Question 1

Figure 9-1
The figure illustrates the market for wool in New Zealand.  
-Refer to Figure 9-1.From the figure it is apparent that

Accepted Answer

A)  New Zealand will export wool if trade is allowed. 
B)  New Zealand will import wool if trade is allowed. 
C)  New Zealand has nothing to gain either by importing or exporting wool. 
D)  the world price will fall if New Zealand begins to allow its citizens to trade with other countries. 
A)  New Zealand will export wool if trade is allowed. 
B)  New Zealand will import wool if trade is allowed. 
C)  New Zealand has nothing to gain either by importing or exporting wool. 
D)  the world price will fall if New Zealand begins to allow its citizens to trade with other countries.

Question 2

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-1
The figure illustrates the market for wool in New Zealand.  
-Refer to Figure 9-1.With trade,New Zealand will

Accepted Answer

A)  export 11 units of wool. 
B)  export 5 units of wool. 
C)  import 15 units of wool. 
D)  import 6 units of wool. 
A)  export 11 units of wool. 
B)  export 5 units of wool. 
C)  import 15 units of wool. 
D)  import 6 units of wool.

Question 4

Countries that restrict foreign trade are likely to

Accepted Answer

A)  forgo the additional surplus that trade allows,but will probably enjoy economies of scale. 
B)  forgo the additional surplus that trade allows,but will be compensated by a higher rate of technological change. 
C)  forgo the additional surplus that trade allows,but will have a lower rate of unemployment. 
D)  have more firms with domestic market power. 
A)  forgo the additional surplus that trade allows,but will probably enjoy economies of scale. 
B)  forgo the additional surplus that trade allows,but will be compensated by a higher rate of technological change. 
C)  forgo the additional surplus that trade allows,but will have a lower rate of unemployment. 
D)  have more firms with domestic market power.

Question 5

Figure 9-13  
-Refer to Figure 9-13.Consumer surplus after trade is

Accepted Answer

A)  $3,600. 
B)  $5,400. 
C)  $7,200. 
D)  $8,100. 
A)  $3,600. 
B)  $5,400. 
C)  $7,200. 
D)  $8,100.

Question 6

Figure 9-10.The figure applies to the nation of Australia and the good is cameras.  
-Refer to Figure 9-10.Australia's gains from trade are represented by the area that is bounded by the points

Accepted Answer

A)  (0,P0),(Q0,P0),(Q2,P1),and (0,P1). 
B)  (0,P1),(0,P2),(Q0,P0),and (Q1,P1). 
C)  (Q0,P0),(Q2,P1),and (Q1,P1). 
D)  (0,P0),(0,P2),and (Q0,P0). 
A)  (0,P0),(Q0,P0),(Q2,P1),and (0,P1). 
B)  (0,P1),(0,P2),(Q0,P0),and (Q1,P1). 
C)  (Q0,P0),(Q2,P1),and (Q1,P1). 
D)  (0,P0),(0,P2),and (Q0,P0).

Question 7

Figure 9-11  
-Refer to Figure 9-11.Consumer surplus in this market before trade is

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 8

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

Accepted Answer

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

Question 9

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

Accepted Answer

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

Question 10

Figure 9-6  
-Refer to Figure 9-6.The imposition of a tariff on carnations

Accepted Answer

A)  increases the number of carnations imported by 100. 
B)  increases the number of carnations imported by 200. 
C)  decreases the number of carnations imported by 200. 
D)  decreases the number of carnations imported by 400. 
A)  increases the number of carnations imported by 100. 
B)  increases the number of carnations imported by 200. 
C)  decreases the number of carnations imported by 200. 
D)  decreases the number of carnations imported by 400.

Question 11

Figure 9-17  
-Refer to Figure 9-17.With trade and a tariff,total surplus is

Accepted Answer

A)  $306. 
B)  $354. 
C)  $378. 
D)  $426. 
A)  $306. 
B)  $354. 
C)  $378. 
D)  $426.

Question 12

Figure 9-6  
-Refer to Figure 9-6.Before the tariff is imposed,this country

Accepted Answer

A)  imports 200 carnations. 
B)  imports 400 carnations. 
C)  exports 200 carnations. 
D)  exports 400 carnations. 
A)  imports 200 carnations. 
B)  imports 400 carnations. 
C)  exports 200 carnations. 
D)  exports 400 carnations.

