Question 1

Graph 9-3
  
-In Graph 9-3, after the quota, imports would be equal to:

Accepted Answer

A)  Q4 minus Q1 
B)  Q3 minus Q2 
C)  Q3 minus Q1 
D)  Q2 minus Q1 
A)  Q4 minus Q1 
B)  Q3 minus Q2 
C)  Q3 minus Q1 
D)  Q2 minus Q1

Question 2

Trade is beneficial because it:

Accepted Answer

A)  creates jobs for middlemen 
B)  creates jobs for shippers 
C)  allows each nation to apply economic pressure on other nations 
D)  allows each nation to specialise in doing what it does best 
A)  creates jobs for middlemen 
B)  creates jobs for shippers 
C)  allows each nation to apply economic pressure on other nations 
D)  allows each nation to specialise in doing what it does best

Question 3

Free trade causes job losses in industries in which a country does not have a comparative advantage but it also causes job gains in industries in which the country has a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 4

A country is likely to import a good if its domestic price is high, relative to the world price.

Accepted Answer

A) True 
 B)False

Question 5

Graph 9-7
  
-According to Graph 9-7, consumer surplus after trade would be:

Accepted Answer

A)  $10 000 
B)  $12 000 
C)  $20 000 
D)  $24 000 
A)  $10 000 
B)  $12 000 
C)  $20 000 
D)  $24 000

Question 6

Many economists oppose the infant industry argument because it is difficult to remove.

Accepted Answer

A) True 
 B)False

Question 7

Graph 9-4
This graph refers to the market for kiwifruit in New Zealand.
  
-According to Graph 9-4, producer surplus in New Zealand after trade is:

Accepted Answer

A)  a 
B)  a + b 
C)  c + b + d 
D)  c 
A)  a 
B)  a + b 
C)  c + b + d 
D)  c

Question 8

What is the effect on the economic wellbeing of a nation if a quota on imports is imposed? Why?

Accepted Answer

A quota reduces the economic wellbeing o

Question 9

Sometimes countries suffer a net loss of jobs due to free trade, because they do not have a comparative advantage in producing anything.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the before-trade domestic price of natural gas in Australia is $15 per kg. The world price of natural gas is $30 per kg. Australia is a price-taker in the natural gas market.
-According to this statement, if trade in natural gas is allowed, Australian producers of natural gas:

Accepted Answer

A)  will be better off 
B)  will be worse off 
C)  will be unaffected 
D)  could be helped or hurt 
A)  will be better off 
B)  will be worse off 
C)  will be unaffected 
D)  could be helped or hurt

Question 11

Import quotas make domestic buyers better off and domestic sellers worse off.

Accepted Answer

A) True 
 B)False

Question 12

Graph 9-6
This graph refers to the market for oil in Spain.
  
-According to Graph 9-6, the change in total surplus in Spain because of trade would be:

Accepted Answer

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

Question 13

Suppose a country becomes more open to trade and imports increase. This means that:

Accepted Answer

A)  everyone in the country benefits from trade 
B)  the losses of the losers is less than the gains of the winners 
C)  the losses of the losers exceed the gains of the winners 
D)  everyone in the country loses from the trade 
A)  everyone in the country benefits from trade 
B)  the losses of the losers is less than the gains of the winners 
C)  the losses of the losers exceed the gains of the winners 
D)  everyone in the country loses from the trade

Question 14

Use the following information to answer the following questions.
The before-trade price of logs in New Zealand is $100 per cubic metre. The world price of logs is $200 per cubic metre. New Zealand is a price taker in the world log market.
-If New Zealand allows trade in logs, domestic consumers of logs will be:

Accepted Answer

A)  worse off and producers of logs will be better off 
B)  better off and producers of logs will be better off 
C)  worse off and producers of logs will be worse off 
D)  worse off and producers of logs will be unaffected 
A)  worse off and producers of logs will be better off 
B)  better off and producers of logs will be better off 
C)  worse off and producers of logs will be worse off 
D)  worse off and producers of logs will be unaffected

Question 15

If Colombia exports coffee to the rest of the world, Colombian coffee sellers benefit from higher producer surplus. Colombian coffee buyers are worse off because of lower consumer surplus, but total surplus in Colombia increases because of trade.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that Australia imposes a tariff on imported computer chips. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million and the reduction in consumer surplus is $500 million, then the deadweight loss of the tariff is $800 million.

