Question 1

Trade decisions are based on the principle of absolute advantage.

Accepted Answer

A) True 
 B)False

Question 2

When a government imposes a tariff on a product,the domestic price will equal the world price.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-7.The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7.With trade,Wales

Accepted Answer

A)  imports Q2 - Q1 units of cheese. 
B)  exports Q2 - Q1 units of cheese. 
C)  imports Q2 - Q0 units of cheese. 
D)  exports Q2 - Q0 units of cheese. 
A)  imports Q2 - Q1 units of cheese. 
B)  exports Q2 - Q1 units of cheese. 
C)  imports Q2 - Q0 units of cheese. 
D)  exports Q2 - Q0 units of cheese.

Question 4

Import quotas and tariffs produce some common results.Which of the following is not one of those common results?

Accepted Answer

A)  Total surplus in the domestic country falls. 
B)  Producer surplus in the domestic country increases. 
C)  The domestic country experiences a deadweight loss. 
D)  Revenue is raised for the domestic government. 
A)  Total surplus in the domestic country falls. 
B)  Producer surplus in the domestic country increases. 
C)  The domestic country experiences a deadweight loss. 
D)  Revenue is raised for the domestic government.

Question 5

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Accepted Answer

A)  the domestic price of coffee will be greater than the world price of coffee. 
B)  the domestic price of coffee will be lower than the world price of coffee. 
C)  the domestic price of coffee will equal the world price of coffee. 
D)  The world price of coffee does not matter;the domestic price of coffee prevails. 
A)  the domestic price of coffee will be greater than the world price of coffee. 
B)  the domestic price of coffee will be lower than the world price of coffee. 
C)  the domestic price of coffee will equal the world price of coffee. 
D)  The world price of coffee does not matter;the domestic price of coffee prevails.

Question 6

If Belgium exports chocolate to the rest of the world,then Belgian chocolate producers benefit from higher producer surplus,Belgian chocolate consumers are worse off because of lower consumer surplus,and total surplus in Belgium increases because of the exports of chocolate.

Accepted Answer

A) True 
 B)False

Question 7

Workers displaced by trade eventually find jobs in

Accepted Answer

A)  another country. 
B)  the government sector. 
C)  the industries in which the country has a comparative advantage. 
D)  a different company in the same industry. 
A)  another country. 
B)  the government sector. 
C)  the industries in which the country has a comparative advantage. 
D)  a different company in the same industry.

Question 8

If the United States threatens to impose a tariff on German cars if Germany does not remove agricultural subsidies,the United States will be

Accepted Answer

A)  better off no matter how Germany responds. 
B)  better off if Germany gives in,and will be no worse off if it doesn't. 
C)  worse off if Germany doesn't give in to the threat. 
D)  worse off no matter how Germany responds. 
A)  better off no matter how Germany responds. 
B)  better off if Germany gives in,and will be no worse off if it doesn't. 
C)  worse off if Germany doesn't give in to the threat. 
D)  worse off no matter how Germany responds.

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 changes from the area A + B + D to the area A. 
B)  producer surplus changes from the area C to the area B + C + D. 
C)  total surplus decreases by the area D. 
D)  All of the above are correct. 
A)  consumer surplus changes from the area A + B + D to the area A. 
B)  producer surplus changes from the area C to the area B + C + D. 
C)  total surplus decreases by the area D. 
D)  All of the above are correct.

Question 10

Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars.  
-Refer to Figure 9-8.In the country for which the figure is drawn,total surplus with international trade in cars

Accepted Answer

A)  is represented by the area A + B + C. 
B)  is represented by the area A + B + D. 
C)  is smaller than producer surplus without international trade in cars. 
D)  is larger than total surplus without international trade in cars. 
A)  is represented by the area A + B + C. 
B)  is represented by the area A + B + D. 
C)  is smaller than producer surplus without international trade in cars. 
D)  is larger than total surplus without international trade in cars.

Question 11

Figure 9-1
The figure illustrates the market for wool in New Zealand.  
-Refer to Figure 9-1.In the absence of trade,total surplus in the New Zealand wool market amounts to

Accepted Answer

A)  187.5 
B)  275.0 
C)  378.5 
D)  412.5 
A)  187.5 
B)  275.0 
C)  378.5 
D)  412.5

Question 12

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Accepted Answer

A) True 
 B)False

Question 13

The nation of Pineland forbids international trade.In Pineland,you can buy 1 pound of fish for 2 pounds of beef.In other countries,you can buy 1 pound of fish for 1.5 pounds of beef.These facts indicate that

Accepted Answer

A)  Pineland has a comparative advantage,relative to other countries,in producing fish. 
B)  other countries have a comparative advantage,relative to Pineland,in producing beef. 
C)  the price of beef in Pineland exceeds the world price of beef. 
D)  if Pineland were to allow trade,it would import fish. 
A)  Pineland has a comparative advantage,relative to other countries,in producing fish. 
B)  other countries have a comparative advantage,relative to Pineland,in producing beef. 
C)  the price of beef in Pineland exceeds the world price of beef. 
D)  if Pineland were to allow trade,it would import fish.

