Question 1

A tariff decreases the quantity of imports.

Accepted Answer

A) True 
 B)False  True

Question 2

When Ford and General Motors import automobile parts from Mexico at prices below those they must pay in the US:

Accepted Answer

A)  workers who assemble Ford and General Motors vehicles become worse off 
B)  US consumers, taken as a group, become worse off 
C)  Mexican consumers, taken as a group, become worse off 
D)  American companies that manufacture automobile parts become worse off 
A)  workers who assemble Ford and General Motors vehicles become worse off 
B)  US consumers, taken as a group, become worse off 
C)  Mexican consumers, taken as a group, become worse off 
D)  American companies that manufacture automobile parts become worse off D

Question 3

Since losers from international trade are always compensated for their losses, international trade increases the size of the economic pie and the size of the pieces such that everyone is better off.

Accepted Answer

A) True 
 B)False  False

Question 4

A tariff is a:

Accepted Answer

A)  tax imposed on imported goods 
B)  tax imposed on exported goods 
C)  a quantitative limit on imported goods 
D)  policy to encourage more trade 
A)  tax imposed on imported goods 
B)  tax imposed on exported goods 
C)  a quantitative limit on imported goods 
D)  policy to encourage more trade

Question 5

If Australia imports toys from other countries, Australian producers of toys are better off as a result of trade, but Australian consumers of toys are worse off.

Accepted Answer

A) True 
 B)False

Question 6

Workers displaced by trade will eventually find jobs in:

Accepted Answer

A)  another country 
B)  the government sector 
C)  the industries in which the country has a comparative advantage 
D)  a different company in the same industry 
A)  another country 
B)  the government sector 
C)  the industries in which the country has a comparative advantage 
D)  a different company in the same industry

Question 7

Suppose that Australia has a comparative advantage over the New Zealand in providing financial services and New Zealand has a comparative advantage over Australia in producing milk products. By reducing trade barriers, CER allowed both Australia and New Zealand to export more of the products in which it enjoys a comparative advantage. Do all people in both countries benefit from this free trade agreement? Explain.

Accepted Answer

While overall economic wellbeing in both

Question 8

Graph 9-8
  
-According to Graph 9-8, producer surplus before trade would be:

Accepted Answer

A)  $3600 
B)  $4400 
C)  $5200 
D)  $6600 
A)  $3600 
B)  $4400 
C)  $5200 
D)  $6600

Question 9

If Peru exports coffee to the rest of the world, Peruvian consumers of coffee are worse off as a result of trade, but Peruvian producers of coffee are better off.

Accepted Answer

A) True 
 B)False

Question 10

If free trade means that domestic jobs might be lost because of foreign competition, then economists agree that free trade must be restricted.

Accepted Answer

A) True 
 B)False

Question 11

Graph 9-9
  
-Which of the following is an argument for restricting trade?

Accepted Answer

A)  trade restrictions make all Australians better off 
B)  trade restrictions increase economic efficiency 
C)  trade restrictions are necessary for economic growth 
D)  trade restrictions are necessary for national security 
A)  trade restrictions make all Australians better off 
B)  trade restrictions increase economic efficiency 
C)  trade restrictions are necessary for economic growth 
D)  trade restrictions are necessary for national security

Question 12

Graph 9-5
This graph refers to the market for oil in Spain.
  
-According to Graph 9-5, the quantity of oil imported into Spain is:

Accepted Answer

A)  Q0 
B)  Q1 
C)  Q2 
D)  Q2 minus Q1 
A)  Q0 
B)  Q1 
C)  Q2 
D)  Q2 minus Q1

Question 13

In principle, trade can make everyone better off, since the gains to the winners exceed the losses to the losers.

Accepted Answer

A) True 
 B)False

Question 14

Graph 9-6
This graph refers to the market for oil in Spain.
  
-According to Graph 9-6, producer surplus in Spain before trade would be:

Accepted Answer

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

Question 15

Graph 9-8
  
-According to Graph 9-8, consumer surplus after trade would be:

Accepted Answer

A)  $3600 
B)  $5400 
C)  $7200 
D)  $8100 
A)  $3600 
B)  $5400 
C)  $7200 
D)  $8100

Question 16

In 1983, New Zealand had 16 car assembly plants. These plants were protected from international competition by very high tariffs. These tariffs were later removed. Assuming that New Zealand is a price taker in the automobile market, explain the welfare changes that occurred after the tariffs were removed. Identify the winners and losers of the policy.

Accepted Answer

New Zealand car assembly plants were wor

Question 17

Import quotas and tariffs both cause the quantity of imports to fall.

Accepted Answer

A) True 
 B)False

Question 18

Graph 9-1
This graph refers to the market for beef in Japan.
  
-According to Graph 9-1, if trade in beef is allowed, Japanese beef:

Accepted Answer

A)  consumers and Japanese beef producers will gain 
B)  consumers and Japanese beef producers will lose 
C)  consumers will gain, and Japanese beef producers will lose 
D)  producers will gain, and Japanese beef consumers will lose 
A)  consumers and Japanese beef producers will gain 
B)  consumers and Japanese beef producers will lose 
C)  consumers will gain, and Japanese beef producers will lose 
D)  producers will gain, and Japanese beef consumers will lose

Question 19

Graph 9-7
  
-According to Graph 9-7, the price and domestic quantity demanded after trade would be:

Accepted Answer

A)  $20, 2000 
B)  $20, 2800 
C)  $10, 2000 
D)  $10, 2800 
A)  $20, 2000 
B)  $20, 2800 
C)  $10, 2000 
D)  $10, 2800

Question 20

Graph 9-8
  
-According to Graph 9-8, how many units of this product would be imported after trade?

Accepted Answer

A)  800 
B)  600 
C)  400 
D)  200 
A)  800 
B)  600 
C)  400 
D)  200

Exam 9: Application: International Trade

A tariff decreases the quantity of imports.

When Ford and General Motors import automobile parts from Mexico at prices below those they must pay in the US:

Since losers from international trade are always compensated for their losses, international trade increases the size of the economic pie and the size of the pieces such that everyone is better off.

A tariff is a:

If Australia imports toys from other countries, Australian producers of toys are better off as a result of trade, but Australian consumers of toys are worse off.

Workers displaced by trade will eventually find jobs in:

Graph 9-8 -According to Graph 9-8, producer surplus before trade would be:

If Peru exports coffee to the rest of the world, Peruvian consumers of coffee are worse off as a result of trade, but Peruvian producers of coffee are better off.

If free trade means that domestic jobs might be lost because of foreign competition, then economists agree that free trade must be restricted.

Graph 9-9 -Which of the following is an argument for restricting trade?

Graph 9-5 This graph refers to the market for oil in Spain. -According to Graph 9-5, the quantity of oil imported into Spain is:

In principle, trade can make everyone better off, since the gains to the winners exceed the losses to the losers.

Graph 9-6 This graph refers to the market for oil in Spain. -According to Graph 9-6, producer surplus in Spain before trade would be:

Graph 9-8 -According to Graph 9-8, consumer surplus after trade would be:

Import quotas and tariffs both cause the quantity of imports to fall.

Graph 9-1 This graph refers to the market for beef in Japan. -According to Graph 9-1, if trade in beef is allowed, Japanese beef:

Graph 9-7 -According to Graph 9-7, the price and domestic quantity demanded after trade would be:

Graph 9-8 -According to Graph 9-8, how many units of this product would be imported after trade?

Ten Lessons From 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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

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

Five Debates Over Macroeconomic Policy

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