Question 1

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

Accepted Answer

A)  assuming the domestic price before trade will continue to prevail once that country is opened up to trade with other countries. 
B)  assuming there is no demand for that country's domestically-produced goods by other countries. 
C)  assuming international trade can benefit producers,but not consumers,in that country. 
D)  making an assumption that is not necessary to analyze the gains and losses from international trade. 
A)  assuming the domestic price before trade will continue to prevail once that country is opened up to trade with other countries. 
B)  assuming there is no demand for that country's domestically-produced goods by other countries. 
C)  assuming international trade can benefit producers,but not consumers,in that country. 
D)  making an assumption that is not necessary to analyze the gains and losses from international trade.

Question 2

Suppose Scotland goes from being an isolated country to being an exporter of wool.As a result,

Accepted Answer

A)  consumer surplus of Scottish consumers of wool increases. 
B)  producer surplus of Scottish producers of wool increases. 
C)  total surplus of Scottish wool consumers and producers remains constant. 
D)  it is reasonable to infer that other countries have a comparative advantage over Scotland in wool production. 
A)  consumer surplus of Scottish consumers of wool increases. 
B)  producer surplus of Scottish producers of wool increases. 
C)  total surplus of Scottish wool consumers and producers remains constant. 
D)  it is reasonable to infer that other countries have a comparative advantage over Scotland in wool production.

Question 3

Senator Blowhard represents a state in which many textile firms are located.He wants to impose tariffs on all imported textiles.Which of the following is the least likely consequence of such tariffs?

Accepted Answer

A)  Domestic textile buyers will lose consumer surplus,have less variety,and will pay higher prices. 
B)  Domestic textile sellers will gain producer surplus. 
C)  Domestic textile sellers will have a higher rate of technological advance. 
D)  Domestic textile sellers will have more market power. 
A)  Domestic textile buyers will lose consumer surplus,have less variety,and will pay higher prices. 
B)  Domestic textile sellers will gain producer surplus. 
C)  Domestic textile sellers will have a higher rate of technological advance. 
D)  Domestic textile sellers will have more market power.

Question 4

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.The country for which the figure is drawn

Accepted Answer

A)  has a comparative advantage relative to other countries in the production of computers and it will export computers. 
B)  has a comparative advantage relative to other countries in the production of computers and it will import computers. 
C)  has a comparative disadvantage relative to other countries in the production of computers and it will export computers. 
D)  has a comparative disadvantage relative to other countries in the production of computers and it will import computers. 
A)  has a comparative advantage relative to other countries in the production of computers and it will export computers. 
B)  has a comparative advantage relative to other countries in the production of computers and it will import computers. 
C)  has a comparative disadvantage relative to other countries in the production of computers and it will export computers. 
D)  has a comparative disadvantage relative to other countries in the production of computers and it will import computers.

Question 5

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Accepted Answer

A)  A multilateral approach can reduce trade restrictions abroad as well as at home. 
B)  A multilateral approach has the potential to result in freer trade. 
C)  A multilateral approach requires the agreement of two or more nations. 
D)  A multilateral approach may have political advantages. 
A)  A multilateral approach can reduce trade restrictions abroad as well as at home. 
B)  A multilateral approach has the potential to result in freer trade. 
C)  A multilateral approach requires the agreement of two or more nations. 
D)  A multilateral approach may have political advantages.

Question 6

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade;he argues that everything can be produced at lower cost in other countries.The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Accepted Answer

A)  there is no evidence that any worker ever lost his or her job because of free trade. 
B)  unemployment of labor is not a serious problem relative to other economic problems. 
C)  the gains from trade are based on comparative advantage. 
D)  the gains from trade are based on absolute advantage. 
A)  there is no evidence that any worker ever lost his or her job because of free trade. 
B)  unemployment of labor is not a serious problem relative to other economic problems. 
C)  the gains from trade are based on comparative advantage. 
D)  the gains from trade are based on absolute advantage.

Question 7

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

Accepted Answer

A)  $245. 
B)  $367.50. 
C)  $607.50. 
D)  $687.50. 
A)  $245. 
B)  $367.50. 
C)  $607.50. 
D)  $687.50.