Question 13

The principle of comparative advantage asserts that

Accepted Answer

A)  not all countries can benefit from trade with other countries. 
B)  the world price of a good will prevail in all countries,regardless of whether those countries allow international trade in that good. 
C)  countries can become better off by exporting goods,but they cannot become better off by importing goods. 
D)  countries can become better off by specializing in what they do best. 
A)  not all countries can benefit from trade with other countries. 
B)  the world price of a good will prevail in all countries,regardless of whether those countries allow international trade in that good. 
C)  countries can become better off by exporting goods,but they cannot become better off by importing goods. 
D)  countries can become better off by specializing in what they do best.

Question 14

A tariff is a tax placed on

Accepted Answer

A)  an exported good and it lowers the domestic price of the good below the world price. 
B)  an exported good and it ensures that the domestic price of the good stays the same as the world price. 
C)  an imported good and it lowers the domestic price of the good below the world price. 
D)  an imported good and it raises the domestic price of the good above the world price. 
A)  an exported good and it lowers the domestic price of the good below the world price. 
B)  an exported good and it ensures that the domestic price of the good stays the same as the world price. 
C)  an imported good and it lowers the domestic price of the good below the world price. 
D)  an imported good and it raises the domestic price of the good above the world price.

Question 15

A quota is

Accepted Answer

A)  a tax placed on imports. 
B)  a limit on the quantity of imports. 
C)  a tax on exports to other countries. 
D)  an excess of exports over imports. 
A)  a tax placed on imports. 
B)  a limit on the quantity of imports. 
C)  a tax on exports to other countries. 
D)  an excess of exports over imports.

Question 16

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

Accepted Answer

A)  foreign competition may cause unemployment in import-competing industries,but the effect is temporary because other industries,especially exporting industries,will be expanding. 
B)  foreign competition may cause unemployment in import-competing industries,but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C)  the critics are correct,so countries must protect their industries with tariffs or quotas. 
D)  foreign competition may cause unemployment in import-competing industries,but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs. 
A)  foreign competition may cause unemployment in import-competing industries,but the effect is temporary because other industries,especially exporting industries,will be expanding. 
B)  foreign competition may cause unemployment in import-competing industries,but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C)  the critics are correct,so countries must protect their industries with tariffs or quotas. 
D)  foreign competition may cause unemployment in import-competing industries,but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.

Question 17

When a country allows international trade and becomes an exporter of a good,

Accepted Answer

A)  domestic producers of the good become better off. 
B)  domestic consumers of the good become worse off. 
C)  the gains of the winners exceed the losses of the losers. 
D)  All of the above are correct. 
A)  domestic producers of the good become better off. 
B)  domestic consumers of the good become worse off. 
C)  the gains of the winners exceed the losses of the losers. 
D)  All of the above are correct.

Question 18

Figure 9-6  
-Refer to Figure 9-6.When the tariff is imposed,domestic consumers

Accepted Answer

A)  lose by $500. 
B)  lose by $900. 
C)  gain by $500. 
D)  gain by $900. 
A)  lose by $500. 
B)  lose by $900. 
C)  gain by $500. 
D)  gain by $900.

Question 19

Figure 9-5  
-Refer to Figure 9-5.With trade,producer surplus is

Accepted Answer

A)  $80. 
B)  $150. 
C)  $210. 
D)  $245. 
A)  $80. 
B)  $150. 
C)  $210. 
D)  $245.

Question 20

If the demand curve and the supply curve for a good are straight lines,then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by

Accepted Answer

A)  the area of one triangle. 
B)  the area of one rectangle. 
C)  the combined areas of two different triangles. 
D)  the combined areas of two different rectangles. 
A)  the area of one triangle. 
B)  the area of one rectangle. 
C)  the combined areas of two different triangles. 
D)  the combined areas of two different rectangles.

Exam 9: Application: International Trade

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.From the figure it is apparent that

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.With trade,New Zealand will

Countries that restrict foreign trade are likely to

Figure 9-13 -Refer to Figure 9-13.Consumer surplus after trade is

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.Australia's gains from trade are represented by the area that is bounded by the points

Figure 9-11 -Refer to Figure 9-11.Consumer surplus in this market before trade is

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

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

Figure 9-6 -Refer to Figure 9-6.The imposition of a tariff on carnations

Figure 9-17 -Refer to Figure 9-17.With trade and a tariff,total surplus is

Figure 9-6 -Refer to Figure 9-6.Before the tariff is imposed,this country

The principle of comparative advantage asserts that

A tariff is a tax placed on

A quota is

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

When a country allows international trade and becomes an exporter of a good,

Figure 9-6 -Refer to Figure 9-6.When the tariff is imposed,domestic consumers

Figure 9-5 -Refer to Figure 9-5.With trade,producer surplus is

If the demand curve and the supply curve for a good are straight lines,then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by

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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