Question 1

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

Accepted Answer

A) $210. 
B) $245. 
C) $450. 
D) $455. 
A) $210. 
B) $245. 
C) $450. 
D) $455.

Question 2

Figure 9-2  
-Refer to Figure 9-2. With free trade, producer surplus is

Accepted Answer

A) $80.00. 
B) $210.00. 
C) $245.50. 
D) $472.50. 
A) $80.00. 
B) $210.00. 
C) $245.50. 
D) $472.50.

Question 3

Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches.
-Refer to Scenario 9-1. If trade in peaches is allowed, the

Accepted Answer

A) price paid by American consumers of peaches is unchanged relative to the no-trade situation. 
B) total well-being of American producers of peaches is diminished relative to the no-trade situation. 
C) total well-being of American consumers of peaches is enhanced relative to the no-trade situation. 
D) total well-being of the United States is enhanced relative to the no-trade situation. 
A) price paid by American consumers of peaches is unchanged relative to the no-trade situation. 
B) total well-being of American producers of peaches is diminished relative to the no-trade situation. 
C) total well-being of American consumers of peaches is enhanced relative to the no-trade situation. 
D) total well-being of the United States is enhanced relative to the no-trade situation.

Question 4

Figure 9-15  
-Refer to Figure 9-15. For the saddle market, area B represents

Accepted Answer

A) government's revenue from the tariff. 
B) the deadweight loss of the tariff. 
C) the increase in producer surplus, relative to the free-trade situation, as a result of the tariff. 
D) None of the above is correct. 
A) government's revenue from the tariff. 
B) the deadweight loss of the tariff. 
C) the increase in producer surplus, relative to the free-trade situation, as a result of the tariff. 
D) None of the above is correct.

Question 5

Figure 9-6  
-Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Accepted Answer

A) gain by $100. 
B) gain by $200. 
C) gain by $300. 
D) lose by $100. 
A) gain by $100. 
B) gain by $200. 
C) gain by $300. 
D) lose by $100.

Question 6

For Country A, the world price of soybeans exceeds the domestic equilibrium price of soybeans. As a result, international trade allows buyers of soybeans in Country A to experience greater consumer surplus than they otherwise would experience.

Accepted Answer

A) True 
 B)False

Question 7

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

Accepted Answer

A) better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off. 
B) worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off 
C) worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off. 
D) better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off 
A) better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off. 
B) worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off 
C) worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off. 
D) better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off

Question 8

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A) protectionism based on the national-security argument. 
B) protectionism based on the infant-industry argument. 
C) protectionism based on the unfair-competition argument. 
D) keeping world markets relatively open. 
A) protectionism based on the national-security argument. 
B) protectionism based on the infant-industry argument. 
C) protectionism based on the unfair-competition argument. 
D) keeping world markets relatively open.

Question 9

Which of the following tools and concepts is useful in the analysis of international trade?

Accepted Answer

A) total surplus 
B) domestic supply 
C) equilibrium price 
D) All of the above are correct. 
A) total surplus 
B) domestic supply 
C) equilibrium price 
D) All of the above are correct.

Question 10

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

Accepted Answer

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

Question 11

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland.  
-Refer to Figure 9-18. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $5, then the policy change results in a

Accepted Answer

A) $25 decrease in consumer surplus. 
B) $20 increase in consumer surplus. 
C) $25 decrease in producer surplus. 
D) $20 increase in producer surplus. 
A) $25 decrease in consumer surplus. 
B) $20 increase in consumer surplus. 
C) $25 decrease in producer surplus. 
D) $20 increase in producer surplus.

Question 12

Assume, for the U.S., that the domestic price of pineapples without international trade is lower than the world price of pineapples. This suggests that, in the production of pineapples,

Accepted Answer

A) the U.S. has a comparative advantage over other countries and the U.S. will export pineapples. 
B) the U.S. has a comparative advantage over other countries and the U.S. will import pineapples. 
C) other countries have a comparative advantage over the U.S. and the U.S. will export pineapples. 
D) other countries have a comparative advantage over the U.S. and the U.S. will import pineapples. 
A) the U.S. has a comparative advantage over other countries and the U.S. will export pineapples. 
B) the U.S. has a comparative advantage over other countries and the U.S. will import pineapples. 
C) other countries have a comparative advantage over the U.S. and the U.S. will export pineapples. 
D) other countries have a comparative advantage over the U.S. and the U.S. will import pineapples.

