Question 1

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 2

If a country is an exporter of a good, then it must be the case that

Accepted Answer

A)  the world price is less than its domestic price. 
B)  consumer surplus is higher than a no trade situation. 
C)  the world price is greater than its domestic price. 
D)  they used an infant-industry argument to protect its producers. 
A)  the world price is less than its domestic price. 
B)  consumer surplus is higher than a no trade situation. 
C)  the world price is greater than its domestic price. 
D)  they used an infant-industry argument to protect its producers.

Question 3

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

Accepted Answer

A)  $3,240. 
B)  $6,480. 
C)  $7,760. 
D)  $15,520. 
A)  $3,240. 
B)  $6,480. 
C)  $7,760. 
D)  $15,520.

Question 4

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Accepted Answer

A)  gain $100 of producer surplus. 
B)  gain $150 of producer surplus. 
C)  gain $200 of producer surplus. 
D)  gain $300 of producer surplus. 
A)  gain $100 of producer surplus. 
B)  gain $150 of producer surplus. 
C)  gain $200 of producer surplus. 
D)  gain $300 of producer surplus.

Question 5

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 9-24. With free trade, consumer surplus is

Accepted Answer

A)  $400 and producer surplus is $100. 
B)  $400 and producer surplus is $400. 
C)  $900 and producer surplus is $100. 
D)  $900 and producer surplus is $400. 
A)  $400 and producer surplus is $100. 
B)  $400 and producer surplus is $400. 
C)  $900 and producer surplus is $100. 
D)  $900 and producer surplus is $400.

Question 6

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. If this country allows free trade in tricycles,

Accepted Answer

A)  consumers will gain more than producers will lose. 
B)  producers will gain more than consumers will lose. 
C)  producers and consumers will both gain equally. 
D)  producers and consumers will both lose equally. 
A)  consumers will gain more than producers will lose. 
B)  producers will gain more than consumers will lose. 
C)  producers and consumers will both gain equally. 
D)  producers and consumers will both lose equally.

Question 7

If the world price of coffee is higher than Colombia's domestic price of coffee without trade, then Colombia

Accepted Answer

A)  should import coffee. 
B)  has a comparative advantage in coffee and should export coffee. 
C)  should produce just enough coffee to satisfy domestic demand. 
D)  should produce no coffee domestically. 
A)  should import coffee. 
B)  has a comparative advantage in coffee and should export coffee. 
C)  should produce just enough coffee to satisfy domestic demand. 
D)  should produce no coffee domestically.

Question 8

Figure 9-15  
-Refer to Figure 9-15. With the tariff, the quantity of saddles imported is

Accepted Answer

A)  Q3 - Q1. 
B)  Q3 - Q2. 
C)  Q4 - Q1. 
D)  Q4 - Q2. 
A)  Q3 - Q1. 
B)  Q3 - Q2. 
C)  Q4 - Q1. 
D)  Q4 - Q2.

Question 9

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. The size of the tariff on roses is

Accepted Answer

A)  $4. 
B)  $2 
C)  $2. 
D)  $1. 
A)  $4. 
B)  $2 
C)  $2. 
D)  $1.

Question 10

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. If the country allows free trade, how many units will domestic consumers demand and how many units will domestic producers supply?

Accepted Answer

With trade, domestic

Question 11

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. With trade, Wales

Accepted Answer

A)  imports Q2 - Q1 units of cheese. 
B)  exports Q2 - Q1 units of cheese. 
C)  imports Q2 - Q0 units of cheese. 
D)  exports Q2 - Q0 units of cheese. 
A)  imports Q2 - Q1 units of cheese. 
B)  exports Q2 - Q1 units of cheese. 
C)  imports Q2 - Q0 units of cheese. 
D)  exports Q2 - Q0 units of cheese.

Question 12

Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles,

Accepted Answer

A)  Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B)  Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C)  other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D)  other countries have a comparative advantage over Vietnam and Vietnam will export textiles. 
A)  Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B)  Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C)  other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D)  other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

Question 13

A tariff on a product

Accepted Answer

A)  enhances the economic well-being of the domestic economy. 
B)  increases the domestic quantity supplied. 
C)  increases the domestic quantity demanded. 
D)  results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus. 
A)  enhances the economic well-being of the domestic economy. 
B)  increases the domestic quantity supplied. 
C)  increases the domestic quantity demanded. 
D)  results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus.

Question 14

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

Accepted Answer

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

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, what will be the domestic price in this market?

Accepted Answer

With trade and a tar

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 the gains from trade?

Accepted Answer

A)  Gains from trade = 1/2)P1 - P0)Q2 - Q1). 
B)  Gains from trade = 1/2)P1 - P0)Q2 - Q0) 
C)  Gains from trade = 1/2)P1 - P0)Q1 + Q2). 
D)  Gains from trade = 1/2)Q1)P3 - P1). 
A)  Gains from trade = 1/2)P1 - P0)Q2 - Q1). 
B)  Gains from trade = 1/2)P1 - P0)Q2 - Q0) 
C)  Gains from trade = 1/2)P1 - P0)Q1 + Q2). 
D)  Gains from trade = 1/2)Q1)P3 - P1).

Question 19

For Country A, the world price of soybeans exceeds the domestic equilibrium price of soybeans. As a result, international trade allows buyers of soybeans in Country A to experience greater consumer surplus than they otherwise would experience.

Accepted Answer

A) True 
 B)False

Question 20

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

Accepted Answer

With trade, consumer

Exam 9: Application: International Trade

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

If a country is an exporter of a good, 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, total surplus is

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

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 9-24. With free trade, consumer surplus is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. If this country allows free trade in tricycles,

If the world price of coffee is higher than Colombia's domestic price of coffee without trade, then Colombia

Figure 9-15 -Refer to Figure 9-15. With the tariff, the quantity of saddles imported is

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The size of the tariff on roses is

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. With trade, Wales

Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles,

A tariff on a product

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

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

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

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 the gains from trade?

For Country A, the world price of soybeans exceeds the domestic equilibrium price of soybeans. As a result, international trade allows buyers of soybeans in Country A to experience greater consumer surplus than they otherwise would experience.

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

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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