Accepted Answer

A) True 
 B)False

Question 17

Graph 9-3
  
-In Graph 9-3, after the quota, deadweight loss would be equal to:

Accepted Answer

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

Question 18

Use the following information to answer the following questions.
The before-trade price of logs in New Zealand is $100 per cubic metre. The world price of logs is $200 per cubic metre. New Zealand is a price taker in the world log market.
-When a country allows trade and becomes an exporter of a good:

Accepted Answer

A)  everyone in the country benefits 
B)  everyone in the country loses 
C)  the gains of the winners exceed the losses of the losers 
D)  the losses of the losers exceed the gains of the winners 
A)  everyone in the country benefits 
B)  everyone in the country loses 
C)  the gains of the winners exceed the losses of the losers 
D)  the losses of the losers exceed the gains of the winners

Question 19

Use the following information to answer the following questions.
The before-trade price of logs in New Zealand is $100 per cubic metre. The world price of logs is $200 per cubic metre. New Zealand is a price taker in the world log market.
-If Brazil has a comparative advantage in producing rubber and trade in rubber is allowed:

Accepted Answer

A)  Brazil will become an importer of rubber 
B)  Brazil will become an exporter of rubber 
C)  Brazil could become either an exporter or an importer of rubber 
D)  it is impossible to determine whether Brazil will become an importer or an exporter of rubber without additional information about rubber prices 
A)  Brazil will become an importer of rubber 
B)  Brazil will become an exporter of rubber 
C)  Brazil could become either an exporter or an importer of rubber 
D)  it is impossible to determine whether Brazil will become an importer or an exporter of rubber without additional information about rubber prices

Question 20

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

Accepted Answer

A)  and producer surplus will increase 
B)  and producer surplus will decrease 
C)  will increase and producer surplus will decrease 
D)  will decrease and producer surplus will increase 
A)  and producer surplus will increase 
B)  and producer surplus will decrease 
C)  will increase and producer surplus will decrease 
D)  will decrease and producer surplus will increase

Exam 9: Application: International Trade

Graph 9-3 -In Graph 9-3, after the quota, imports would be equal to:

Trade is beneficial because it:

Free trade causes job losses in industries in which a country does not have a comparative advantage but it also causes job gains in industries in which the country has a comparative advantage.

A country is likely to import a good if its domestic price is high, relative to the world price.

Graph 9-7 -According to Graph 9-7, consumer surplus after trade would be:

Many economists oppose the infant industry argument because it is difficult to remove.

Graph 9-4 This graph refers to the market for kiwifruit in New Zealand. -According to Graph 9-4, producer surplus in New Zealand after trade is:

What is the effect on the economic wellbeing of a nation if a quota on imports is imposed? Why?

Sometimes countries suffer a net loss of jobs due to free trade, because they do not have a comparative advantage in producing anything.

Suppose the before-trade domestic price of natural gas in Australia is $15 per kg. The world price of natural gas is $30 per kg. Australia is a price-taker in the natural gas market. -According to this statement, if trade in natural gas is allowed, Australian producers of natural gas:

Import quotas make domestic buyers better off and domestic sellers worse off.

Graph 9-6 This graph refers to the market for oil in Spain. -According to Graph 9-6, the change in total surplus in Spain because of trade would be:

Suppose a country becomes more open to trade and imports increase. This means that:

If Colombia exports coffee to the rest of the world, Colombian coffee sellers benefit from higher producer surplus. Colombian coffee buyers are worse off because of lower consumer surplus, but total surplus in Colombia increases because of trade.

Suppose that Australia imposes a tariff on imported computer chips. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million and the reduction in consumer surplus is $500 million, then the deadweight loss of the tariff is $800 million.

Graph 9-3 -In Graph 9-3, after the quota, deadweight loss would be equal to:

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

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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