Question 13

Figure 9-11  
-Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is

Accepted Answer

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

Question 14

Patterns of trade among nations are primarily determined by

Accepted Answer

A) cultural considerations. 
B) political considerations. 
C) comparative advantage. 
D) differences in the income elasticity of demand among nations. 
A) cultural considerations. 
B) political considerations. 
C) comparative advantage. 
D) differences in the income elasticity of demand among nations.

Question 15

If Freedonia changes its laws to allow international trade in software and the world price is lower 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 16

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Accepted Answer

A) True 
 B)False

Question 17

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

Accepted Answer

A) the country becomes an importer of the good as a result. 
B) the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C) other countries have a comparative advantage, relative to the country in question, in producing the good. 
D) total surplus does not change as a result. 
A) the country becomes an importer of the good as a result. 
B) the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C) other countries have a comparative advantage, relative to the country in question, in producing the good. 
D) total surplus does not change as a result.

Question 18

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. If Boxland prohibits international trade in cardboard, then the equilibrium price of a ton of cardboard is

Accepted Answer

A) $36 and the equilibrium quantity of cardboard is 74 tons. 
B) $44 and the equilibrium quantity of cardboard is 88 tons. 
C) $52 and the equilibrium quantity of cardboard is 96 tons. 
D) $60 and the equilibrium quantity of cardboard is 100 tons. 
A) $36 and the equilibrium quantity of cardboard is 74 tons. 
B) $44 and the equilibrium quantity of cardboard is 88 tons. 
C) $52 and the equilibrium quantity of cardboard is 96 tons. 
D) $60 and the equilibrium quantity of cardboard is 100 tons.

Question 19

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. A result of this country allowing international trade in crude oil is as follows:

Accepted Answer

A) The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel. 
B) The effect on the well-being of domestic crude-oil consumers is unclear in that they now buy more crude oil, but at a higher price per barrel. 
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases, while the effect on domestic consumer surplus is unclear. 
D) All of the above are correct. 
A) The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel. 
B) The effect on the well-being of domestic crude-oil consumers is unclear in that they now buy more crude oil, but at a higher price per barrel. 
C) The effect on the well-being of the country is unclear in that domestic producer surplus increases, while the effect on domestic consumer surplus is unclear. 
D) All of the above are correct.

Question 20

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

Accepted Answer

A) the losses of the domestic producers of coal exceed the gains of the domestic consumers of coal. 
B) the losses of the domestic consumers of coal exceed the gains of the domestic producers of coal. 
C) the gains of the domestic producers of coal exceed the losses of the domestic consumers of coal. 
D) the gains of the domestic consumers of coal exceed the losses of the domestic producers of coal. 
A) the losses of the domestic producers of coal exceed the gains of the domestic consumers of coal. 
B) the losses of the domestic consumers of coal exceed the gains of the domestic producers of coal. 
C) the gains of the domestic producers of coal exceed the losses of the domestic consumers of coal. 
D) the gains of the domestic consumers of coal exceed the losses of the domestic producers of coal.

Exam 9: Application: International Trade

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

Figure 9-2 -Refer to Figure 9-2. With free trade, producer surplus is

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the

Figure 9-15 -Refer to Figure 9-15. For the saddle market, area B represents

Figure 9-6 -Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

For Country A, the world price of soybeans exceeds the domestic equilibrium price of soybeans. As a result, international trade allows buyers of soybeans in Country A to experience greater consumer surplus than they otherwise would experience.

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

In a December 2007 New York Times column Paul Krugman argued in favor of

Which of the following tools and concepts is useful in the analysis of international trade?

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

Assume, for the U.S., that the domestic price of pineapples without international trade is lower than the world price of pineapples. This suggests that, in the production of pineapples,

Figure 9-11 -Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is

Patterns of trade among nations are primarily determined by

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

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

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. A result of this country allowing international trade in crude oil is as follows:

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

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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