Question 1

If the Japanese steel industry subsidizes the steel that it sells to the United States,the

Accepted Answer

A)  United States should protect its domestic steel industry from this unfair competition. 
B)  harm done to U.S.steel producers from this unfair competition exceeds the gain to U.S.consumers of cheap Japanese steel. 
C)  harm done to U.S.steel producers is less than the benefit that accrues to U.S.consumers of steel. 
D)  United States should subsidize the products it sells to Japan. 
A)  United States should protect its domestic steel industry from this unfair competition. 
B)  harm done to U.S.steel producers from this unfair competition exceeds the gain to U.S.consumers of cheap Japanese steel. 
C)  harm done to U.S.steel producers is less than the benefit that accrues to U.S.consumers of steel. 
D)  United States should subsidize the products it sells to Japan.

Question 2

Figure 9-17  
-Refer to Figure 9-17.When the country moves from free trade to trade and a tariff,consumer surplus

Accepted Answer

A)  decreases by $144 and producer surplus does not change. 
B)  decreases by $144 and producer surplus increases by $48. 
C)  decreases by $198 and producer surplus does not change. 
D)  decreases by $198 and producer surplus increases by $48. 
A)  decreases by $144 and producer surplus does not change. 
B)  decreases by $144 and producer surplus increases by $48. 
C)  decreases by $198 and producer surplus does not change. 
D)  decreases by $198 and producer surplus increases by $48.

Question 3

A major difference between tariffs and import quotas is that

Accepted Answer

A)  tariffs create deadweight losses,but import quotas do not. 
B)  tariffs help domestic consumers,and import quotas help domestic producers. 
C)  tariffs raise revenue for the government,but import quotas create surplus for those who get the licenses to import. 
D)  All of the above are correct. 
A)  tariffs create deadweight losses,but import quotas do not. 
B)  tariffs help domestic consumers,and import quotas help domestic producers. 
C)  tariffs raise revenue for the government,but import quotas create surplus for those who get the licenses to import. 
D)  All of the above are correct.

Question 4

Figure 9-12  
-Refer to Figure 9-12.Consumer surplus before 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 5

Figure 9-5  
-Refer to Figure 9-5.With trade,the price of wagons in this country is

Accepted Answer

A)  $8,with 70 wagons produced in this country,20 of which are exported. 
B)  $8,with 90 wagons produced in this country,50 of which are exported. 
C)  $5,with 40 wagons produced in this country and another 30 wagons imported. 
D)  $5,with 40 wagons produced in this country and another 50 wagons imported. 
A)  $8,with 70 wagons produced in this country,20 of which are exported. 
B)  $8,with 90 wagons produced in this country,50 of which are exported. 
C)  $5,with 40 wagons produced in this country and another 30 wagons imported. 
D)  $5,with 40 wagons produced in this country and another 50 wagons imported.

Question 6

The price of a good that prevails in a world market is called the

Accepted Answer

A)  absolute price. 
B)  relative price. 
C)  comparative price. 
D)  world price. 
A)  absolute price. 
B)  relative price. 
C)  comparative price. 
D)  world price.

Question 7

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 $3,then the policy change results in a

Accepted Answer

A)  $15.00 decrease in producer surplus. 
B)  $45.00 increase in consumer surplus. 
C)  $20.00 increase in total surplus. 
D)  $12.50 increase in total surplus. 
A)  $15.00 decrease in producer surplus. 
B)  $45.00 increase in consumer surplus. 
C)  $20.00 increase in total surplus. 
D)  $12.50 increase in total surplus.

Question 8

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 the world price of peaches is $5,then

Accepted Answer

A)  producer surplus will be smaller than it would be if Isoland banned trade. 
B)  consumer surplus will be smaller than it would be if Isoland banned trade. 
C)  the domestic quantity of peaches demanded will exceed the domestic quantity of peaches supplied. 
D)  Isoland will be an importer of peaches. 
A)  producer surplus will be smaller than it would be if Isoland banned trade. 
B)  consumer surplus will be smaller than it would be if Isoland banned trade. 
C)  the domestic quantity of peaches demanded will exceed the domestic quantity of peaches supplied. 
D)  Isoland will be an importer of peaches.

Question 9

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good,

Accepted Answer

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

Question 10

Figure 9-4.The domestic country is Jamaica.  
-Refer to Figure 9-4.The change in total surplus in Jamaica because of trade is

Accepted Answer

A)  $625,and this is an increase in total surplus. 
B)  $750,and this is an increase in total surplus. 
C)  $625,and this is a decrease in total surplus. 
D)  $750,and this is a decrease in total surplus. 
A)  $625,and this is an increase in total surplus. 
B)  $750,and this is an increase in total surplus. 
C)  $625,and this is a decrease in total surplus. 
D)  $750,and this is a decrease in total surplus.

Question 11

Figure 9-3.The domestic country is China.  
-Refer to Figure 9-3.With trade,producer surplus in China is

Accepted Answer

A)  $800. 
B)  $1,200. 
C)  $1,800. 
D)  $2,700. 
A)  $800. 
B)  $1,200. 
C)  $1,800. 
D)  $2,700.