Question 8

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

Accepted Answer

A)  cause these factories to pay the U.S.minimum wage. 
B)  increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C)  increase poverty in poor countries and benefit U.S.firms which compete with these imports. 
D)  harm U.S.firms which compete with these imports. 
A)  cause these factories to pay the U.S.minimum wage. 
B)  increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C)  increase poverty in poor countries and benefit U.S.firms which compete with these imports. 
D)  harm U.S.firms which compete with these imports.

Question 9

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

Accepted Answer

A) True 
 B)False

Question 10

When a country that exported 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 11

Figure 9-10.The figure applies to the nation of Australia and the good is cameras.  
-Refer to Figure 9-10.With trade,the equilibrium price of cameras and the equilibrium quantity of cameras demanded in Australia are

Accepted Answer

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

Question 12

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Accepted Answer

A) True 
 B)False

Question 13

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,the price of tomatoes in the United States

Accepted Answer

A)  will be greater than the world price. 
B)  will be equal to the world price. 
C)  will be less than the world price. 
D)  could be greater than,equal to,or less than the world price;this cannot be determined. 
A)  will be greater than the world price. 
B)  will be equal to the world price. 
C)  will be less than the world price. 
D)  could be greater than,equal to,or less than the world price;this cannot be determined.

Question 14

Figure 9-12  
-Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are

Accepted Answer

A)  600 and 400. 
B)  800 and 400. 
C)  400 and 600. 
D)  400 and 800. 
A)  600 and 400. 
B)  800 and 400. 
C)  400 and 600. 
D)  400 and 800.

Question 15

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

Accepted Answer

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

Question 16

A tariff

Accepted Answer

A)  lowers the domestic price of the exported good below the world price. 
B)  keeps the domestic price of the exported good the same as the world price. 
C)  raises the domestic price of the imported good above the world price. 
D)  lowers the domestic price of the imported good below the world price. 
A)  lowers the domestic price of the exported good below the world price. 
B)  keeps the domestic price of the exported good the same as the world price. 
C)  raises the domestic price of the imported good above the world price. 
D)  lowers the domestic price of the imported good below the world price.

Question 17

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

Accepted Answer

A)  $245. 
B)  $362.50. 
C)  $367.50. 
D)  $607.50. 
A)  $245. 
B)  $362.50. 
C)  $367.50. 
D)  $607.50.

Question 18

When a country allows trade and becomes an exporter of a good,which of the following is not a consequence?

Accepted Answer

A)  The price paid by domestic consumers of the good increases. 
B)  The price received by domestic producers of the good increases. 
C)  The losses of domestic consumers of the good exceed the gains of domestic producers of the good. 
D)  The gains of domestic producers of the good exceed the losses of domestic consumers of the good. 
A)  The price paid by domestic consumers of the good increases. 
B)  The price received by domestic producers of the good increases. 
C)  The losses of domestic consumers of the good exceed the gains of domestic producers of the good. 
D)  The gains of domestic producers of the good exceed the losses of domestic consumers of the good.

Question 19

What are the arguments in favor of trade restrictions,and what are the counterarguments? According to most economists,do any of these arguments really justify trade restrictions? Explain.

Accepted Answer

Arguments mentioned in the text include

Question 20

Figure 9-15  
-Refer to Figure 9-15.Producer surplus with trade and without a tariff is

Accepted Answer

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

Exam 9: Application: International Trade

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

Suppose Scotland goes from being an isolated country to being an exporter of wool.As a result,

Senator Blowhard represents a state in which many textile firms are located.He wants to impose tariffs on all imported textiles.Which of the following is the least likely consequence of such tariffs?

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.The country for which the figure is drawn

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade;he argues that everything can be produced at lower cost in other countries.The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

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

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

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

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.With trade,the equilibrium price of cameras and the equilibrium quantity of cameras demanded in Australia are

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

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,the price of tomatoes in the United States

Figure 9-12 -Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are

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

A tariff

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

When a country allows trade and becomes an exporter of a good,which of the following is not a consequence?

What are the arguments in favor of trade restrictions,and what are the counterarguments? According to most economists,do any of these arguments really justify trade restrictions? Explain.

Figure 9-15 -Refer to Figure 9-15.Producer surplus with trade and without a tariff is

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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