Question 1

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.These taxes

Accepted Answer

A)  benefit the United States as a whole,because they generate revenue for the government.In addition,because the goods are priced below cost,the taxes do not harm domestic consumers. 
B)  benefit the United States as a whole,because they generate revenue for the government and increase producer surplus. 
C)  harm the United States as a whole,because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D)  harm the United States as a whole,because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue. 
A)  benefit the United States as a whole,because they generate revenue for the government.In addition,because the goods are priced below cost,the taxes do not harm domestic consumers. 
B)  benefit the United States as a whole,because they generate revenue for the government and increase producer surplus. 
C)  harm the United States as a whole,because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. 
D)  harm the United States as a whole,because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue.

Question 2

Figure 9-17  
-Refer to Figure 9-17.Without trade,total surplus is

Accepted Answer

A)  $150. 
B)  $300. 
C)  $450. 
D)  $600. 
A)  $150. 
B)  $300. 
C)  $450. 
D)  $600.

Question 3

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

Accepted Answer

A)  $1,600. 
B)  $,2400. 
C)  $3,200. 
D)  $3,600. 
A)  $1,600. 
B)  $,2400. 
C)  $3,200. 
D)  $3,600.

Question 4

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Accepted Answer

A) True 
 B)False

Question 5

Characterize the two different approaches a nation can take to achieve free trade.Does one approach have an advantage over the other?

Accepted Answer

A unilateral approach is when a country

Question 6

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.When the country for which the figure is drawn allows international trade in cars,

Accepted Answer

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

Question 7

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

Accepted Answer

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

Question 8

When a country moves away from a free trade position and imposes a tariff on imports,it causes

Accepted Answer

A)  a decrease in total surplus in the market. 
B)  a decrease in producer surplus in the market. 
C)  an increase in consumer surplus in the market. 
D)  a decrease in revenue to the government. 
A)  a decrease in total surplus in the market. 
B)  a decrease in producer surplus in the market. 
C)  an increase in consumer surplus in the market. 
D)  a decrease in revenue to the government.

Question 9

When a country allows trade and becomes an importer of bottled water,which of the following is not a consequence?

Accepted Answer

A)  The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water. 
B)  The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water. 
C)  The price paid by domestic consumers of bottled water decreases. 
D)  The price received by domestic producers of bottled water decreases. 
A)  The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water. 
B)  The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water. 
C)  The price paid by domestic consumers of bottled water decreases. 
D)  The price received by domestic producers of bottled water decreases.

Question 10

Figure 9-5  
-Refer to Figure 9-5.The increase in total surplus resulting from trade is

Accepted Answer

A)  $60,since producer surplus increases by $180 and consumer surplus falls by $240. 
B)  $60,since consumer surplus increases by $180 and producer surplus falls by $240. 
C)  $75,since consumer surplus increases by $240 and producer surplus falls by $165. 
D)  $75,since consumer surplus increases by $300 and producer surplus falls by $225. 
A)  $60,since producer surplus increases by $180 and consumer surplus falls by $240. 
B)  $60,since consumer surplus increases by $180 and producer surplus falls by $240. 
C)  $75,since consumer surplus increases by $240 and producer surplus falls by $165. 
D)  $75,since consumer surplus increases by $300 and producer surplus falls by $225.

Question 11

Figure 9-17  
-Refer to Figure 9-17.Without trade,consumer surplus is

Accepted Answer

A)  $100 and producer surplus is $50. 
B)  $100 and producer surplus is $200. 
C)  $400 and producer surplus is $50. 
D)  $400 and producer surplus is $200. 
A)  $100 and producer surplus is $50. 
B)  $100 and producer surplus is $200. 
C)  $400 and producer surplus is $50. 
D)  $400 and producer surplus is $200.

Question 12

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

Accepted Answer

A)  312.5. 
B)  367.0. 
C)  467.5. 
D)  495.0. 
A)  312.5. 
B)  367.0. 
C)  467.5. 
D)  495.0.

Question 13

The rules established under the General Agreement on Tariffs and Trade (GATT)are enforced by an international body called the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is the most accurate statement?

