Question 1

A tariff on a product

Accepted Answer

A)  enhances the economic well-being of the domestic economy. 
B)  increases the domestic quantity supplied. 
C)  increases the domestic quantity demanded. 
D)  results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus. 
A)  enhances the economic well-being of the domestic economy. 
B)  increases the domestic quantity supplied. 
C)  increases the domestic quantity demanded. 
D)  results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus.

Question 2

Figure 9-2  
-Refer to Figure 9-2.As a result of trade,total surplus increases by

Accepted Answer

A)  $80. 
B)  $97.50. 
C)  $162.50. 
D)  $495.50. 
A)  $80. 
B)  $97.50. 
C)  $162.50. 
D)  $495.50.

Question 3

Figure 9-15  
-Refer to Figure 9-15.With the tariff,the domestic price and domestic quantity demanded are

Accepted Answer

A)  P1 and Q1. 
B)  P1 and Q4. 
C)  P2 and Q2. 
D)  P2 and Q3. 
A)  P1 and Q1. 
B)  P1 and Q4. 
C)  P2 and Q2. 
D)  P2 and Q3.

Question 4

Assume,for France,that the domestic price of tea without international trade is higher than the world price of tea.This suggests that

Accepted Answer

A)  other countries have a comparative advantage over France in producing tea. 
B)  France has an absolute advantage over other countries in producing tea. 
C)  France will export tea if international trade is allowed. 
D)  French tea buyers will become worse off if international trade is allowed. 
A)  other countries have a comparative advantage over France in producing tea. 
B)  France has an absolute advantage over other countries in producing tea. 
C)  France will export tea if international trade is allowed. 
D)  French tea buyers will become worse off if international trade is allowed.

Question 5

A tariff on a product makes

Accepted Answer

A)  domestic sellers better off and domestic buyers worse off. 
B)  domestic sellers worse off and domestic buyers worse off. 
C)  domestic sellers better off and domestic buyers better off. 
D)  domestic sellers worse off and domestic buyers better off. 
A)  domestic sellers better off and domestic buyers worse off. 
B)  domestic sellers worse off and domestic buyers worse off. 
C)  domestic sellers better off and domestic buyers better off. 
D)  domestic sellers worse off and domestic buyers better off.

Question 6

Figure 9-5  
-Refer to Figure 9-5.The horizontal line at the world price of wagons represents the

Accepted Answer

A)  demand for wagons from the rest of the world. 
B)  supply of wagons from the rest of the world. 
C)  level of inefficiency in the domestic market caused by trade. 
D)  surplus in the domestic wagon market. 
A)  demand for wagons from the rest of the world. 
B)  supply of wagons from the rest of the world. 
C)  level of inefficiency in the domestic market caused by trade. 
D)  surplus in the domestic wagon market.

Question 7

Figure 9-2  
-Refer to Figure 9-2.This country

Accepted Answer

A)  has a comparative advantage in baskets. 
B)  should export baskets. 
C)  is a price taker in the world economy. 
D)  All of the above are correct. 
A)  has a comparative advantage in baskets. 
B)  should export baskets. 
C)  is a price taker in the world economy. 
D)  All of the above are correct.

Question 8

NAFTA is an example of a multilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 9

Trade enhances the economic well-being of a nation in the sense that

Accepted Answer

A)  both domestic producers and domestic consumers of a good become better off with trade,regardless of whether the nation imports or exports the good in question. 
B)  the gains of domestic producers of a good exceed the losses of domestic consumers of a good,regardless of whether the nation imports or exports the good in question. 
C)  trade results in an increase in total surplus. 
D)  trade puts downward pressure on the prices of all goods. 
A)  both domestic producers and domestic consumers of a good become better off with trade,regardless of whether the nation imports or exports the good in question. 
B)  the gains of domestic producers of a good exceed the losses of domestic consumers of a good,regardless of whether the nation imports or exports the good in question. 
C)  trade results in an increase in total surplus. 
D)  trade puts downward pressure on the prices of all goods.

Question 10

Most economists support the infant-industry argument because it is so easy to implement in practice.

Accepted Answer

A) True 
 B)False

Question 11

What is the fundamental basis for trade among nations?

Accepted Answer

A)  shortages or surpluses in nations that do not trade 
B)  misguided economic policies 
C)  absolute advantage 
D)  comparative advantage 
A)  shortages or surpluses in nations that do not trade 
B)  misguided economic policies 
C)  absolute advantage 
D)  comparative advantage

Question 12

Tariffs and quotas are different in the sense that

Accepted Answer

A)  tariffs cause deadweight losses,while quotas do not cause deadweight losses. 
B)  tariffs raise revenue for the government,while quotas do not raise revenue for the government. 
C)  tariffs enhance the well-being of domestic consumers,while quotas diminish the well-being of domestic consumers. 
D)  tariffs enhance the well-being of domestic producers,while quotas diminish the well-being of domestic producers. 
A)  tariffs cause deadweight losses,while quotas do not cause deadweight losses. 
B)  tariffs raise revenue for the government,while quotas do not raise revenue for the government. 
C)  tariffs enhance the well-being of domestic consumers,while quotas diminish the well-being of domestic consumers. 
D)  tariffs enhance the well-being of domestic producers,while quotas diminish the well-being of domestic producers.

Question 13

Domestic producers of a good become better off,and domestic consumers of a good become worse off,when a country begins allowing international trade in that good and

Accepted Answer

A)  the country becomes an importer of the good as a result. 
B)  the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C)  other countries have a comparative advantage,relative to the country in question,in producing the good. 
D)  total surplus does not change as a result. 
A)  the country becomes an importer of the good as a result. 
B)  the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C)  other countries have a comparative advantage,relative to the country in question,in producing the good. 
D)  total surplus does not change as a result.

