Question 1

Which of the following tools and concepts is useful in the analysis of international trade?

Accepted Answer

A)  total surplus 
B)  domestic supply 
C)  equilibrium price 
D)  All of the above are correct. 
A)  total surplus 
B)  domestic supply 
C)  equilibrium price 
D)  All of the above are correct. D

Question 2

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Accepted Answer

A)  demand for tricycles from the rest of the world. 
B)  supply of tricycles from the rest of the world. 
C)  level of inefficiency in the domestic market caused by trade. 
D)  surplus in the domestic tricycle market. 
A)  demand for tricycles from the rest of the world. 
B)  supply of tricycles from the rest of the world. 
C)  level of inefficiency in the domestic market caused by trade. 
D)  surplus in the domestic tricycle market. B

Question 3

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. The deadweight loss caused by the tariff is

Accepted Answer

A)  $6,000. 
B)  $9,000. 
C)  $12,000. 
D)  $15,000. 
A)  $6,000. 
B)  $9,000. 
C)  $12,000. 
D)  $15,000. A

Question 4

Figure 9-17  
-Refer to Figure 9-17. When the country moves from no trade to free trade, consumer surplus

Accepted Answer

A)  increases by $1,200 and producer surplus increases by $600. 
B)  increases by $1,200 and producer surplus decreases by $600. 
C)  decreases by $1,350 and producer surplus increases by $450. 
D)  decreases by $1,350 and producer surplus decreases by $450. 
A)  increases by $1,200 and producer surplus increases by $600. 
B)  increases by $1,200 and producer surplus decreases by $600. 
C)  decreases by $1,350 and producer surplus increases by $450. 
D)  decreases by $1,350 and producer surplus decreases by $450.

Question 5

The small-economy assumption is necessary to analyze the gains and losses from international trade.

Accepted Answer

A) True 
 B)False

Question 6

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 7

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Accepted Answer

A)  United States should protect its domestic steel industry from this unfair competition. 
B)  harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel. 
C)  harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. 
D)  United States should subsidize the products it sells to Korea. 
A)  United States should protect its domestic steel industry from this unfair competition. 
B)  harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel. 
C)  harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. 
D)  United States should subsidize the products it sells to Korea.

Question 8

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 9

When the nation of Mooseland first permitted trade with other nations, domestic producers of sugar experienceda decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million We can conclude that

Accepted Answer

A)  Mooseland became an exporter of sugar. 
B)  the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. 
C)  consumer surplus in Mooseland increased by $7 million. 
D)  the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right. 
A)  Mooseland became an exporter of sugar. 
B)  the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. 
C)  consumer surplus in Mooseland increased by $7 million. 
D)  the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

Question 10

Figure 9-17  
-Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff

Accepted Answer

A)  decreases imports of the good by 16 units and increases domestic production of the good by 8 units. 
B)  decreases imports of the good by 16 units and increases domestic production of the good by 16 units. 
C)  decreases imports of the good by 24 units and increases domestic production of the good by 8 units. 
D)  decreases imports of the good by 24 units and increases domestic production of the good by 24 units. 
A)  decreases imports of the good by 16 units and increases domestic production of the good by 8 units. 
B)  decreases imports of the good by 16 units and increases domestic production of the good by 16 units. 
C)  decreases imports of the good by 24 units and increases domestic production of the good by 8 units. 
D)  decreases imports of the good by 24 units and increases domestic production of the good by 24 units.

Question 11

Figure 9-12  
-Refer to Figure 9-12. With trade allowed, this country

Accepted Answer

A)  exports 400 units of the good. 
B)  exports 800 units of the good. 
C)  imports 400 units of the good. 
D)  exports 1,600 units of the good. 
A)  exports 400 units of the good. 
B)  exports 800 units of the good. 
C)  imports 400 units of the good. 
D)  exports 1,600 units of the good.

Question 12

List five arguments given to support trade restrictions.

