Question 1

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. With trade, Wales

Accepted Answer

A) imports Q2 - Q1 units of cheese. 
B) exports Q2 - Q1 units of cheese. 
C) imports Q2 - Q0 units of cheese. 
D) exports Q2 - Q0 units of cheese. 
A) imports Q2 - Q1 units of cheese. 
B) exports Q2 - Q1 units of cheese. 
C) imports Q2 - Q0 units of cheese. 
D) exports Q2 - Q0 units of cheese.

Question 2

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. If Isoland allows international trade and if the world price of peaches is $3, then

Accepted Answer

A) Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B) Isoland will export peaches. 
C) producer surplus with trade exceeds producer surplus without trade. 
D) consumer surplus with trade exceeds consumer surplus without trade. 
A) Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B) Isoland will export peaches. 
C) producer surplus with trade exceeds producer surplus without trade. 
D) consumer surplus with trade exceeds consumer surplus without trade.

Question 3

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

Accepted Answer

A) better off no matter how Honduras responds. 
B) better off if Honduras gives in, and will be no worse off if it doesn't. 
C) worse off if Honduras doesn't give in to the threat. 
D) worse off no matter how Honduras responds. 
A) better off no matter how Honduras responds. 
B) better off if Honduras gives in, and will be no worse off if it doesn't. 
C) worse off if Honduras doesn't give in to the threat. 
D) worse off no matter how Honduras responds.

Question 4

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

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 5

Figure 9-1
The figure illustrates the market for wool in Scotland.  
-Refer to Figure 9-1. Relative to the no-trade situation, trade with the rest of the world results in

Accepted Answer

A) Scotland consumers paying a higher price for wool. 
B) a decrease in producer surplus in Scotland. 
C) a decrease in total surplus in Scotland. 
D) All of the above are correct. 
A) Scotland consumers paying a higher price for wool. 
B) a decrease in producer surplus in Scotland. 
C) a decrease in total surplus in Scotland. 
D) All of the above are correct.

Question 6

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Accepted Answer

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

Question 7

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. If Isoland allows international trade and if the world price of peaches is $5, then

Accepted Answer

A) Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B) Isoland will import peaches. 
C) consumer surplus with trade exceeds consumer surplus without trade. 
D) All of the above are correct. 
A) Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B) Isoland will import peaches. 
C) consumer surplus with trade exceeds consumer surplus without trade. 
D) All of the above are correct.

Question 8

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. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

Accepted Answer

A) above $2. 
B) below $4. 
C) above $4. 
D) below $7. 
A) above $2. 
B) below $4. 
C) above $4. 
D) below $7.

Question 9

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

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

Question 10

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, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

Accepted Answer

A) True 
 B)False

Question 11

The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy. If the world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2 per pound, then Aviana should export goose meat.

Accepted Answer

A) True 
 B)False

Question 12

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Accepted Answer

A) representatives of industry. 
B) representatives of the defense establishment. 
C) members of households. 
D) foreign government officials. 
A) representatives of industry. 
B) representatives of the defense establishment. 
C) members of households. 
D) foreign government officials.

Question 13

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. From the figure it is apparent that

Accepted Answer

A) Vietnam will experience a shortage of rice if trade is not allowed. 
B) Vietnam will experience a surplus of rice if trade is not allowed. 
C) Vietnam has a comparative advantage in producing rice, relative to the rest of the world. 
D) foreign countries have a comparative advantage in producing rice, relative to Vietnam. 
A) Vietnam will experience a shortage of rice if trade is not allowed. 
B) Vietnam will experience a surplus of rice if trade is not allowed. 
C) Vietnam has a comparative advantage in producing rice, relative to the rest of the world. 
D) foreign countries have a comparative advantage in producing rice, relative to Vietnam.

Question 14

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 $60. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 
A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.

Question 15

When a country allows trade and becomes an exporter 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 16

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 $3, then the policy change results in a

Accepted Answer

A) $15.00 decrease in producer surplus. 
B) $45.00 increase in consumer surplus. 
C) $20.00 increase in total surplus. 
D) $12.50 increase in total surplus. 
A) $15.00 decrease in producer surplus. 
B) $45.00 increase in consumer surplus. 
C) $20.00 increase in total surplus. 
D) $12.50 increase in total surplus.

Question 17

The nation of Fastbrooke forbids international trade. In Fastbrooke, you can exchange 1 television for 3 computers. In other countries, you can exchange 1 television for 2 computers. These facts indicate that

Accepted Answer

A) other countries have an absolute advantage, relative to Fastbrooke, in producing televisions. 
B) Fastbrooke has a comparative advantage, relative to other countries, in producing televisions. 
C) if Fastbrooke were to allow trade, it would import computers. 
D) the world price of computers exceeds the price of computers in Fastbrooke. 
A) other countries have an absolute advantage, relative to Fastbrooke, in producing televisions. 
B) Fastbrooke has a comparative advantage, relative to other countries, in producing televisions. 
C) if Fastbrooke were to allow trade, it would import computers. 
D) the world price of computers exceeds the price of computers in Fastbrooke.

Question 18

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter 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.

Question 19

Figure 9-13  
-Refer to Figure 9-13. Consumer surplus before trade is

Accepted Answer

A) $1,600. 
B) $2,400. 
C) $3,200. 
D) $3,600. 
A) $1,600. 
B) $2,400. 
C) $3,200. 
D) $3,600.

Question 20

A multilateral approach to free trade has greater 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

Exam 9: Application: International Trade

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. With trade, Wales

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. If Isoland allows international trade and if the world price of peaches is $3, then

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

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

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1. Relative to the no-trade situation, trade with the rest of the world results in

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

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. If Isoland allows international trade and if the world price of peaches is $5, then

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. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

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, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy. If the world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2 per pound, then Aviana should export goose meat.

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. From the figure it is apparent that

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

The nation of Fastbrooke forbids international trade. In Fastbrooke, you can exchange 1 television for 3 computers. In other countries, you can exchange 1 television for 2 computers. These facts indicate that

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

Figure 9-13 -Refer to Figure 9-13. Consumer surplus before trade is

A multilateral approach to free trade has greater 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.

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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