Question 1

When the nation of Worldova allows trade and becomes an exporter of silk,

Accepted Answer

A)  residents of Worldova who produce silk become worse off;residents of Worldova who buy silk become better off;and the economic well-being of Worldova rises. 
B)  residents of Worldova who produce silk become worse off;residents of Worldova who buy silk become better off;and the economic well-being of Worldova falls. 
C)  residents of Worldova who produce silk become better off;residents of Worldova who buy silk become worse off;and the economic well-being of Worldova rises. 
D)  residents of Worldova who produce silk become better off;residents of Worldova who buy silk become worse off;and the economic well-being of Worldova falls. 
A)  residents of Worldova who produce silk become worse off;residents of Worldova who buy silk become better off;and the economic well-being of Worldova rises. 
B)  residents of Worldova who produce silk become worse off;residents of Worldova who buy silk become better off;and the economic well-being of Worldova falls. 
C)  residents of Worldova who produce silk become better off;residents of Worldova who buy silk become worse off;and the economic well-being of Worldova rises. 
D)  residents of Worldova who produce silk become better off;residents of Worldova who buy silk become worse off;and the economic well-being of Worldova falls.

Question 2

The two basic approaches that a country can take as a means to achieve free trade are the

Accepted Answer

A)  unilateral approach and the multilateral approach. 
B)  short-run approach and the long-run approach. 
C)  continental approach and the global approach. 
D)  industry approach and the security approach. 
A)  unilateral approach and the multilateral approach. 
B)  short-run approach and the long-run approach. 
C)  continental approach and the global approach. 
D)  industry approach and the security approach.

Question 3

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

Accepted Answer

A)  this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. 
B)  this is an indication that the nation has a comparative advantage in producing soybeans. 
C)  the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off. 
D)  All of the above are correct. 
A)  this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. 
B)  this is an indication that the nation has a comparative advantage in producing soybeans. 
C)  the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off. 
D)  All of the above are correct.

Question 4

The "unfair-competition" argument might be cited by an American who believes that

Accepted Answer

A)  almost every country has a comparative advantage,relative to the United States,in producing almost all goods. 
B)  young industries should be protected against foreign competition until they become profitable. 
C)  the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost. 
D)  the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products. 
A)  almost every country has a comparative advantage,relative to the United States,in producing almost all goods. 
B)  young industries should be protected against foreign competition until they become profitable. 
C)  the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost. 
D)  the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.

Question 5

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Accepted Answer

A)  54 percent 
B)  72 percent 
C)  89 percent 
D)  97 percent 
A)  54 percent 
B)  72 percent 
C)  89 percent 
D)  97 percent

Question 6

Suppose France imposes a tariff on wine of 3 euros per bottle.If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers,with the tariff,is 8 million bottles per year,then we can conclude that

Accepted Answer

A)  the quantity of wine demanded by France,with the tariff,is 18 million bottles per year. 
B)  the quantity of wine demanded by France,without the tariff,would be 24 million bottles per year. 
C)  the amount of the deadweight loss is 24 million euros per year. 
D)  the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff. 
A)  the quantity of wine demanded by France,with the tariff,is 18 million bottles per year. 
B)  the quantity of wine demanded by France,without the tariff,would be 24 million bottles per year. 
C)  the amount of the deadweight loss is 24 million euros per year. 
D)  the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff.

Question 7

Figure 9-7.The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

A)  P1 and Q2. 
B)  P1 and Q1. 
C)  P0 and Q0. 
D)  P0 and Q1. 
A)  P1 and Q2. 
B)  P1 and Q1. 
C)  P0 and Q0. 
D)  P0 and Q1.

Question 8

Scenario 9-1
The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes.
-Refer to Scenario 9-1.If trade in tomatoes is allowed,U.S.producers of tomatoes

Accepted Answer

A)  will be better off. 
B)  will be worse off. 
C)  will be unaffected. 
D)  will experience a decrease in their collective producer surplus. 
A)  will be better off. 
B)  will be worse off. 
C)  will be unaffected. 
D)  will experience a decrease in their collective producer surplus.

Question 9

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 experience a shortage of wool if trade is not allowed. 
B)  New Zealand will experience a surplus of wool if trade is not allowed. 
C)  New Zealand has a comparative advantage in producing wool,relative to the rest of the world. 
D)  foreign countries have a comparative advantage in producing wool,relative to New Zealand. 
A)  New Zealand will experience a shortage of wool if trade is not allowed. 
B)  New Zealand will experience a surplus of wool if trade is not allowed. 
C)  New Zealand has a comparative advantage in producing wool,relative to the rest of the world. 
D)  foreign countries have a comparative advantage in producing wool,relative to New Zealand.

