Question 1

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Accepted Answer

A)  abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. 
B)  abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. 
C)  abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. 
D)  abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples. 
A)  abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. 
B)  abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. 
C)  abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. 
D)  abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples.

Question 2

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are

Accepted Answer

A)  P1 and Q2. 
B)  P1 and Q1. 
C)  P0 and Q0. 
D)  P3 and Q1. 
A)  P1 and Q2. 
B)  P1 and Q1. 
C)  P0 and Q0. 
D)  P3 and Q1.

Question 3

The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Accepted Answer

A) True 
 B)False

Question 4

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, then it will be an exporter of peaches if and only if the world price of peaches is

Accepted Answer

A)  above $2. 
B)  below $4. 
C)  above $4. 
D)  below $7. 
A)  above $2. 
B)  below $4. 
C)  above $4. 
D)  below $7.

Question 5

The principle of comparative advantage asserts that

Accepted Answer

A)  not all countries can benefit from trade with other countries. 
B)  the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C)  countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D)  countries can become better off by specializing in what they do best. 
A)  not all countries can benefit from trade with other countries. 
B)  the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C)  countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D)  countries can become better off by specializing in what they do best.

Question 6

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 7

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. With trade, producer surplus is

Accepted Answer

A)  $500. 
B)  $1,000. 
C)  $1,500. 
D)  $2,000. 
A)  $500. 
B)  $1,000. 
C)  $1,500. 
D)  $2,000.

Question 8

Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how many units will domestic consumers demand, and how many units will domestic producers supply?

Accepted Answer

Domestic consumers w

Question 9

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents

Accepted Answer

A)  Mexico's gains from trade. 
B)  the amount by which Mexico's gain in producer surplus exceeds its loss in consumer surplus due to trade. 
C)  Mexico's loss in total surplus due to trade. 
D)  All of the above are correct. 
A)  Mexico's gains from trade. 
B)  the amount by which Mexico's gain in producer surplus exceeds its loss in consumer surplus due to trade. 
C)  Mexico's loss in total surplus due to trade. 
D)  All of the above are correct.

Question 10

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 11

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A)  protectionism based on the national-security argument. 
B)  protectionism based on the infant-industry argument. 
C)  protectionism based on the unfair-competition argument. 
D)  keeping world markets relatively open. 
A)  protectionism based on the national-security argument. 
B)  protectionism based on the infant-industry argument. 
C)  protectionism based on the unfair-competition argument. 
D)  keeping world markets relatively open.

Question 12

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 13

When a country takes a multilateral approach to free trade, it

Accepted Answer

A)  removes trade restrictions on its own. 
B)  reduces its trade restrictions while other countries do the same. 
C)  does not remove trade restrictions no matter what other countries do. 
D)  is willing to trade with multiple countries at once. 
A)  removes trade restrictions on its own. 
B)  reduces its trade restrictions while other countries do the same. 
C)  does not remove trade restrictions no matter what other countries do. 
D)  is willing to trade with multiple countries at once.

Question 14

When the nation of Duxembourg allows trade and becomes an importer of software,

Accepted Answer

A)  residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises. 
B)  residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg falls. 
C)  residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg rises. 
D)  residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg falls. 
A)  residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises. 
B)  residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg falls. 
C)  residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg rises. 
D)  residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg falls.

Question 15

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. Without trade, consumer surplus is

Accepted Answer

A)  $423. 
B)  $845. 
C)  $1,690. 
D)  $3,380. 
A)  $423. 
B)  $845. 
C)  $1,690. 
D)  $3,380.

Question 16

Some goods can be produced at low cost only if they are produced in large quantities. This phenomenon is called

Accepted Answer

A)  marginal cost of production. 
B)  marginal benefit of size. 
C)  economies of scale. 
D)  economies of production. 
A)  marginal cost of production. 
B)  marginal benefit of size. 
C)  economies of scale. 
D)  economies of production.

Question 17

Assume, for England, that the domestic price of wine without international trade is lower than the world price of wine. This suggests that, in the production of wine,

Accepted Answer

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

Question 18

Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

Accepted Answer

A) True 
 B)False

Question 19

Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Accepted Answer

A)  Guatemala has a comparative advantage over other countries in the production of coffee, and Guatemala will export coffee. 
B)  Guatemala has a comparative advantage over other countries in the production of coffee, and Guatemala will import coffee. 
C)  other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will export coffee. 
D)  other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will import coffee. 
A)  Guatemala has a comparative advantage over other countries in the production of coffee, and Guatemala will export coffee. 
B)  Guatemala has a comparative advantage over other countries in the production of coffee, and Guatemala will import coffee. 
C)  other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will export coffee. 
D)  other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will import coffee.

Question 20

Countries that restrict foreign trade are likely to

Accepted Answer

A)  forgo the additional surplus that trade allows, but will probably enjoy economies of scale. 
B)  forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change. 
C)  forgo the additional surplus that trade allows, but will have a lower rate of unemployment. 
D)  have more firms with domestic market power. 
A)  forgo the additional surplus that trade allows, but will probably enjoy economies of scale. 
B)  forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change. 
C)  forgo the additional surplus that trade allows, but will have a lower rate of unemployment. 
D)  have more firms with domestic market power.

Exam 9: Application: International Trade

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are

The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

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, then it will be an exporter of peaches if and only if the world price of peaches is

The principle of comparative advantage asserts that

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, producer surplus is

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents

A tariff on a product

In a December 2007 New York Times column Paul Krugman argued in favor of

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

When a country takes a multilateral approach to free trade, it

When the nation of Duxembourg allows trade and becomes an importer of software,

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. Without trade, consumer surplus is

Some goods can be produced at low cost only if they are produced in large quantities. This phenomenon is called

Assume, for England, that the domestic price of wine without international trade is lower than the world price of wine. This suggests that, in the production of wine,

Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Countries that restrict foreign trade are likely to

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

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