Question 1

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

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

Question 2

The two basic approaches that a country can take as a means to achieve free trade are the

Accepted Answer

A)  unilateral approach and the multilateral approach. 
B)  short-run approach and the long-run approach. 
C)  continental approach and the global approach. 
D)  industry approach and the security approach. 
A)  unilateral approach and the multilateral approach. 
B)  short-run approach and the long-run approach. 
C)  continental approach and the global approach. 
D)  industry approach and the security approach.

Question 3

If Freedonia changes its laws to allow international trade in software and the world price is lower 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 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. With trade, the price of tricycles in this country is

Accepted Answer

A)  $11, with 200 tricycles produced in this country and another 320 tricycles imported. 
B)  $11, with 360 tricycles produced in this country and another 160 tricycles imported. 
C)  $19, with 200 tricycles produced in this country and another 160 tricycles imported. 
D)  $19, with 360 tricycles produced in this country and another 320 tricycles imported. 
A)  $11, with 200 tricycles produced in this country and another 320 tricycles imported. 
B)  $11, with 360 tricycles produced in this country and another 160 tricycles imported. 
C)  $19, with 200 tricycles produced in this country and another 160 tricycles imported. 
D)  $19, with 360 tricycles produced in this country and another 320 tricycles imported.

Question 5

Import quotas and tariffs produce some common results. Which of the following is not one of those common results?

Accepted Answer

A)  Total surplus in the domestic country falls. 
B)  Producer surplus in the domestic country increases. 
C)  The domestic country experiences a deadweight loss. 
D)  Revenue is raised for the domestic government. 
A)  Total surplus in the domestic country falls. 
B)  Producer surplus in the domestic country increases. 
C)  The domestic country experiences a deadweight loss. 
D)  Revenue is raised for the domestic government.

Question 6

Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is
$52 per bushel. The U.S. is a price-taker in the market for peaches.
-Refer to Scenario 9-1. If trade in peaches is allowed, the United States

Accepted Answer

A)  will become an importer of peaches. 
B)  will become an exporter of peaches. 
C)  may become either an importer or an exporter of peaches, but this cannot be determined. 
D)  will experience increases in both consumer surplus and producer surplus. 
A)  will become an importer of peaches. 
B)  will become an exporter of peaches. 
C)  may become either an importer or an exporter of peaches, but this cannot be determined. 
D)  will experience increases in both consumer surplus and producer surplus.

Question 7

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Accepted Answer

A)  there is no evidence that any worker ever lost his or her job because of free trade. 
B)  unemployment of labor is not a serious problem relative to other economic problems. 
C)  the gains from trade are based on comparative advantage. 
D)  the gains from trade are based on absolute advantage. 
A)  there is no evidence that any worker ever lost his or her job because of free trade. 
B)  unemployment of labor is not a serious problem relative to other economic problems. 
C)  the gains from trade are based on comparative advantage. 
D)  the gains from trade are based on absolute advantage.

Question 8

Figure 9-13  
-Refer to Figure 9-13. The price and domestic quantity demanded after trade are

Accepted Answer

A)  $8 and 300. 
B)  $8 and 900. 
C)  $14 and 900. 
D)  $14 and 600. 
A)  $8 and 300. 
B)  $8 and 900. 
C)  $14 and 900. 
D)  $14 and 600.

Question 9

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not 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 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. If Boxland prohibits international trade in cardboard, then the equilibrium price of a ton of cardboard is

Accepted Answer

A)  $36 and the equilibrium quantity of cardboard is 74 tons. 
B)  $44 and the equilibrium quantity of cardboard is 88 tons. 
C)  $52 and the equilibrium quantity of cardboard is 96 tons. 
D)  $60 and the equilibrium quantity of cardboard is 100 tons. 
A)  $36 and the equilibrium quantity of cardboard is 74 tons. 
B)  $44 and the equilibrium quantity of cardboard is 88 tons. 
C)  $52 and the equilibrium quantity of cardboard is 96 tons. 
D)  $60 and the equilibrium quantity of cardboard is 100 tons.

