Question 1

Relative to a situation in which domestic firms do not compete with foreign firms, firms in countries that engage in free trade

Accepted Answer

A)  can realize economies of scale more fully. 
B)  have greater market power. 
C)  experience larger producer surplus. 
D)  All of the above are correct. 
A)  can realize economies of scale more fully. 
B)  have greater market power. 
C)  experience larger producer surplus. 
D)  All of the above are correct.

Question 2

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

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 3

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 much is producer surplus?

Accepted Answer

With trade

Question 4

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

Accepted Answer

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

Question 5

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. Suppose the government imposes a tariff of $10 per unit. The deadweight loss caused by the tariff is

Accepted Answer

A)  $25. 
B)  $50. 
C)  $75. 
D)  
D)  $100. 
A)  $25. 
B)  $50. 
C)  $75. 
D)  
D)  $100.

Question 6

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. With free trade, the domestic price and domestic quantity demanded are

Accepted Answer

A)  $30 and 1,200. 
B)  $40 and 800. 
C)  $30 and 800. 
D)  $40 and 1,600. 
A)  $30 and 1,200. 
B)  $40 and 800. 
C)  $30 and 800. 
D)  $40 and 1,600.

Question 7

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices, the Swedish economy would be worse off.

Accepted Answer

A) True 
 B)False

Question 8

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.  
-Refer to Figure 9-16. The tariff

Accepted Answer

A)  decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases total surplus by the area D + F. 
B)  increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F. 
C)  creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F. 
D)  increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F. 
A)  decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases total surplus by the area D + F. 
B)  increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F. 
C)  creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F. 
D)  increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.

Question 9

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-27. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

Accepted Answer

With trade, consumer

Question 10

Scenario 9-2
-For a small country called Boxland, the equation of the domestic demand curve for cardboard is
   where
     represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard.
-For Boxland, the equation of the domestic supply curve for cardboard is
   where
     represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard.
-Refer to Scenario 9-2. Suppose the world price of cardboard is $45 and international trade is allowed. Then Boxland's consumers demand

Accepted Answer

A)  110 tons of cardboard and Boxland's producers supply 75 tons of cardboard. 
B)  110 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
C)  96 tons of cardboard and Boxland's producers supply 75 tons of cardboard. 
D)  96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
A)  110 tons of cardboard and Boxland's producers supply 75 tons of cardboard. 
B)  110 tons of cardboard and Boxland's producers supply 96 tons of cardboard. 
C)  96 tons of cardboard and Boxland's producers supply 75 tons of cardboard. 
D)  96 tons of cardboard and Boxland's producers supply 96 tons of cardboard.

Question 11

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. Without trade, producer 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 12

Figure 9-15  
-Refer to Figure 9-15. With trade and without a tariff, the 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 13

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

Accepted Answer

A) True 
 B)False

Question 14

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began

Accepted Answer

A)  exporting almonds and the price per pound in Uruguay remained at $3.00. 
B)  exporting almonds and the price per pound in Uruguay increased to $4.50. 
C)  importing almonds and the price per pound in Uruguay remained at $3.00. 
D)  importing almonds and the price per pound in Uruguay increased to $4.50. 
A)  exporting almonds and the price per pound in Uruguay remained at $3.00. 
B)  exporting almonds and the price per pound in Uruguay increased to $4.50. 
C)  importing almonds and the price per pound in Uruguay remained at $3.00. 
D)  importing almonds and the price per pound in Uruguay increased to $4.50.

Question 15

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

Accepted Answer

A)  Consumer surplus decreases by $100; producer surplus increases by $100; and government revenue from the tariff amounts to $50. 
B)  Consumer surplus decreases by $200; producer surplus increases by $100; and government revenue from the tariff amounts to $50. 
C)  Consumer surplus increases by $100; producer surplus decreases by $200; and government revenue from the tariff amounts to $50. 
D)  Consumer surplus decreases by $50; producer surplus increases by $200; and government revenue from the tariff amounts to $150. 
A)  Consumer surplus decreases by $100; producer surplus increases by $100; and government revenue from the tariff amounts to $50. 
B)  Consumer surplus decreases by $200; producer surplus increases by $100; and government revenue from the tariff amounts to $50. 
C)  Consumer surplus increases by $100; producer surplus decreases by $200; and government revenue from the tariff amounts to $50. 
D)  Consumer surplus decreases by $50; producer surplus increases by $200; and government revenue from the tariff amounts to $150.

Question 16

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

Accepted Answer

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

Question 17

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 if the world price of peaches is $5, then

Accepted Answer

A)  Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B)  Isoland will import peaches. 
C)  consumer surplus with trade exceeds consumer surplus without trade. 
D)  All of the above are correct. 
A)  Isoland has a comparative advantage, relative to other countries, in producing peaches. 
B)  Isoland will import peaches. 
C)  consumer surplus with trade exceeds consumer surplus without trade. 
D)  All of the above are correct.

Question 18

For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

Accepted Answer

A) True 
 B)False

Question 19

Scenario 9-2
-For a small country called Boxland, the equation of the domestic demand curve for cardboard is
   where
     represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard.
-For Boxland, the equation of the domestic supply curve for cardboard is
   where
     represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard.
-Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard

Accepted Answer

A)  benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. 
B)  benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. 
C)  benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. 
D)  harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. 
A)  benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. 
B)  benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. 
C)  benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. 
D)  harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00.

Question 20

Workers displaced by trade eventually find jobs in

Accepted Answer

A)  another country. 
B)  the government sector. 
C)  the industries in which the country has a comparative advantage. 
D)  a different company in the same industry. 
A)  another country. 
B)  the government sector. 
C)  the industries in which the country has a comparative advantage. 
D)  a different company in the same industry.

Relative to a situation in which domestic firms do not compete with foreign firms, firms in countries that engage in free trade

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

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 much is producer surplus?

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

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. Suppose the government imposes a tariff of $10 per unit. The deadweight loss caused by the tariff 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. With free trade, the domestic price and domestic quantity demanded are

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices, the Swedish economy would be worse off.

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The tariff

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

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

Figure 9-15 -Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

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

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 if the world price of peaches is $5, then

For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

Workers displaced by trade eventually find jobs in

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

Relative to a situation in which domestic firms do not compete with foreign firms, firms in countries that engage in free trade

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

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 much is producer surplus?

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

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. Suppose the government imposes a tariff of $10 per unit. The deadweight loss caused by the tariff 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. With free trade, the domestic price and domestic quantity demanded are

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices, the Swedish economy would be worse off.

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The tariff

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

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

Figure 9-15 -Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

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

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 if the world price of peaches is $5, then

For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

Workers displaced by trade eventually find jobs in

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