buy 1 pound of fish for 1.5 pounds of pineapples. These facts indicate that

A common argument in favor of restricting international trade in good x is based on the premise that

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

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

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular 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 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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