Accepted Answer

The jobs argument; the nationa

Question 13

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel, then the domestic price of steel will increase as a result.

Accepted Answer

A) True 
 B)False

Question 14

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 15

When a country allows trade and becomes an importer of a good,

Accepted Answer

A)  both domestic producers and domestic consumers become better off. 
B)  domestic producers become better off, and domestic consumers become worse off. 
C)  domestic producers become worse off, and domestic consumers become better off. 
D)  both domestic producers and domestic consumers become worse off. 
A)  both domestic producers and domestic consumers become better off. 
B)  domestic producers become better off, and domestic consumers become worse off. 
C)  domestic producers become worse off, and domestic consumers become better off. 
D)  both domestic producers and domestic consumers become worse off.

Question 16

William and Jamal live in the country of Dumexia. When Dumexia legalized international trade in bananas, the price of bananas in Dumexia increased. As a result, William became better off and Jamal became worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

Accepted Answer

A) True 
 B)False

Question 17

Figure 9-15  
-Refer to Figure 9-15. Consumer surplus with the tariff is

Accepted Answer

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

Question 18

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 produces which of the following results for Boxland?

Accepted Answer

A)  It increases consumer surplus, decreases producer surplus, and increases total surplus. 
B)  It increases consumer surplus, increases producer surplus, and increases total surplus. 
C)  It increases consumer surplus, decreases producer surplus, and decreases total surplus. 
D)  It decreases consumer surplus, increases producer surplus, and increases total surplus. 
A)  It increases consumer surplus, decreases producer surplus, and increases total surplus. 
B)  It increases consumer surplus, increases producer surplus, and increases total surplus. 
C)  It increases consumer surplus, decreases producer surplus, and decreases total surplus. 
D)  It decreases consumer surplus, increases producer surplus, and increases total surplus.

Question 19

The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

Accepted Answer

A)  exporting steel and the price per ton in Russia remained at $650. 
B)  exporting steel and the price per ton in Russia increased to $1,000. 
C)  importing steel and the price per ton in Russia remained at $650. 
D)  importing steel and the price per ton in Russia increased to $1,000. 
A)  exporting steel and the price per ton in Russia remained at $650. 
B)  exporting steel and the price per ton in Russia increased to $1,000. 
C)  importing steel and the price per ton in Russia remained at $650. 
D)  importing steel and the price per ton in Russia increased to $1,000.

Question 20

Suppose Brazil has a comparative advantage over other countries in producing almonds, but other countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

Accepted Answer

A)  will import almonds. 
B)  will export almonds. 
C)  will either import almonds or export almonds, but it is not clear from the given information. 
D)  would have nothing to gain either from exporting or importing almonds. 
A)  will import almonds. 
B)  will export almonds. 
C)  will either import almonds or export almonds, but it is not clear from the given information. 
D)  would have nothing to gain either from exporting or importing almonds.

Exam 9: Application: International Trade

Which of the following tools and concepts is useful in the analysis of international trade?

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

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. The deadweight loss caused by the tariff is

Figure 9-17 -Refer to Figure 9-17. When the country moves from no trade to free trade, consumer surplus

The small-economy assumption is necessary to analyze the gains and losses from international trade.

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?

If the Korean steel industry subsidizes the steel that it sells to the United States, the

When the nation of Mooseland first permitted trade with other nations, domestic producers of sugar experienceda decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million We can conclude that

Figure 9-17 -Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff

Figure 9-12 -Refer to Figure 9-12. With trade allowed, this country

List five arguments given to support trade restrictions.

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel, then the domestic price of steel will increase as a result.

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.

When a country allows trade and becomes an importer of a good,

William and Jamal live in the country of Dumexia. When Dumexia legalized international trade in bananas, the price of bananas in Dumexia increased. As a result, William became better off and Jamal became worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

Figure 9-15 -Refer to Figure 9-15. Consumer surplus with the tariff is

The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

Suppose Brazil has a comparative advantage over other countries in producing almonds, but other countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters