Question 1

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Accepted Answer

A)  export copper, since that country has a comparative advantage in copper. 
B)  import copper, since that country has a comparative advantage in copper. 
C)  neither export nor import copper, since that country cannot gain from trade. 
D)  neither export nor import copper, since that country already produces copper at a low cost compared to other countries. 
A)  export copper, since that country has a comparative advantage in copper. 
B)  import copper, since that country has a comparative advantage in copper. 
C)  neither export nor import copper, since that country cannot gain from trade. 
D)  neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

Question 2

Trade among nations is ultimately based on

Accepted Answer

A)  absolute advantage. 
B)  strategic advantage. 
C)  comparative advantage. 
D)  technical advantage. 
A)  absolute advantage. 
B)  strategic advantage. 
C)  comparative advantage. 
D)  technical advantage.

Question 3

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

Question 4

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit.  
-Refer to Figure 9-27. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Accepted Answer

With trade, consumer surplus i

Question 5

Figure 9-9  
-Refer to Figure 9-9. Total 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 6

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

Accepted Answer

A)  the country becomes an importer of the good as a result. 
B)  the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C)  other countries have a comparative advantage, relative to the country in question, in producing the good. 
D)  total surplus does not change as a result. 
A)  the country becomes an importer of the good as a result. 
B)  the world price exceeds the domestic price of the good that prevailed before international trade was allowed. 
C)  other countries have a comparative advantage, relative to the country in question, in producing the good. 
D)  total surplus does not change as a result.

Question 7

Suppose in the country of Jumanji that the price of wheat with no trade allowed is above the world price of wheat. If Jumanji allows free trade, will Jumanji be an importer or an exporter of wheat?

Accepted Answer

Jumanji wi

Question 8

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

Accepted Answer

A)  increases by the area B + D. 
B)  increases by the area C + F. 
C)  decreases by the area B + D. 
D)  decreases by the area D + G. 
A)  increases by the area B + D. 
B)  increases by the area C + F. 
C)  decreases by the area B + D. 
D)  decreases by the area D + G.

Question 9

Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how much is total surplus?

Accepted Answer

With trade

Question 10

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 price of peaches in the United States

Accepted Answer

A)  will be greater than the world price. 
B)  will be equal to the world price. 
C)  will be less than the world price. 
D)  could be greater than, equal to, or less than the world price; this cannot be determined. 
A)  will be greater than the world price. 
B)  will be equal to the world price. 
C)  will be less than the world price. 
D)  could be greater than, equal to, or less than the world price; this cannot be determined.

Question 11

Some goods can be produced at low cost only if they are produced in large quantities. This phenomenon is called

Accepted Answer

A)  marginal cost of production. 
B)  marginal benefit of size. 
C)  economies of scale. 
D)  economies of production. 
A)  marginal cost of production. 
B)  marginal benefit of size. 
C)  economies of scale. 
D)  economies of production.

Question 12

When a country takes a unilateral approach to free trade, it

Accepted Answer

A)  removes trade restrictions on its own. 
B)  reduces its trade restrictions while other countries do the same. 
C)  does not remove trade restrictions no matter what other countries do. 
D)  is willing to trade with multiple countries at once. 
A)  removes trade restrictions on its own. 
B)  reduces its trade restrictions while other countries do the same. 
C)  does not remove trade restrictions no matter what other countries do. 
D)  is willing to trade with multiple countries at once.

Question 13

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. With free trade, this country will

Accepted Answer

A)  import 50 calculators. 
B)  import 100 calculators. 
C)  export 50 calculators. 
D)  export 100 calculators. 
A)  import 50 calculators. 
B)  import 100 calculators. 
C)  export 50 calculators. 
D)  export 100 calculators.

Question 14

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A)  protectionism based on the national-security argument. 
B)  protectionism based on the infant-industry argument. 
C)  protectionism based on the unfair-competition argument. 
D)  keeping world markets relatively open. 
A)  protectionism based on the national-security argument. 
B)  protectionism based on the infant-industry argument. 
C)  protectionism based on the unfair-competition argument. 
D)  keeping world markets relatively open.

Question 15

The greater the elasticities of supply and demand, the smaller are the gains from trade.

Accepted Answer

A) True 
 B)False

Question 16

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 are consumer surplus and producer surplus?

Accepted Answer

With trade and a tar

Question 17

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of beans increases to equal the world price of beans, then

Accepted Answer

A)  that country becomes an exporter of beans. 
B)  that country has a comparative advantage in producing beans. 
C)  at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. 
D)  All of the above are correct. 
A)  that country becomes an exporter of beans. 
B)  that country has a comparative advantage in producing beans. 
C)  at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. 
D)  All of the above are correct.

Question 18

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

Accepted Answer

A)  $3,240. 
B)  $6,480. 
C)  $6,760. 
D)  $13,520. 
A)  $3,240. 
B)  $6,480. 
C)  $6,760. 
D)  $13,520.

Question 19

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

Question 20

Spain is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Spain imposes a $5 tariff on chips. As a result,

Accepted Answer

A)  Spanish consumers of chips and Spanish producers of chips both gain. 
B)  Spanish consumers of chips gain and Spanish producers of chips lose. 
C)  Spanish consumers of chips lose and Spanish producers of chips gain. 
D)  Spanish consumers of chips and Spanish producers of chips both lose. 
A)  Spanish consumers of chips and Spanish producers of chips both gain. 
B)  Spanish consumers of chips gain and Spanish producers of chips lose. 
C)  Spanish consumers of chips lose and Spanish producers of chips gain. 
D)  Spanish consumers of chips and Spanish producers of chips both lose.

Exam 9: Application: International Trade

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Trade among nations is ultimately based on

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,

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?

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

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

Suppose in the country of Jumanji that the price of wheat with no trade allowed is above the world price of wheat. If Jumanji allows free trade, will Jumanji be an importer or an exporter of wheat?

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how much is total surplus?

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 price of peaches in the United States

Some goods can be produced at low cost only if they are produced in large quantities. This phenomenon is called

When a country takes a unilateral approach to free trade, it

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. With free trade, this country will

In a December 2007 New York Times column Paul Krugman argued in favor of

The greater the elasticities of supply and demand, the smaller are the gains from trade.

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of beans increases to equal the world price of beans, then

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

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

Spain is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Spain imposes a $5 tariff on chips. As a result,

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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