Question 1

When the nation of Worldova allows trade and becomes an exporter of silk,

Accepted Answer

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

Question 2

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

Accepted Answer

A)  Spain imports olive oil. 
B)  the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed. 
C)  consumer surplus in Spain would exceed producer surplus in Spain if trade with other countries were not allowed. 
D)  All of the above are correct. 
A)  Spain imports olive oil. 
B)  the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed. 
C)  consumer surplus in Spain would exceed producer surplus in Spain if trade with other countries were not allowed. 
D)  All of the above are correct.

Question 3

Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Accepted Answer

A)  consumer surplus increases for consumers of coats in Iceland. 
B)  producer surplus increases for producers of coats in Iceland. 
C)  total surplus remains unchanged in the coat market in Iceland. 
D)  it is reasonable to infer that other countries have a comparative advantage over Iceland in coat production. 
A)  consumer surplus increases for consumers of coats in Iceland. 
B)  producer surplus increases for producers of coats in Iceland. 
C)  total surplus remains unchanged in the coat market in Iceland. 
D)  it is reasonable to infer that other countries have a comparative advantage over Iceland in coat production.

Question 4

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit.  
-Refer to Figure 9-22. With free trade, consumer surplus is

Accepted Answer

A)  $48,000 and producer surplus is $48,000. 
B)  $18,000 and producer surplus is $12,000. 
C)  $108,000 and producer surplus is $12,000. 
D)  $18,000 and producer surplus is $48,000. 
A)  $48,000 and producer surplus is $48,000. 
B)  $18,000 and producer surplus is $12,000. 
C)  $108,000 and producer surplus is $12,000. 
D)  $18,000 and producer surplus is $48,000.

Question 5

A quota is

Accepted Answer

A)  a tax placed on imports. 
B)  a limit on the quantity of imports. 
C)  a tax on exports to other countries. 
D)  an excess of exports over imports. 
A)  a tax placed on imports. 
B)  a limit on the quantity of imports. 
C)  a tax on exports to other countries. 
D)  an excess of exports over imports.

Question 6

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

Accepted Answer

A)  More Danish-produced chips are sold in Denmark. 
B)  More foreign-produced chips are sold in Denmark. 
C)  Danish consumers of chips become better off. 
D)  Total surplus in the Danish chip market increases. 
A)  More Danish-produced chips are sold in Denmark. 
B)  More foreign-produced chips are sold in Denmark. 
C)  Danish consumers of chips become better off. 
D)  Total surplus in the Danish chip market increases.

Question 7

Figure 9-17  
-Refer to Figure 9-17. Without trade, total surplus is

Accepted Answer

A)  $600. 
B)  $1,200. 
C)  $1,800. 
D)  $2,250. 
A)  $600. 
B)  $1,200. 
C)  $1,800. 
D)  $2,250.

Question 8

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit.  
-Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, consumer surplus is

Accepted Answer

A)  $75,000 and producer surplus is $27,000. 
B)  $63,000 and producer surplus is $12,000. 
C)  $75,000 and producer surplus is $12,000. 
D)  $63,000 and producer surplus is $27,000. 
A)  $75,000 and producer surplus is $27,000. 
B)  $63,000 and producer surplus is $12,000. 
C)  $75,000 and producer surplus is $12,000. 
D)  $63,000 and producer surplus is $27,000.

Question 9

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

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

Question 10

Scenario 9-3
Suppose domestic demand and domestic supply in a market are given by the following equations:  
-Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country allows free trade, how much are consumer surplus, producer surplus, and producer surplus with trade?

Accepted Answer

With trade, consumer

Question 11

When a country that imports a particular good imposes a tariff on that good,

Accepted Answer

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

Question 12

Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?

Accepted Answer

A)  Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. 
B)  Domestic furniture producers will gain producer surplus. 
C)  Domestic furniture producers will have a higher rate of technological advance. 
D)  Domestic furniture producers will have more market power. 
A)  Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. 
B)  Domestic furniture producers will gain producer surplus. 
C)  Domestic furniture producers will have a higher rate of technological advance. 
D)  Domestic furniture producers will have more market power.

Question 13

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

Accepted Answer

A)  $400. 
B)  $600. 
C)  $750. 
D)  $1,000. 
A)  $400. 
B)  $600. 
C)  $750. 
D)  $1,000.

Question 14

Figure 9-15  
-Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Accepted Answer

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

Question 15

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 16

Figure 9-11  
-Refer to Figure 9-11. Consumer surplus in this market after trade is

Accepted Answer

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

Question 17

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 18

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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Accepted Answer

With trade, consumer surplus i

Question 19

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

Accepted Answer

A) True 
 B)False

Question 20

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, what will be the domestic price in this market?

Accepted Answer

With trade and a tar

When the nation of Worldova allows trade and becomes an exporter of silk,

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. With free trade, consumer surplus is

A quota is

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

Figure 9-17 -Refer to Figure 9-17. Without trade, total surplus is

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, consumer surplus is

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

When a country that imports a particular good imposes a tariff on that good,

Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?

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

Figure 9-15 -Refer to Figure 9-15. Producer surplus with trade and without a tariff is

What is the fundamental basis for trade among nations?

Figure 9-11 -Refer to Figure 9-11. Consumer surplus in this market after trade is

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 9-27 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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

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

When the nation of Worldova allows trade and becomes an exporter of silk,

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. With free trade, consumer surplus is

A quota is

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

Figure 9-17 -Refer to Figure 9-17. Without trade, total surplus is

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, consumer surplus is

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

When a country that imports a particular good imposes a tariff on that good,

Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?

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

Figure 9-15 -Refer to Figure 9-15. Producer surplus with trade and without a tariff is

What is the fundamental basis for trade among nations?

Figure 9-11 -Refer to Figure 9-11. Consumer surplus in this market after trade is

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 9-27 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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

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