Question 1

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. Without trade, producer surplus amounts to

Accepted Answer

A)  $810. 
B)  $1,620. 
C)  $3,240. 
D)  $6,480. 
A)  $810. 
B)  $1,620. 
C)  $3,240. 
D)  $6,480.

Question 2

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

Accepted Answer

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

Question 3

When, in our analysis of the gains and losses from international trade, we assume that a particular country is small, we are

Accepted Answer

A)  assuming the domestic price before trade will continue to prevail once that country is opened up to trade with other countries. 
B)  assuming there is no demand for that country's domestically­produced goods by other countries. 
C)  assuming international trade can benefit producers, but not consumers, in that country. 
D)  making an assumption that is not necessary to analyze the gains and losses from international trade. 
A)  assuming the domestic price before trade will continue to prevail once that country is opened up to trade with other countries. 
B)  assuming there is no demand for that country's domestically­produced goods by other countries. 
C)  assuming international trade can benefit producers, but not consumers, in that country. 
D)  making an assumption that is not necessary to analyze the gains and losses from international trade.

Question 4

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is

Accepted Answer

A)  P0 and Q0. 
B)  P1 and Q1. 
C)  P2 and Q2. 
D)  P1 and Q0. 
A)  P0 and Q0. 
B)  P1 and Q1. 
C)  P2 and Q2. 
D)  P1 and Q0.

Question 5

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 $5, then the policy change results in a

Accepted Answer

A)  $25 decrease in consumer surplus. 
B)  $20 increase in consumer surplus. 
C)  $25 decrease in producer surplus. 
D)  $20 increase in producer surplus. 
A)  $25 decrease in consumer surplus. 
B)  $20 increase in consumer surplus. 
C)  $25 decrease in producer surplus. 
D)  $20 increase in producer surplus.

Question 6

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Accepted Answer

A)  54 percent 
B)  72 percent 
C)  89 percent 
D)  97 percent 
A)  54 percent 
B)  72 percent 
C)  89 percent 
D)  97 percent

Question 7

Honduras is an importer of goose-down pillows. The world price of these pillows is $50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras

Accepted Answer

A)  remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases. 
B)  increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
C)  increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
D)  increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same. 
A)  remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases. 
B)  increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
C)  increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases. 
D)  increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.

Question 8

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

Accepted Answer

A)  How does international trade affect consumer well-being? 
B)  Who gains and who loses from free trade among countries? 
C)  How do the gains from trade compare to the losses? 
D)  Which argument for restricting free trade is politically feasible? 
A)  How does international trade affect consumer well-being? 
B)  Who gains and who loses from free trade among countries? 
C)  How do the gains from trade compare to the losses? 
D)  Which argument for restricting free trade is politically feasible?

Question 9

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?

Accepted Answer

A)  Producer surplus with trade = (1/2)P0Q0. 
B)  Producer surplus with trade = (1/2)P1Q1. 
C)  Producer surplus with trade = (1/2)P1Q2. 
D)  None of the above is correct. 
A)  Producer surplus with trade = (1/2)P0Q0. 
B)  Producer surplus with trade = (1/2)P1Q1. 
C)  Producer surplus with trade = (1/2)P1Q2. 
D)  None of the above is correct.

Question 10

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. The world price for calculators represents

Accepted Answer

A)  the demand for calculators from the rest of the world. 
B)  the supply of calculators from the rest of the world. 
C)  the level of inefficiency in the domestic market caused by trade. 
D)  the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage. 
A)  the demand for calculators from the rest of the world. 
B)  the supply of calculators from the rest of the world. 
C)  the level of inefficiency in the domestic market caused by trade. 
D)  the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.

Question 11

Figure 9-4. The domestic country is Nicaragua.  
-Refer to Figure 9-4. The change in total surplus in Nicaragua because of trade is

Accepted Answer

A)  $625, and this is an increase in total surplus. 
B)  $750, and this is an increase in total surplus. 
C)  $625, and this is a decrease in total surplus. 
D)  $750, and this is a decrease in total surplus. 
A)  $625, and this is an increase in total surplus. 
B)  $750, and this is an increase in total surplus. 
C)  $625, and this is a decrease in total surplus. 
D)  $750, and this is a decrease in total surplus.

Question 12

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, domestic production and domestic consumption, respectively, are

Accepted Answer

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

Question 13

Since World War II, GATT has been responsible for reducing the average tariff among member countries from about

Accepted Answer

A)  40 percent to about 5 percent. 
B)  40 percent to about 20 percent. 
C)  80 percent to about 20 percent. 
D)  20 percent to about 10 percent. 
A)  40 percent to about 5 percent. 
B)  40 percent to about 20 percent. 
C)  80 percent to about 20 percent. 
D)  20 percent to about 10 percent.

Question 14

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. This country

Accepted Answer

A)  has a comparative advantage in calculators. 
B)  should export calculators. 
C)  is a price taker in the world economy. 
D)  All of the above are correct. 
A)  has a comparative advantage in calculators. 
B)  should export calculators. 
C)  is a price taker in the world economy. 
D)  All of the above are correct.

Question 15

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

Accepted Answer

A)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases. 
B)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
C)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
D)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change. 
A)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases. 
B)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
C)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases. 
D)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change.

Question 16

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, total surplus is

Accepted Answer

A)  $30,000. 
B)  $66,000. 
C)  $96,000. 
D)  $120,000. 
A)  $30,000. 
B)  $66,000. 
C)  $96,000. 
D)  $120,000.

Question 17

Figure 9-25
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit.  
-Refer to Figure 9-25. With free trade, total surplus is

Accepted Answer

A)  $800. 
B)  $1,200. 
C)  $1,600. 
D)  $2,000. 
A)  $800. 
B)  $1,200. 
C)  $1,600. 
D)  $2,000.

Question 18

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

Accepted Answer

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

Question 19

A common argument in favor of restricting international trade in good x is based on the premise that

Accepted Answer

A)  international trade reduces total surplus in countries that export good x. 
B)  international trade reduces total surplus in countries that import good x. 
C)  international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another. 
D)  trade restrictions can be useful when one country bargains with its trading partners. 
A)  international trade reduces total surplus in countries that export good x. 
B)  international trade reduces total surplus in countries that import good x. 
C)  international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another. 
D)  trade restrictions can be useful when one country bargains with its trading partners.

Question 20

The price of sugar that prevails in international markets is called the

Accepted Answer

A)  export price of sugar. 
B)  import price of sugar. 
C)  comparative-advantage price of sugar. 
D)  world price of sugar. 
A)  export price of sugar. 
B)  import price of sugar. 
C)  comparative-advantage price of sugar. 
D)  world price of sugar.

Exam 9: Application: International Trade

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Without trade, producer surplus amounts to

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

When, in our analysis of the gains and losses from international trade, we assume that a particular country is small, we are

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Honduras is an importer of goose-down pillows. The world price of these pillows is $50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. The world price for calculators represents

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. The change in total surplus in Nicaragua because of trade 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, domestic production and domestic consumption, respectively, are

Since World War II, GATT has been responsible for reducing the average tariff among member countries from about

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. This country

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

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, total surplus is

Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. With free trade, total surplus is

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

A common argument in favor of restricting international trade in good x is based on the premise that

The price of sugar that prevails in international markets is called the

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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