Question 12

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

Accepted Answer

A)  $210. 
B)  $245. 
C)  $450. 
D)  $455. 
A)  $210. 
B)  $245. 
C)  $450. 
D)  $455.

Question 13

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

Accepted Answer

A)  the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good. 
B)  the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good. 
C)  the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good. 
D)  the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good. 
A)  the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good. 
B)  the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good. 
C)  the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good. 
D)  the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good.

Question 14

Figure 9-12  
-Refer to Figure 9-12.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

The world price of a pound of T-bone steak is $9.00.Before Latvia allowed trade in beef,the price of a pound of T-bone steak there was $7.50.Once Latvia began allowing trade in beef with other countries,Latvia began

Accepted Answer

A)  exporting T-bone steak and the price per pound in Latvia remained at $7.50. 
B)  exporting T-bone steak and the price per pound in Latvia increased to $9.00. 
C)  importing T-bone steak and the price per pound in Latvia remained at $7.50. 
D)  importing T-bone steak and the price per pound in Latvia increased to $9.00. 
A)  exporting T-bone steak and the price per pound in Latvia remained at $7.50. 
B)  exporting T-bone steak and the price per pound in Latvia increased to $9.00. 
C)  importing T-bone steak and the price per pound in Latvia remained at $7.50. 
D)  importing T-bone steak and the price per pound in Latvia increased to $9.00.

Question 16

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

Accepted Answer

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

Question 17

Assume,for Singapore,that the domestic price of soybeans without international trade is higher than the world price of soybeans.This suggests that,in the production of soybeans,

Accepted Answer

A)  Singapore has a comparative advantage over other countries and Singapore will import soybeans. 
B)  Singapore has a comparative advantage over other countries and Singapore will export soybeans. 
C)  other countries have a comparative advantage over Singapore and Singapore will import soybeans. 
D)  other countries have a comparative advantage over Singapore and Singapore will export soybeans. 
A)  Singapore has a comparative advantage over other countries and Singapore will import soybeans. 
B)  Singapore has a comparative advantage over other countries and Singapore will export soybeans. 
C)  other countries have a comparative advantage over Singapore and Singapore will import soybeans. 
D)  other countries have a comparative advantage over Singapore and Singapore will export soybeans.

Question 18

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.The price corresponding to the horizontal dotted line on the graph represents the price of cars

Accepted Answer

A)  after trade is allowed. 
B)  before trade is allowed. 
C)  that maximizes total surplus when trade is allowed. 
D)  that minimizes the well-being of domestic car producers when trade is allowed. 
A)  after trade is allowed. 
B)  before trade is allowed. 
C)  that maximizes total surplus when trade is allowed. 
D)  that minimizes the well-being of domestic car producers when trade is allowed.

Question 19

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 incense,exporting steel,and neither importing nor exporting rugs.Which groups in Aquilonia are better off as a result of the new free-trade policy?

Accepted Answer

A)  producers of incense and consumers of steel 
B)  consumers of all three goods 
C)  consumers of incense and producers of rugs 
D)  producers of steel and consumers of incense 
A)  producers of incense and consumers of steel 
B)  consumers of all three goods 
C)  consumers of incense and producers of rugs 
D)  producers of steel and consumers of incense

Question 20

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam

Accepted Answer

A)  should import textiles. 
B)  has a comparative advantage in textiles. 
C)  should produce just enough textiles to meet its domestic demand. 
D)  should refrain altogether from producing textiles. 
A)  should import textiles. 
B)  has a comparative advantage in textiles. 
C)  should produce just enough textiles to meet its domestic demand. 
D)  should refrain altogether from producing textiles.

Exam 9: Application: International Trade

If the Japanese steel industry subsidizes the steel that it sells to the United States,the

Figure 9-17 -Refer to Figure 9-17.When the country moves from free trade to trade and a tariff,consumer surplus

A major difference between tariffs and import quotas is that

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

Figure 9-5 -Refer to Figure 9-5.With trade,the price of wagons in this country is

The price of a good that prevails in a world market is called the

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 the world price of peaches is $5,then

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good,

Figure 9-4.The domestic country is Jamaica. -Refer to Figure 9-4.The change in total surplus in Jamaica because of trade is

Figure 9-3.The domestic country is China. -Refer to Figure 9-3.With trade,producer surplus in China is

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

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

Figure 9-12 -Refer to Figure 9-12.Producer surplus before trade is

The world price of a pound of T-bone steak is $9.00.Before Latvia allowed trade in beef,the price of a pound of T-bone steak there was $7.50.Once Latvia began allowing trade in beef with other countries,Latvia began

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

Assume,for Singapore,that the domestic price of soybeans without international trade is higher than the world price of soybeans.This suggests that,in the production of soybeans,

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.The price corresponding to the horizontal dotted line on the graph represents the price of cars

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 incense,exporting steel,and neither importing nor exporting rugs.Which groups in Aquilonia are better off as a result of the new free-trade policy?

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam

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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