Question 1

Import quotas increase the domestic price of the product to at least the world price.

Accepted Answer

A) True 
 B)False

Question 2

Graph 9-7
  
-According to Graph 9-7, domestic production and domestic consumption after trade would be:

Accepted Answer

A)  2400, 2000 
B)  2800, 2000 
C)  2000, 2400 
D)  2000, 2800 
A)  2400, 2000 
B)  2800, 2000 
C)  2000, 2400 
D)  2000, 2800

Question 3

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

Accepted Answer

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

Question 4

A tariff:

Accepted Answer

A)  lowers the price of the exported good below the world price 
B)  keeps the price of the exported good the same as the world price 
C)  raises the price of the imported good above the world price 
D)  lowers the price of the imported good below the world price 
A)  lowers the price of the exported good below the world price 
B)  keeps the price of the exported good the same as the world price 
C)  raises the price of the imported good above the world price 
D)  lowers the price of the imported good below the world price

Question 5

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

Accepted Answer

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

Question 6

When a country allows trade and becomes an importer 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

Question 7

A multilateral approach to free trade can sometimes win political support when a unilateral approach cannot.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a benefit of trade?

Accepted Answer

A)  an increased variety of goods 
B)  an ability to control domestic and world prices 
C)  lower costs through economies of scale 
D)  increased competition 
A)  an increased variety of goods 
B)  an ability to control domestic and world prices 
C)  lower costs through economies of scale 
D)  increased competition

Question 9

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

Accepted Answer

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

Question 10

Graph 9-9
  
-In Graph 9-9, consumer surplus with free trade would be:

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

Question 11

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

Accepted Answer

A)  $21 600 
B)  $25 200 
C)  $43 200 
D)  $50 400 
A)  $21 600 
B)  $25 200 
C)  $43 200 
D)  $50 400

Question 12

The Closer Economic Relations agreement between New Zealand and Australia is designed to ensure that Australia can exercise its absolute advantage.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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

Question 14

Graph 9-3
  
-In Graph 9-3, the equilibrium price and quantity after the quota would be:

Accepted Answer

A)  P1, Q1 
B)  P1, Q4 
C)  P2, Q2 
D)  P2, Q3 
A)  P1, Q1 
B)  P1, Q4 
C)  P2, Q2 
D)  P2, Q3

Question 15

Graph 9-13
  
-Using Graph 9-13, answer the following questions about hammers.
a. What is the equilibrium price of hammers before trade?
b. What is the equilibrium quantity of hammers before trade?
c. What is the price of hammers after trade is allowed?
d. What is the quantity of hammers imported?
e. What is the amount of consumer surplus before trade?
f. What is the amount of consumer surplus after trade?
g. What is the amount of producer surplus before trade?
h. What is the amount of producer surplus after trade?
i. What is the change in total surplus because of trade?

Accepted Answer

a. $8
b. 60
c. $5
d.

Question 16

Suppose that China can produce every product at an absolutely lower cost than can Australia. Does it pay for China to trade with Australia? Explain.

Accepted Answer

Since international trade is based on co

Question 17

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

Accepted Answer

A)  $1600 
B)  $2400 
C)  $3200 
D)  $3600 
A)  $1600 
B)  $2400 
C)  $3200 
D)  $3600

Question 18

If a country allows trade and the domestic price of a good is higher than the world price:

Accepted Answer

A)  the country will become an exporter of the good 
B)  additional information about demand is needed to determine whether the country will export or import the good 
C)  the country will neither export nor import the good 
D)  the country will become an importer of the good 
A)  the country will become an exporter of the good 
B)  additional information about demand is needed to determine whether the country will export or import the good 
C)  the country will neither export nor import the good 
D)  the country will become an importer of the good

Question 19

When the free trade treaty CER was signed between New Zealand and Australia, opponents claimed that New Zealand would suffer significant job losses to more efficient Australian producers. Why would you not be surprised to learn that CER did not lift unemployment in either country?

Accepted Answer

In the short run, both Australia and New

Question 20

Trade among nations is ultimately based on absolute advantage.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

Import quotas increase the domestic price of the product to at least the world price.

Graph 9-7 -According to Graph 9-7, domestic production and domestic consumption after trade would be:

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

A tariff:

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

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

A multilateral approach to free trade can sometimes win political support when a unilateral approach cannot.

Which of the following is not a benefit of trade?

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

Graph 9-9 -In Graph 9-9, consumer surplus with free trade would be:

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

The Closer Economic Relations agreement between New Zealand and Australia is designed to ensure that Australia can exercise its absolute advantage.

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

Graph 9-3 -In Graph 9-3, the equilibrium price and quantity after the quota would be:

Suppose that China can produce every product at an absolutely lower cost than can Australia. Does it pay for China to trade with Australia? Explain.

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

If a country allows trade and the domestic price of a good is higher than the world price:

When the free trade treaty CER was signed between New Zealand and Australia, opponents claimed that New Zealand would suffer significant job losses to more efficient Australian producers. Why would you not be surprised to learn that CER did not lift unemployment in either country?

Trade among nations is ultimately based on absolute advantage.

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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