Question 14

Denmark is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Denmark imposes a $5 tariff on chips.Which of the following outcomes is possible?

Accepted Answer

A)  More Danish-produced chips are sold in Denmark. 
B)  More foreign-produced chips are sold in Denmark. 
C)  Danish consumers of chips become better off. 
D)  Total surplus in the Danish chip market increases. 
A)  More Danish-produced chips are sold in Denmark. 
B)  More foreign-produced chips are sold in Denmark. 
C)  Danish consumers of chips become better off. 
D)  Total surplus in the Danish chip market increases.

Question 15

Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany

Accepted Answer

A)  may prompt German farmers to invoke the unfair-competition argument. 
B)  increase the consumer surplus of German buyers of wheat. 
C)  increase the total surplus of the German people. 
D)  All of the above are correct. 
A)  may prompt German farmers to invoke the unfair-competition argument. 
B)  increase the consumer surplus of German buyers of wheat. 
C)  increase the total surplus of the German people. 
D)  All of the above are correct.

Question 16

Figure 9-12  
-Refer to Figure 9-12.Consumer surplus after trade is

Accepted Answer

A)  $1,600. 
B)  $2,400. 
C)  $3,200. 
D)  $3,600. 
A)  $1,600. 
B)  $2,400. 
C)  $3,200. 
D)  $3,600.

Question 17

Figure 9-5  
-Refer to Figure 9-5.Without trade,total surplus amounts to

Accepted Answer

A)  $122.50. 
B)  $245. 
C)  $367.50. 
D)  $612.50. 
A)  $122.50. 
B)  $245. 
C)  $367.50. 
D)  $612.50.

Question 18

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.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $5,then the policy change results in

Accepted Answer

A)  a decrease in consumer surplus. 
B)  an increase in producer surplus. 
C)  an increase in total surplus. 
D)  All of the above are correct. 
A)  a decrease in consumer surplus. 
B)  an increase in producer surplus. 
C)  an increase in total surplus. 
D)  All of the above are correct.

Question 19

When,in our analysis of the gains and losses from international trade,we assume that a country is small,we are in effect assuming that the country

Accepted Answer

A)  cannot experience significant gains or losses by trading with other countries. 
B)  cannot have a significant comparative advantage over other countries. 
C)  cannot affect world prices by trading with other countries. 
D)  All of the above are correct. 
A)  cannot experience significant gains or losses by trading with other countries. 
B)  cannot have a significant comparative advantage over other countries. 
C)  cannot affect world prices by trading with other countries. 
D)  All of the above are correct.

Question 20

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 $3,then

Accepted Answer

A)  Isoland has a comparative advantage,relative to other countries,in producing peaches. 
B)  Isoland will export peaches. 
C)  producer surplus with trade exceeds producer surplus without trade. 
D)  consumer surplus with trade exceeds consumer surplus without trade. 
A)  Isoland has a comparative advantage,relative to other countries,in producing peaches. 
B)  Isoland will export peaches. 
C)  producer surplus with trade exceeds producer surplus without trade. 
D)  consumer surplus with trade exceeds consumer surplus without trade.

Exam 9: Application: International Trade

Trade decisions are based on the principle of absolute advantage.

When a government imposes a tariff on a product,the domestic price will equal the world price.

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.With trade,Wales

Import quotas and tariffs produce some common results.Which of the following is not one of those common results?

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

If Belgium exports chocolate to the rest of the world,then Belgian chocolate producers benefit from higher producer surplus,Belgian chocolate consumers are worse off because of lower consumer surplus,and total surplus in Belgium increases because of the exports of chocolate.

Workers displaced by trade eventually find jobs in

If the United States threatens to impose a tariff on German cars if Germany does not remove agricultural subsidies,the United States will be

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,

Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8.In the country for which the figure is drawn,total surplus with international trade in cars

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.In the absence of trade,total surplus in the New Zealand wool market amounts to

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

The nation of Pineland forbids international trade.In Pineland,you can buy 1 pound of fish for 2 pounds of beef.In other countries,you can buy 1 pound of fish for 1.5 pounds of beef.These facts indicate that

Denmark is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Denmark imposes a $5 tariff on chips.Which of the following outcomes is possible?

Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany

Figure 9-12 -Refer to Figure 9-12.Consumer surplus after trade is

Figure 9-5 -Refer to Figure 9-5.Without trade,total surplus amounts to

When,in our analysis of the gains and losses from international trade,we assume that a country is small,we are in effect assuming that the country

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 $3,then

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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