Question 14

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade,thus reducing the gains from trade.

Accepted Answer

A) True 
 B)False

Question 15

At present,the United States uses a system of quotas to limit the amount of sugar imported into the country.Which of the following statements is most likely true?

Accepted Answer

A)  The quotas are probably the result of lobbying from U.S.consumers of sugar.The quotas increase consumer surplus for the United States,reduce producer surplus for the United States,and harm foreign sugar producers. 
B)  The quotas are probably the result of lobbying from U.S.producers of sugar.The quotas increase producer surplus for the United States,reduce consumer surplus for the United States,and harm foreign sugar producers. 
C)  The quotas are probably the result of lobbying from foreign producers of sugar.The quotas reduce producer surplus for the United States,increase consumer surplus for the United States,and benefit foreign sugar producers. 
D)  U.S.lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them. 
A)  The quotas are probably the result of lobbying from U.S.consumers of sugar.The quotas increase consumer surplus for the United States,reduce producer surplus for the United States,and harm foreign sugar producers. 
B)  The quotas are probably the result of lobbying from U.S.producers of sugar.The quotas increase producer surplus for the United States,reduce consumer surplus for the United States,and harm foreign sugar producers. 
C)  The quotas are probably the result of lobbying from foreign producers of sugar.The quotas reduce producer surplus for the United States,increase consumer surplus for the United States,and benefit foreign sugar producers. 
D)  U.S.lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them.

Question 16

Figure 9-6  
-Refer to Figure 9-6.Without trade,the equilibrium price of carnations is

Accepted Answer

A)  $8 and the equilibrium quantity is 300. 
B)  $6 and the equilibrium quantity is 200. 
C)  $6 and the equilibrium quantity is 400. 
D)  $4 and the equilibrium quantity is 500. 
A)  $8 and the equilibrium quantity is 300. 
B)  $6 and the equilibrium quantity is 200. 
C)  $6 and the equilibrium quantity is 400. 
D)  $4 and the equilibrium quantity is 500.

Question 17

Figure 9-13  
-Refer to Figure 9-13.With trade,domestic production and domestic consumption,respectively,are

Accepted Answer

A)  600 and 600. 
B)  600 and 300. 
C)  300 and 900. 
D)  600 and 900. 
A)  600 and 600. 
B)  600 and 300. 
C)  300 and 900. 
D)  600 and 900.

Question 18

An important factor in the decline of the U.S.textile industry over the past 100 or so years is

Accepted Answer

A)  foreign competitors that can produce quality textile goods at low cost. 
B)  lower prices of goods that are substitutes for clothing. 
C)  a decrease in Americans' demand for clothing,due to increased incomes and the fact that clothing is an inferior good. 
D)  the fact that the minimum wage in the U.S.has failed to keep pace with the cost of living. 
A)  foreign competitors that can produce quality textile goods at low cost. 
B)  lower prices of goods that are substitutes for clothing. 
C)  a decrease in Americans' demand for clothing,due to increased incomes and the fact that clothing is an inferior good. 
D)  the fact that the minimum wage in the U.S.has failed to keep pace with the cost of living.

Question 19

Figure 9-1
The figure illustrates the market for wool in New Zealand.  
-Refer to Figure 9-1.When trade in wool is allowed,consumer surplus in New Zealand

Accepted Answer

A)  increases by the area B + D. 
B)  increases by the area C + F. 
C)  decreases by the area B + D. 
D)  decreases by the area D + G. 
A)  increases by the area B + D. 
B)  increases by the area C + F. 
C)  decreases by the area B + D. 
D)  decreases by the area D + G.

Question 20

Figure 9-17  
-Refer to Figure 9-17.When comparing no trade to free trade,the gain from trade is

Accepted Answer

A)  $72. 
B)  $100. 
C)  $150. 
D)  $450. 
A)  $72. 
B)  $100. 
C)  $150. 
D)  $450.

Exam 9: Application: International Trade

A tariff on a product

Figure 9-2 -Refer to Figure 9-2.As a result of trade,total surplus increases by

Figure 9-15 -Refer to Figure 9-15.With the tariff,the domestic price and domestic quantity demanded are

Assume,for France,that the domestic price of tea without international trade is higher than the world price of tea.This suggests that

A tariff on a product makes

Figure 9-5 -Refer to Figure 9-5.The horizontal line at the world price of wagons represents the

Figure 9-2 -Refer to Figure 9-2.This country

NAFTA is an example of a multilateral approach to achieving free trade.

Trade enhances the economic well-being of a nation in the sense that

Most economists support the infant-industry argument because it is so easy to implement in practice.

What is the fundamental basis for trade among nations?

Tariffs and quotas are different in the sense that

Domestic producers of a good become better off,and domestic consumers of a good become worse off,when a country begins allowing international trade in that good and

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade,thus reducing the gains from trade.

At present,the United States uses a system of quotas to limit the amount of sugar imported into the country.Which of the following statements is most likely true?

Figure 9-6 -Refer to Figure 9-6.Without trade,the equilibrium price of carnations is

Figure 9-13 -Refer to Figure 9-13.With trade,domestic production and domestic consumption,respectively,are

An important factor in the decline of the U.S.textile industry over the past 100 or so years is

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.When trade in wool is allowed,consumer surplus in New Zealand

Figure 9-17 -Refer to Figure 9-17.When comparing no trade to free trade,the gain from trade 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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