Question 10

Figure 9-15  
-Refer to Figure 9-15.The amount of government revenue created by the tariff is

Accepted Answer

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

Question 11

Suppose Ecuador imposes a tariff on imported bananas.If the increase in producer surplus is $50 million,the reduction in consumer surplus is $150 million,and the deadweight loss of the tariff is $30 million,then the tariff generates $130 million in revenue for the government.

Accepted Answer

A) True 
 B)False

Question 12

Suppose Haiti has an absolute advantage over other countries in producing oranges,but other countries have a comparative advantage over Haiti in producing oranges.If trade in oranges is allowed,Haiti

Accepted Answer

A)  will import oranges. 
B)  will export oranges. 
C)  will either export oranges or export oranges,but it is not clear from the given information. 
D)  would have nothing to gain either from exporting or importing oranges. 
A)  will import oranges. 
B)  will export oranges. 
C)  will either export oranges or export oranges,but it is not clear from the given information. 
D)  would have nothing to gain either from exporting or importing oranges.

Question 13

Which of the following tools and concepts is useful in the analysis of international trade?

Accepted Answer

A)  total surplus 
B)  domestic supply 
C)  equilibrium price 
D)  All of the above are correct. 
A)  total surplus 
B)  domestic supply 
C)  equilibrium price 
D)  All of the above are correct.

Question 14

Figure 9-13  
-Refer to Figure 9-13.Producer surplus before trade is

Accepted Answer

A)  $3,600. 
B)  $4,400. 
C)  $5,200. 
D)  $6,600. 
A)  $3,600. 
B)  $4,400. 
C)  $5,200. 
D)  $6,600.

Question 15

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

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

Question 16

Figure 9-6  
-Refer to Figure 9-6.When a tariff is imposed in the market,domestic producers

Accepted Answer

A)  gain by $100. 
B)  gain by $200. 
C)  gain by $300. 
D)  lose by $100. 
A)  gain by $100. 
B)  gain by $200. 
C)  gain by $300. 
D)  lose by $100.

Question 17

Figure 9-4.The domestic country is Jamaica.  
-Refer to Figure 9-4.Consumer surplus in Jamaica without trade is

Accepted Answer

A)  $375. 
B)  $2,000. 
C)  $2,250. 
D)  $8,700. 
A)  $375. 
B)  $2,000. 
C)  $2,250. 
D)  $8,700.

Question 18

Figure 9-2  
-Refer to Figure 9-2.With free trade,producer surplus is

Accepted Answer

A)  $80.00. 
B)  $210.00. 
C)  $245.50. 
D)  $472.50. 
A)  $80.00. 
B)  $210.00. 
C)  $245.50. 
D)  $472.50.

Question 19

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

Accepted Answer

A)  $210.50. 
B)  $245.50. 
C)  $367.50. 
D)  $607.50. 
A)  $210.50. 
B)  $245.50. 
C)  $367.50. 
D)  $607.50.

Question 20

In analyzing the gains and losses from international trade,to say that Moldova is a small country is to say that

Accepted Answer

A)  Moldova can only import goods;it cannot export goods. 
B)  Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. 
C)  only the domestic price of a good is relevant for Moldova;the world price of a good is irrelevant. 
D)  Moldova is a price taker. 
A)  Moldova can only import goods;it cannot export goods. 
B)  Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. 
C)  only the domestic price of a good is relevant for Moldova;the world price of a good is irrelevant. 
D)  Moldova is a price taker.

Exam 9: Application: International Trade

When the nation of Worldova allows trade and becomes an exporter of silk,

The two basic approaches that a country can take as a means to achieve free trade are the

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

The "unfair-competition" argument might be cited by an American who believes that

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Suppose France imposes a tariff on wine of 3 euros per bottle.If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers,with the tariff,is 8 million bottles per year,then we can conclude that

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Scenario 9-1 The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes. -Refer to Scenario 9-1.If trade in tomatoes is allowed,U.S.producers of tomatoes

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

Figure 9-15 -Refer to Figure 9-15.The amount of government revenue created by the tariff is

Suppose Ecuador imposes a tariff on imported bananas.If the increase in producer surplus is $50 million,the reduction in consumer surplus is $150 million,and the deadweight loss of the tariff is $30 million,then the tariff generates $130 million in revenue for the government.

Suppose Haiti has an absolute advantage over other countries in producing oranges,but other countries have a comparative advantage over Haiti in producing oranges.If trade in oranges is allowed,Haiti

Which of the following tools and concepts is useful in the analysis of international trade?

Figure 9-13 -Refer to Figure 9-13.Producer surplus before trade is

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Figure 9-6 -Refer to Figure 9-6.When a tariff is imposed in the market,domestic producers

Figure 9-4.The domestic country is Jamaica. -Refer to Figure 9-4.Consumer surplus in Jamaica without trade is

Figure 9-2 -Refer to Figure 9-2.With free trade,producer surplus is

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

In analyzing the gains and losses from international trade,to say that Moldova is a small country is to say that

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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