Question 1

Within a country,the domestic price of a product will equal the world price if

Accepted Answer

A)  trade restrictions are imposed on the product. 
B)  the country allows free trade. 
C)  the country chooses to import,but not export,the product. 
D)  the country chooses to export,but not import,the product. 
A)  trade restrictions are imposed on the product. 
B)  the country allows free trade. 
C)  the country chooses to import,but not export,the product. 
D)  the country chooses to export,but not import,the product. B

Question 2

When a country that imports a particular good imposes a tariff on that good,

Accepted Answer

A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good. 
A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good. D

Question 3

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. A

Question 4

Figure 9-9  
-Refer to Figure 9-9.Total surplus in this market before trade 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 5

Figure 9-2  
-Refer to Figure 9-2.If this country chooses to trade,the price of baskets in this country will be

Accepted Answer

A)  $10 and 40 baskets will be sold domestically. 
B)  $10 and 105 baskets will be sold domestically. 
C)  $7 and 70 baskets will be sold domestically. 
D)  $7 and 40 baskets will be sold domestically. 
A)  $10 and 40 baskets will be sold domestically. 
B)  $10 and 105 baskets will be sold domestically. 
C)  $7 and 70 baskets will be sold domestically. 
D)  $7 and 40 baskets will be sold domestically.

Question 6

GATT is an example of a successful unilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 7

Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price.  
-Refer to Figure 9-16.The deadweight loss created by the tariff is represented by the area

Accepted Answer

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

Question 8

Suppose a certain country imposes a tariff on a good.Which of the following results of the tariff is possible?

Accepted Answer

A)  Consumer surplus decreases by $100;producer surplus increases by $100;and government revenue from the tariff amounts to $50. 
B)  Consumer surplus decreases by $200;producer surplus increases by $100;and government revenue from the tariff amounts to $50. 
C)  Consumer surplus increases by $100;producer surplus decreases by $200;and government revenue from the tariff amounts to $50. 
D)  Consumer surplus decreases by $50;producer surplus increases by $200;and government revenue from the tariff amounts to $150. 
A)  Consumer surplus decreases by $100;producer surplus increases by $100;and government revenue from the tariff amounts to $50. 
B)  Consumer surplus decreases by $200;producer surplus increases by $100;and government revenue from the tariff amounts to $50. 
C)  Consumer surplus increases by $100;producer surplus decreases by $200;and government revenue from the tariff amounts to $50. 
D)  Consumer surplus decreases by $50;producer surplus increases by $200;and government revenue from the tariff amounts to $150.

Question 9

Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers.  
-Refer to Figure 9-14.When the country for which the figure is drawn allows international trade in computers,

Accepted Answer

A)  consumer surplus for domestic computer consumers decreases. 
B)  the demand for computers by domestic computer consumers decreases. 
C)  the losses of the domestic losers outweigh the gains of the domestic winners. 
D)  domestic computer producers sell fewer computers. 
A)  consumer surplus for domestic computer consumers decreases. 
B)  the demand for computers by domestic computer consumers decreases. 
C)  the losses of the domestic losers outweigh the gains of the domestic winners. 
D)  domestic computer producers sell fewer computers.

Question 10

A tariff on a product

Accepted Answer

A)  is a direct quantitative restriction on the amount of a good that can be imported. 
B)  increases the domestic quantity supplied. 
C)  increases domestic consumer surplus. 
D)  All of the above are correct. 
A)  is a direct quantitative restriction on the amount of a good that can be imported. 
B)  increases the domestic quantity supplied. 
C)  increases domestic consumer surplus. 
D)  All of the above are correct.

Question 11

A logical starting point from which the study of international trade begins is

Accepted Answer

A)  the recognition that not all markets are competitive. 
B)  the recognition that government intervention in markets sometimes enhances the economic welfare of the society. 
C)  the principle of absolute advantage. 
D)  the principle of comparative advantage. 
A)  the recognition that not all markets are competitive. 
B)  the recognition that government intervention in markets sometimes enhances the economic welfare of the society. 
C)  the principle of absolute advantage. 
D)  the principle of comparative advantage.