Accepted Answer

A)  Protection is necessary in order for young industries to grow up and be successful. 
B)  Protection is not necessary for an industry to grow. 
C)  Protection is necessary because if young industries are not protected,they may suffer losses. 
D)  Protection may not always be necessary for infant industries,but it has proven to be useful in most cases. 
A)  Protection is necessary in order for young industries to grow up and be successful. 
B)  Protection is not necessary for an industry to grow. 
C)  Protection is necessary because if young industries are not protected,they may suffer losses. 
D)  Protection may not always be necessary for infant industries,but it has proven to be useful in most cases.

Question 15

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

Accepted Answer

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

Question 16

Figure 9-17  
-Refer to Figure 9-17.With free trade,consumer surplus is

Accepted Answer

A)  $100 and producer surplus is $50. 
B)  $100 and producer surplus is $200. 
C)  $400 and producer surplus is $50. 
D)  $400 and producer surplus is $200. 
A)  $100 and producer surplus is $50. 
B)  $100 and producer surplus is $200. 
C)  $400 and producer surplus is $50. 
D)  $400 and producer surplus is $200.

Question 17

Figure 9-10.The figure applies to the nation of Australia and the good is cameras.  
-Refer to Figure 9-10.The price and quantity of cameras in Australia before trade is

Accepted Answer

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

Question 18

When a country allows trade and becomes an importer of a good,

Accepted Answer

A)  everyone in the country benefits. 
B)  the gains of the winners exceed the losses of the losers. 
C)  the losses of the losers exceed the gains of the winners. 
D)  everyone in the country loses. 
A)  everyone in the country benefits. 
B)  the gains of the winners exceed the losses of the losers. 
C)  the losses of the losers exceed the gains of the winners. 
D)  everyone in the country loses.

Question 19

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing rice,exporting steel,and neither importing nor exporting TVs.We can conclude that producer surplus in Aquilonia is now

Accepted Answer

A)  higher in the steel market,lower in the rice market,and unchanged in the TV market. 
B)  higher in the rice and steel markets,and unchanged in the TV market. 
C)  lower in the rice and TV markets,and higher in the steel market. 
D)  lower in the rice and steel markets,and the same in the TV market. 
A)  higher in the steel market,lower in the rice market,and unchanged in the TV market. 
B)  higher in the rice and steel markets,and unchanged in the TV market. 
C)  lower in the rice and TV markets,and higher in the steel market. 
D)  lower in the rice and steel markets,and the same in the TV market.

Question 20

Suppose Mexico imposes a tariff on lumber.For the tariff to have any effect,it must be the case that

Accepted Answer

A)  Mexico is an exporter of lumber. 
B)  the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the tariff. 
C)  the world price without the tariff is less than the price of lumber without trade. 
D)  the world price without the tariff is greater than the price of lumber without trade. 
A)  Mexico is an exporter of lumber. 
B)  the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the tariff. 
C)  the world price without the tariff is less than the price of lumber without trade. 
D)  the world price without the tariff is greater than the price of lumber without trade.

Exam 9: Application: International Trade

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.These taxes

Figure 9-17 -Refer to Figure 9-17.Without trade,total surplus is

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

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Characterize the two different approaches a nation can take to achieve free trade.Does one approach have an advantage over the other?

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.When the country for which the figure is drawn allows international trade in cars,

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

When a country moves away from a free trade position and imposes a tariff on imports,it causes

When a country allows trade and becomes an importer of bottled water,which of the following is not a consequence?

Figure 9-5 -Refer to Figure 9-5.The increase in total surplus resulting from trade is

Figure 9-17 -Refer to Figure 9-17.Without trade,consumer surplus is

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

The rules established under the General Agreement on Tariffs and Trade (GATT)are enforced by an international body called the World Trade Organization (WTO).

Which of the following is the most accurate statement?

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

Figure 9-17 -Refer to Figure 9-17.With free trade,consumer surplus is

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.The price and quantity of cameras in Australia before trade is

When a country allows trade and becomes an importer of a good,

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing rice,exporting steel,and neither importing nor exporting TVs.We can conclude that producer surplus in Aquilonia is now

Suppose Mexico imposes a tariff on lumber.For the tariff to have any effect,it must be the case 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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