Question 1

Which of the following is the most accurate statement?

Accepted Answer

A)  protection is necessary in order for young industries to grow up and be successful 
B)  protection is not necessary for an industry to grow 
C)  protection is necessary because if young industries are not protected, they may suffer losses 
D)  protection may not always be necessary for infant industries, but it has proven to be useful in most cases 
A)  protection is necessary in order for young industries to grow up and be successful 
B)  protection is not necessary for an industry to grow 
C)  protection is necessary because if young industries are not protected, they may suffer losses 
D)  protection may not always be necessary for infant industries, but it has proven to be useful in most cases

Question 2

Graph 9-9
  
-In Graph 9-9, consumer surplus after the tariff 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 3

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

Accepted Answer

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

Question 4

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, the price of natural gas in Australia will be:

Accepted Answer

A)  greater than $30 per kg 
B)  equal to $30 per kg 
C)  less than $30 per kg 
D)  greater than, equal to, or less than $30 per kg 
A)  greater than $30 per kg 
B)  equal to $30 per kg 
C)  less than $30 per kg 
D)  greater than, equal to, or less than $30 per kg

Question 5

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.
-Suppose Australia has a free-trade treaty with the United States. As a result, Australia increases its exports of kangaroo to the USA. Which of the following statements is NOT true?

Accepted Answer

A)  the price paid by Australian consumers of kangaroo increases 
B)  the price received by Australian producers of kangaroo increases 
C)  the losses of Australian consumers exceed the gains of Australian producers 
D)  the gains of Australian producers exceed the losses of Australian consumers 
A)  the price paid by Australian consumers of kangaroo increases 
B)  the price received by Australian producers of kangaroo increases 
C)  the losses of Australian consumers exceed the gains of Australian producers 
D)  the gains of Australian producers exceed the losses of Australian consumers

Question 6

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

Accepted Answer

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

Question 7

Graph 9-12
  
-Using Graph 9-12, answer the following questions about chairs.
a. What is the equilibrium price of chairs before trade?
b. What is the equilibrium quantity of chairs before trade?
c. What is the price of chairs after trade is allowed?
d. What is the quantity of chairs exported?
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. $35
b. 60
c. $45

Question 8

While tariffs raise the domestic price of a good, a quota has no effect on the domestic price of a good.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that Australia and China do not trade with each other. If they then allow trade and Australia becomes an exporter of mineral products to China, which group or groups in each country are better off, and which are worse off?

Accepted Answer

Mineral producers in Australia are bette

Question 10

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

Accepted Answer

A)  $ five per pound 
B)  $ two per pound 
C)  between $ two per pound and $ five per pound 
D)  higher than $ five per pound 
A)  $ five per pound 
B)  $ two per pound 
C)  between $ two per pound and $ five per pound 
D)  higher than $ five per pound

Question 11

Graph 9-9
  
-In Graph 9-9, the domestic price and quantity demanded after the tariff 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 12

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:

Accepted Answer

A)  Australia will become an importer of natural gas 
B)  Australia will become an exporter of natural gas 
C)  Australia may become either an importer or an exporter of natural gas 
D)  it is impossible to determine whether Australia will become an importer of natural gas or an exporter of natural gas 
A)  Australia will become an importer of natural gas 
B)  Australia will become an exporter of natural gas 
C)  Australia may become either an importer or an exporter of natural gas 
D)  it is impossible to determine whether Australia will become an importer of natural gas or an exporter of natural gas

Question 13

Define the two approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?

Accepted Answer

A unilateral approach involves a country

Question 14

A tariff on a product makes domestic sellers:

Accepted Answer

A)  better off and domestic buyers worse off 
B)  worse off and domestic buyers worse off 
C)  better off and domestic buyers better off 
D)  worse off and domestic buyers better off 
A)  better off and domestic buyers worse off 
B)  worse off and domestic buyers worse off 
C)  better off and domestic buyers better off 
D)  worse off and domestic buyers better off

Question 15

Graph 9-9
  
-Which of the following is NOT an argument for restricting trade?

Accepted Answer

A)  the jobs argument 
B)  the national security argument 
C)  the infant industry argument 
D)  the efficiency argument 
A)  the jobs argument 
B)  the national security argument 
C)  the infant industry argument 
D)  the efficiency argument

Question 16

Suppose that Australia and China do not trade with each other. If they then allow trade and Australia becomes an importer of clothing from China, which group or groups in each country are better off and which are worse off?

Accepted Answer

Producers of clothing in Austr

Question 17

How does an import quota differ from an equivalent tariff?

Accepted Answer

Both the import quota and the tariff rai

Question 18

The decrease in total surplus that results from a tariff or quota is called the gains from trade.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

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

Question 20

Graph 9-9
  
-In Graph 9-9, the free-trade price and quantity demanded 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

Exam 9: Application: International Trade

Which of the following is the most accurate statement?

Graph 9-9 -In Graph 9-9, consumer surplus after the tariff would be:

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

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, the price of natural gas in Australia will be:

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

While tariffs raise the domestic price of a good, a quota has no effect on the domestic price of a good.

Suppose that Australia and China do not trade with each other. If they then allow trade and Australia becomes an exporter of mineral products to China, which group or groups in each country are better off, and which are worse off?

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

Graph 9-9 -In Graph 9-9, the domestic price and quantity demanded after the tariff would be:

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:

Define the two approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?

A tariff on a product makes domestic sellers:

Graph 9-9 -Which of the following is NOT an argument for restricting trade?

Suppose that Australia and China do not trade with each other. If they then allow trade and Australia becomes an importer of clothing from China, which group or groups in each country are better off and which are worse off?

How does an import quota differ from an equivalent tariff?

The decrease in total surplus that results from a tariff or quota is called the gains from trade.

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

Graph 9-9 -In Graph 9-9, the free-trade price and quantity demanded would be:

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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