Question 12

The price of sugar that prevails in international markets is called the

Accepted Answer

A)  export price of sugar. 
B)  import price of sugar. 
C)  comparative-advantage price of sugar. 
D)  world price of sugar. 
A)  export price of sugar. 
B)  import price of sugar. 
C)  comparative-advantage price of sugar. 
D)  world price of sugar.

Question 13

Figure 9-9  
-Refer to Figure 9-9.Total surplus in this market after trade 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 14

In a December 2007 New York Times column,Paul Krugman noted that

Accepted Answer

A)  it is difficult to find instances of trade between high-wage countries in the modern era. 
B)  it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern era. 
C)  the United States now imports more oil and other raw materials from other advanced countries than from the third world. 
D)  the United States now imports more manufactured goods from the third world than from other advanced countries. 
A)  it is difficult to find instances of trade between high-wage countries in the modern era. 
B)  it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern era. 
C)  the United States now imports more oil and other raw materials from other advanced countries than from the third world. 
D)  the United States now imports more manufactured goods from the third world than from other advanced countries.

Question 15

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of pistachios decreases to equal the world price of pistachios,then

Accepted Answer

A)  that country becomes an importer of pistachios. 
B)  that country has a comparative advantage in producing pistachios. 
C)  at the world price,the quantity of pistachios supplied in that country exceeds the quantity of pistachios demanded in that country. 
D)  All of the above are correct. 
A)  that country becomes an importer of pistachios. 
B)  that country has a comparative advantage in producing pistachios. 
C)  at the world price,the quantity of pistachios supplied in that country exceeds the quantity of pistachios demanded in that country. 
D)  All of the above are correct.

Question 16

Which of the following statements is true?

Accepted Answer

A)  Free trade benefits a country when it exports but harms it when it imports. 
B)  "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S.tariffs placed on Canadian hog exports. 
C)  Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses,whereas quotas do not impose deadweight losses. 
D)  Free trade benefits a country both when it exports and when it imports. 
A)  Free trade benefits a country when it exports but harms it when it imports. 
B)  "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S.tariffs placed on Canadian hog exports. 
C)  Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses,whereas quotas do not impose deadweight losses. 
D)  Free trade benefits a country both when it exports and when it imports.

Question 17

The results of a 2007 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Accepted Answer

A) True 
 B)False

Question 18

Figure 9-6  
-Refer to Figure 9-6.The size of the tariff on carnations is

Accepted Answer

A)  $8 per dozen. 
B)  $6 per dozen. 
C)  $4 per dozen. 
D)  $2 per dozen. 
A)  $8 per dozen. 
B)  $6 per dozen. 
C)  $4 per dozen. 
D)  $2 per dozen.

Question 19

When a country takes a unilateral approach to free trade,it

Accepted Answer

A)  removes trade restrictions on its own. 
B)  reduces its trade restrictions while other countries do the same. 
C)  does not remove trade restrictions no matter what other countries do. 
D)  is willing to trade with multiple countries at once. 
A)  removes trade restrictions on its own. 
B)  reduces its trade restrictions while other countries do the same. 
C)  does not remove trade restrictions no matter what other countries do. 
D)  is willing to trade with multiple countries at once.

Question 20

When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

Within a country,the domestic price of a product will equal the world price if

When a country that imports a particular good imposes a tariff on that good,

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 9-9 -Refer to Figure 9-9.Total surplus in this market before trade is

Figure 9-2 -Refer to Figure 9-2.If this country chooses to trade,the price of baskets in this country will be

GATT is an example of a successful unilateral approach to achieving free trade.

Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price. -Refer to Figure 9-16.The deadweight loss created by the tariff is represented by the area

Suppose a certain country imposes a tariff on a good.Which of the following results of the tariff is possible?

Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers. -Refer to Figure 9-14.When the country for which the figure is drawn allows international trade in computers,

A tariff on a product

A logical starting point from which the study of international trade begins is

The price of sugar that prevails in international markets is called the

Figure 9-9 -Refer to Figure 9-9.Total surplus in this market after trade is

In a December 2007 New York Times column,Paul Krugman noted that

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of pistachios decreases to equal the world price of pistachios,then

Which of the following statements is true?

The results of a 2007 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Figure 9-6 -Refer to Figure 9-6.The size of the tariff on carnations is

When a country takes a unilateral approach to free trade,it

When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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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