Question 1

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. Vietnam's gains from trade in rice amount to

Accepted Answer

A)  750. 
B)  1,000. 
C)  1,250. 
D)  1,500. 
A)  750. 
B)  1,000. 
C)  1,250. 
D)  1,500.

Question 2

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 3

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 consumer surplus with trade?

Accepted Answer

A)  Consumer surplus with trade = 1/2)Q0)P1 - P0). 
B)  Consumer surplus with trade = 1/2)Q0)P3 - P0). 
C)  Consumer surplus with trade = 1/2)Q1)P3 - P1). 
D)  None of the above is correct. 
A)  Consumer surplus with trade = 1/2)Q0)P1 - P0). 
B)  Consumer surplus with trade = 1/2)Q0)P3 - P0). 
C)  Consumer surplus with trade = 1/2)Q1)P3 - P1). 
D)  None of the above is correct.

Question 4

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Accepted Answer

A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither. 
A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

Question 5

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 6

Figure 9-15  
-Refer to Figure 9-15. Consumer surplus with trade and without a 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 7

Import quotas and tariffs both cause the quantity of imports to fall.

Accepted Answer

A) True 
 B)False

Question 8

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

Accepted Answer

A)  0, P0), Q0, P0), Q2, P1), and 0, P1). 
B)  0, P1), 0, P2), Q0, P0), and Q1, P1). 
C)  Q0, P0), Q2, P1), and Q1, P1). 
D)  0, P0), 0, P2), and Q0, P0). 
A)  0, P0), Q0, P0), Q2, P1), and 0, P1). 
B)  0, P1), 0, P2), Q0, P0), and Q1, P1). 
C)  Q0, P0), Q2, P1), and Q1, P1). 
D)  0, P0), 0, P2), and Q0, P0).

Question 9

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, U.S. producers of peaches

Accepted Answer

A)  will be better off. 
B)  will be worse off. 
C)  will be unaffected. 
D)  will experience a decrease in their collective producer surplus. 
A)  will be better off. 
B)  will be worse off. 
C)  will be unaffected. 
D)  will experience a decrease in their collective producer surplus.

Question 10

The General Agreement on Tariffs and Trade GATT) was initiated in response to

Accepted Answer

A)  in increase in exports of low-priced goods from developing countries to developed countries. 
B)  the replacement of manufacturing jobs with service jobs in developed countries. 
C)  economic dislocations caused by the North American Free Trade Agreement NAFT
A)  in the 1990s. 
D)  high tariffs imposed during the Great Depression of the 1930s. 
A)  in increase in exports of low-priced goods from developing countries to developed countries. 
B)  the replacement of manufacturing jobs with service jobs in developed countries. 
C)  economic dislocations caused by the North American Free Trade Agreement NAFT
A)  in the 1990s. 
D)  high tariffs imposed during the Great Depression of the 1930s.

Question 11

Figure 9-23
The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit.  
-Refer to Figure 9-23. Consumer surplus with free trade is

Accepted Answer

A)  $75. 
B)  $150. 
C)  $200. 
D)  $300. 
A)  $75. 
B)  $150. 
C)  $200. 
D)  $300.

Question 12

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

Accepted Answer

A)  consumer surplus and producer surplus both increase. 
B)  consumer surplus and producer surplus both decrease. 
C)  consumer surplus increases and producer surplus decreases. 
D)  consumer surplus decreases and producer surplus increases. 
A)  consumer surplus and producer surplus both increase. 
B)  consumer surplus and producer surplus both decrease. 
C)  consumer surplus increases and producer surplus decreases. 
D)  consumer surplus decreases and producer surplus increases.

Question 13

When the nation of Isoland opens up its steel market to international trade, that change

Accepted Answer

A)  creates winners and losers, regardless of whether Isoland ends up exporting or importing steel. 
B)  results in a decrease in total surplus, regardless of whether Isoland ends up exporting or importing steel. 
C)  creates winners, but no losers, if Isoland ends up exporting steel. 
D)  creates losers, but no winners, if Isoland ends up importing steel. 
A)  creates winners and losers, regardless of whether Isoland ends up exporting or importing steel. 
B)  results in a decrease in total surplus, regardless of whether Isoland ends up exporting or importing steel. 
C)  creates winners, but no losers, if Isoland ends up exporting steel. 
D)  creates losers, but no winners, if Isoland ends up importing steel.

Question 14

Figure 9-11  
-Refer to Figure 9-11. Producer surplus plus consumer 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 15

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 much is total surplus?

Accepted Answer

With trade

Question 16

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 17

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil.  
-Refer to Figure 9-14. The country for which the figure is drawn

Accepted Answer

A)  has a comparative advantage relative to other countries in the production of crude oil and it will export crude oil. 
B)  has a comparative advantage relative to other countries in the production of crude oil and it will import crude oil. 
C)  has a comparative disadvantage relative to other countries in the production of crude oil and it will export crude oil. 
D)  has a comparative disadvantage relative to other countries in the production of crude oil and it will import crude oil. 
A)  has a comparative advantage relative to other countries in the production of crude oil and it will export crude oil. 
B)  has a comparative advantage relative to other countries in the production of crude oil and it will import crude oil. 
C)  has a comparative disadvantage relative to other countries in the production of crude oil and it will export crude oil. 
D)  has a comparative disadvantage relative to other countries in the production of crude oil and it will import crude oil.

Question 18

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 19

The principle of comparative advantage asserts that

Accepted Answer

A)  not all countries can benefit from trade with other countries. 
B)  the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C)  countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D)  countries can become better off by specializing in what they do best. 
A)  not all countries can benefit from trade with other countries. 
B)  the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C)  countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D)  countries can become better off by specializing in what they do best.

Question 20

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

Accepted Answer

A)  consumer surplus and producer surplus both increase. 
B)  consumer surplus and producer surplus both decrease. 
C)  consumer surplus increases and producer surplus decreases. 
D)  consumer surplus decreases and producer surplus increases. 
A)  consumer surplus and producer surplus both increase. 
B)  consumer surplus and producer surplus both decrease. 
C)  consumer surplus increases and producer surplus decreases. 
D)  consumer surplus decreases and producer surplus increases.

Exam 9: Application: International Trade

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. Vietnam's gains from trade in rice amount to

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?

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 consumer surplus with trade?

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

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

Import quotas and tariffs both cause the quantity of imports to fall.

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

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, U.S. producers of peaches

The General Agreement on Tariffs and Trade GATT) was initiated in response to

Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. Consumer surplus with free trade is

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

When the nation of Isoland opens up its steel market to international trade, that change

Figure 9-11 -Refer to Figure 9-11. Producer surplus plus consumer surplus in this market before trade is

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

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14. The country for which the figure is drawn

What is the fundamental basis for trade among nations?

The principle of comparative advantage asserts that

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

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

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