Question 11

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles.  
-Refer to Figure 9-19. With free trade, the country for which the figure is drawn will

Accepted Answer

A)  export 30 units of textiles. 
B)  export 50 units of textiles. 
C)  import 30 units of textiles. 
D)  import 50 units of textiles. 
A)  export 30 units of textiles. 
B)  export 50 units of textiles. 
C)  import 30 units of textiles. 
D)  import 50 units of textiles.

Question 12

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. The increase in total surplus resulting from trade is

Accepted Answer

A)  $640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120. 
B)  $1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240. 
C)  $2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000. 
D)  $2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480. 
A)  $640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120. 
B)  $1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240. 
C)  $2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000. 
D)  $2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480.

Question 13

In a December 2007 New York Times column, Paul Krugman noted that

Accepted Answer

A)  it is difficult to find instances of trade between high-wage countries in the modern era. 
B)  it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern erb. 
C)  the United States now imports more oil and other raw materials from other advanced countries than from the third world. 
D)  the United States now imports more manufactured goods from the third world than from other advanced countries. 
A)  it is difficult to find instances of trade between high-wage countries in the modern era. 
B)  it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern erb. 
C)  the United States now imports more oil and other raw materials from other advanced countries than from the third world. 
D)  the United States now imports more manufactured goods from the third world than from other advanced countries.

Question 14

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 many units will domestic consumers demand and how many units will domestic producers supply?

Accepted Answer

With trade and a tariff, domes

Question 15

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Accepted Answer

A) True 
 B)False

Question 16

In principle, trade can make a nation better off, because the gains to the winners exceed the losses to the losers.

Accepted Answer

A) True 
 B)False

Question 17

Figure 9-13  
-Refer to Figure 9-13. With trade, producer surplus is

Accepted Answer

A)  $900. 
B)  $1,100. 
C)  $1,500. 
D)  $2,000. 
A)  $900. 
B)  $1,100. 
C)  $1,500. 
D)  $2,000.

Question 18

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric

Question 19

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

Accepted Answer

A)  cause these factories to pay the U.S. minimum wage. 
B)  increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C)  increase poverty in poor countries and benefit U.S. firms which compete with these imports. 
D)  harm U.S. firms which compete with these imports. 
A)  cause these factories to pay the U.S. minimum wage. 
B)  increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C)  increase poverty in poor countries and benefit U.S. firms which compete with these imports. 
D)  harm U.S. firms which compete with these imports.

Question 20

Figure 9-13  
-Refer to Figure 9-13. Producer surplus before trade is

Accepted Answer

A)  $3,600. 
B)  $4,400. 
C)  $5,200. 
D)  $6,600. 
A)  $3,600. 
B)  $4,400. 
C)  $5,200. 
D)  $6,600.

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

The two basic approaches that a country can take as a means to achieve free trade are the

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

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

Import quotas and tariffs produce some common results. Which of the following is not one of those common results?

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the United States

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Figure 9-13 -Refer to Figure 9-13. The price and domestic quantity demanded after trade are

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19. With free trade, the country for which the figure is drawn will

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The increase in total surplus resulting from trade is

In a December 2007 New York Times column, Paul Krugman noted that

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

In principle, trade can make a nation better off, because the gains to the winners exceed the losses to the losers.

Figure 9-13 -Refer to Figure 9-13. With trade, producer surplus is

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

Figure 9-13 -Refer to Figure 9-13. Producer surplus before 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

Filters

Exam 9: Application: International Trade

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

The two basic approaches that a country can take as a means to achieve free trade are the

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

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

Import quotas and tariffs produce some common results. Which of the following is not one of those common results?

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the United States

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Figure 9-13 -Refer to Figure 9-13. The price and domestic quantity demanded after trade are

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19. With free trade, the country for which the figure is drawn will

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The increase in total surplus resulting from trade is

In a December 2007 New York Times column, Paul Krugman noted that

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

In principle, trade can make a nation better off, because the gains to the winners exceed the losses to the losers.

Figure 9-13 -Refer to Figure 9-13. With trade, producer surplus is

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

Figure 9-13 -Refer to Figure 9-13. Producer surplus before 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

Filters