Question 1

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

Accepted Answer

A)  the number of rifles bought and sold in Mexico. 
B)  the number of rifles produced in Mexico. 
C)  the number of rifles exported by Mexico. 
D)  the number of rifles imported by Mexico. 
A)  the number of rifles bought and sold in Mexico. 
B)  the number of rifles produced in Mexico. 
C)  the number of rifles exported by Mexico. 
D)  the number of rifles imported by Mexico.

Question 2

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

Accepted Answer

A)  both producers of automobiles and consumers of automobiles in that nation became better off as a result. 
B)  the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation. 
C)  the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation. 
D)  even though total surplus in that nation decreased, it was still true that consumer surplus and producer surplus increased. 
A)  both producers of automobiles and consumers of automobiles in that nation became better off as a result. 
B)  the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation. 
C)  the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation. 
D)  even though total surplus in that nation decreased, it was still true that consumer surplus and producer surplus increased.

Question 3

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Accepted Answer

A)  both consumer surplus and producer surplus increase. 
B)  consumer surplus increases and producer surplus decreases. 
C)  consumer surplus decreases and producer surplus increases. 
D)  both consumer surplus and producer surplus decrease. 
A)  both consumer surplus and producer surplus increase. 
B)  consumer surplus increases and producer surplus decreases. 
C)  consumer surplus decreases and producer surplus increases. 
D)  both consumer surplus and producer surplus decrease.

Question 4

Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit.  
-Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how much are consumer surplus and producer surplus?

Accepted Answer

With trade and a tar

Question 5

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 6

If the United Kingdom imports tea cups from other countries, then U.K. producers of tea cups are better off, and U.K. consumers of tea cups are worse off, as a result of trade.

Accepted Answer

A) True 
 B)False

Question 7

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Accepted Answer

A)  People face tradeoffs. 
B)  Trade can make everyone better off. 
C)  Governments can sometimes improve market outcomes. 
D)  Prices rise when the government prints too much money. 
A)  People face tradeoffs. 
B)  Trade can make everyone better off. 
C)  Governments can sometimes improve market outcomes. 
D)  Prices rise when the government prints too much money.

Question 8

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 9

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Accepted Answer

A)  gain $100 of producer surplus. 
B)  gain $150 of producer surplus. 
C)  gain $200 of producer surplus. 
D)  gain $300 of producer surplus. 
A)  gain $100 of producer surplus. 
B)  gain $150 of producer surplus. 
C)  gain $200 of producer surplus. 
D)  gain $300 of producer surplus.

Question 10

Figure 9-23
The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit.  
-Refer to Figure 9-23. Producer surplus with free trade is

Accepted Answer

A)  $200. 
B)  $450. 
C)  $630. 
D)  $1,080 
A)  $200. 
B)  $450. 
C)  $630. 
D)  $1,080

Question 11

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

Accepted Answer

A)  $28,000. 
B)  $30,000. 
C)  $35,200. 
D)  $38,400. 
A)  $28,000. 
B)  $30,000. 
C)  $35,200. 
D)  $38,400.

Question 12

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 13

Figure 9-24
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-24. With free trade, consumer surplus is

Accepted Answer

A)  $400 and producer surplus is $100. 
B)  $400 and producer surplus is $400. 
C)  $900 and producer surplus is $100. 
D)  $900 and producer surplus is $400. 
A)  $400 and producer surplus is $100. 
B)  $400 and producer surplus is $400. 
C)  $900 and producer surplus is $100. 
D)  $900 and producer surplus is $400.

Question 14

Figure 9-21
The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit.  
-Refer to Figure 9-21. Producer surplus with free trade is

Accepted Answer

A)  $14,000. 
B)  $18,000. 
C)  $24,000. 
D)  $32,000. 
A)  $14,000. 
B)  $18,000. 
C)  $24,000. 
D)  $32,000.

Question 15

Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit.  
-Refer to Figure 9-29. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

With trade

Question 16

The small-economy assumption is necessary to analyze the gains and losses from international trade.

Accepted Answer

A) True 
 B)False

Question 17

GATT is an example of a successful unilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 18

Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Figure 9-3. The domestic country is China.  
-Refer to Figure 9-3. The increase in total surplus in China when trade is allowed is

Accepted Answer

A)  $400. 
B)  $500. 
C)  $600. 
D)  $750. 
A)  $400. 
B)  $500. 
C)  $600. 
D)  $750.

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

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

If the United Kingdom imports tea cups from other countries, then U.K. producers of tea cups are better off, and U.K. consumers of tea cups are worse off, as a result of trade.

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Which of the following is the most accurate statement?

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. Producer surplus with free trade is

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

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

Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. With free trade, consumer surplus is

Figure 9-21 The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-21. Producer surplus with free trade is

The small-economy assumption is necessary to analyze the gains and losses from international trade.

GATT is an example of a successful unilateral approach to achieving free trade.

Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

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

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. The increase in total surplus in China when trade is allowed 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

Filters

Exam 9: Application: International Trade

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

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

If the United Kingdom imports tea cups from other countries, then U.K. producers of tea cups are better off, and U.K. consumers of tea cups are worse off, as a result of trade.

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Which of the following is the most accurate statement?

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. Producer surplus with free trade is

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

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

Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. With free trade, consumer surplus is

Figure 9-21 The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-21. Producer surplus with free trade is

The small-economy assumption is necessary to analyze the gains and losses from international trade.

GATT is an example of a successful unilateral approach to achieving free trade.

Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

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

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. The increase in total surplus in China when trade is allowed 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

Filters