Question 1

Figure 9-5  
-Refer to Figure 9-5. If this country allows free trade in wagons,

Accepted Answer

A) consumers will gain more than producers will lose. 
B) producers will gain more than consumers will lose. 
C) producers and consumers will both gain equally. 
D) producers and consumers will both lose equally. 
A) consumers will gain more than producers will lose. 
B) producers will gain more than consumers will lose. 
C) producers and consumers will both gain equally. 
D) producers and consumers will both lose equally.

Question 2

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

Accepted Answer

A) consumer surplus increases for consumers of wool in New Zealand. 
B) producer surplus increases for producers of wool in New Zealand. 
C) total surplus remains unchanged in the wool market in New Zealand. 
D) it is reasonable to infer that other countries have a comparative advantage over New Zealand in wool production. 
A) consumer surplus increases for consumers of wool in New Zealand. 
B) producer surplus increases for producers of wool in New Zealand. 
C) total surplus remains unchanged in the wool market in New Zealand. 
D) it is reasonable to infer that other countries have a comparative advantage over New Zealand in wool production.

Question 3

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 4

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?

Accepted Answer

A) More Danish-produced chips are sold in Denmark. 
B) More foreign-produced chips are sold in Denmark. 
C) Danish consumers of chips become better off. 
D) Total surplus in the Danish chip market increases. 
A) More Danish-produced chips are sold in Denmark. 
B) More foreign-produced chips are sold in Denmark. 
C) Danish consumers of chips become better off. 
D) Total surplus in the Danish chip market increases.

Question 5

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Accepted Answer

A) abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. 
B) abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. 
C) abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. 
D) abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples. 
A) abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. 
B) abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. 
C) abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. 
D) abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples.

Question 6

Figure 9-11  
-Refer to Figure 9-11. Consumer surplus in this market after trade is

Accepted Answer

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

Question 7

Figure 9-3. The domestic country is China.  
-Refer to Figure 9-3. With no international trade,

Accepted Answer

A) the equilibrium price is $12 and the equilibrium quantity is 300. 
B) the equilibrium price is $16 and the equilibrium quantity is 200. 
C) the equilibrium price is $16 and the equilibrium quantity is 300. 
D) the equilibrium price is $16 and the equilibrium quantity is 450. 
A) the equilibrium price is $12 and the equilibrium quantity is 300. 
B) the equilibrium price is $16 and the equilibrium quantity is 200. 
C) the equilibrium price is $16 and the equilibrium quantity is 300. 
D) the equilibrium price is $16 and the equilibrium quantity is 450.

Question 8

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

Accepted Answer

A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. 
B) this is an indication that the nation has a comparative advantage in producing soybeans. 
C) the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off. 
D) All of the above are correct. 
A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. 
B) this is an indication that the nation has a comparative advantage in producing soybeans. 
C) the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off. 
D) All of the above are correct.

Question 9

When the nation of Worldova allows trade and becomes an exporter of silk,

Accepted Answer

A) residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova rises. 
B) residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova falls. 
C) residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises. 
D) residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova falls. 
A) residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova rises. 
B) residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova falls. 
C) residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises. 
D) residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova falls.

Question 10

Figure 9-2  
-Refer to Figure 9-2. Without trade, producer surplus is

Accepted Answer

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

Question 11

The nation of Spritzland used to prohibit international trade, but now trade is allowed, and Spritzland is exporting wristwatches. Relative to the previous no-trade situation, total surplus in the market for wristwatches in Spritzland has increased.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

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

Question 13

Figure 9-17  
-Refer to Figure 9-17. Without trade, consumer surplus is

Accepted Answer

A) $400 and producer surplus is $200. 
B) $400 and producer surplus is $800. 
C) $1,600 and producer surplus is $200. 
D) $1,600 and producer surplus is $800. 
A) $400 and producer surplus is $200. 
B) $400 and producer surplus is $800. 
C) $1,600 and producer surplus is $200. 
D) $1,600 and producer surplus is $800.

Question 14

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

Accepted Answer

A) domestic producers gain and domestic consumers lose. 
B) domestic producers lose and domestic consumers gain. 
C) domestic producers and domestic consumers both gain. 
D) domestic producers and domestic consumers both lose. 
A) domestic producers gain and domestic consumers lose. 
B) domestic producers lose and domestic consumers gain. 
C) domestic producers and domestic consumers both gain. 
D) domestic producers and domestic consumers both lose.

Question 15

When a country allows international trade and becomes an importer of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Figure 9-5  
-Refer to Figure 9-5. Without trade, total surplus amounts to

Accepted Answer

A) $122.50. 
B) $245. 
C) $367.50. 
D) $612.50. 
A) $122.50. 
B) $245. 
C) $367.50. 
D) $612.50.

Question 18

After a certain nation changed its policy from one that banned international trade in wheat to one that allowed international trade in wheat, the nation began importing wheat. As a result, total surplus in the wheat market increased by $10 million. Which of the following changes could have occurred as well?

Accepted Answer

A) The price of wheat in that nation increased with the adoption of the new policy. 
B) The domestic quantity of wheat supplied increased with the adoption of the new policy. 
C) Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. 
D) Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million. 
A) The price of wheat in that nation increased with the adoption of the new policy. 
B) The domestic quantity of wheat supplied increased with the adoption of the new policy. 
C) Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. 
D) Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million.

Question 19

Figure 9-1
The figure illustrates the market for wool in Scotland.  
-Refer to Figure 9-1. In the absence of trade, the equilibrium price of wool in Scotland is

Accepted Answer

A) $15. 
B) $45. 
C) $55. 
D) $70. 
A) $15. 
B) $45. 
C) $55. 
D) $70.

Question 20

Figure 9-15  
-Refer to Figure 9-15. Consumer surplus with the tariff is

Accepted Answer

A) A. 
B) A + B. 
C) A + C + G. 
D) A + B + C + D +E + F. 
A) A. 
B) A + B. 
C) A + C + G. 
D) A + B + C + D +E + F.

Exam 9: Application: International Trade

Figure 9-5 -Refer to Figure 9-5. If this country allows free trade in wagons,

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

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.

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Figure 9-11 -Refer to Figure 9-11. Consumer surplus in this market after trade is

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With no international trade,

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

When the nation of Worldova allows trade and becomes an exporter of silk,

Figure 9-2 -Refer to Figure 9-2. Without trade, producer surplus is

The nation of Spritzland used to prohibit international trade, but now trade is allowed, and Spritzland is exporting wristwatches. Relative to the previous no-trade situation, total surplus in the market for wristwatches in Spritzland has increased.

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

Figure 9-17 -Refer to Figure 9-17. Without trade, consumer surplus is

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

When a country allows international trade and becomes an importer of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off.

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

Figure 9-5 -Refer to Figure 9-5. Without trade, total surplus amounts to

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1. In the absence of trade, the equilibrium price of wool in Scotland is

Figure 9-15 -Refer to Figure 9-15. Consumer surplus with the tariff is

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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