Question 1

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

Accepted Answer

A)  domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country rises. 
B)  domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country falls. 
C)  domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country rises. 
D)  domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country falls. 
A)  domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country rises. 
B)  domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country falls. 
C)  domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country rises. 
D)  domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country falls.

Question 2

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

Accepted Answer

A) True 
 B)False

Question 3

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

Accepted Answer

A) True 
 B)False

Question 4

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

Accepted Answer

A)  cause these factories to pay the U.S. minimum wage. 
B)  increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C)  increase poverty in poor countries and benefit U.S. firms which compete with these imports. 
D)  harm U.S. firms which compete with these imports. 
A)  cause these factories to pay the U.S. minimum wage. 
B)  increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C)  increase poverty in poor countries and benefit U.S. firms which compete with these imports. 
D)  harm U.S. firms which compete with these imports.

Question 5

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.

Question 6

Scenario 9-3
Suppose domestic demand and domestic supply in a market are given by the following equations:  
-Refer to Scenario 9-3. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

Accepted Answer

Without trade, consu

Question 7

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 $3, then the policy change results in a

Accepted Answer

A)  $15.00 decrease in producer surplus. 
B)  $45.00 increase in consumer surplus. 
C)  $20.00 increase in total surplus. 
D)  $12.50 increase in total surplus. 
A)  $15.00 decrease in producer surplus. 
B)  $45.00 increase in consumer surplus. 
C)  $20.00 increase in total surplus. 
D)  $12.50 increase in total surplus.

Question 8

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

Accepted Answer

A)  Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off. 
B)  Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off. 
C)  both Guatemalan producers and consumers of coffee become better off. 
D)  both Guatemalan producers and consumers of coffee become worse off. 
A)  Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off. 
B)  Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off. 
C)  both Guatemalan producers and consumers of coffee become better off. 
D)  both Guatemalan producers and consumers of coffee become worse off.

Question 9

A common argument in favor of restricting trade

Accepted Answer

A)  concerns the strategy of bargaining. 
B)  is that efforts should be made to get new industries started. 
C)  emphasizes the belief that all countries should play by the same rules. 
D)  All of the above are correct. 
A)  concerns the strategy of bargaining. 
B)  is that efforts should be made to get new industries started. 
C)  emphasizes the belief that all countries should play by the same rules. 
D)  All of the above are correct.

Question 10

Figure 9-13  
-Refer to Figure 9-13. Producer surplus before trade is

Accepted Answer

A)  $3,600. 
B)  $4,400. 
C)  $5,200. 
D)  $6,600. 
A)  $3,600. 
B)  $4,400. 
C)  $5,200. 
D)  $6,600.

Question 11

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 United States

Accepted Answer

A)  will become an importer of peaches. 
B)  will become an exporter of peaches. 
C)  may become either an importer or an exporter of peaches, but this cannot be determined. 
D)  will experience increases in both consumer surplus and producer surplus. 
A)  will become an importer of peaches. 
B)  will become an exporter of peaches. 
C)  may become either an importer or an exporter of peaches, but this cannot be determined. 
D)  will experience increases in both consumer surplus and producer surplus.

Question 12

For any country that allows free trade,

Accepted Answer

A)  domestic quantity demanded is equal to domestic quantity supplied at the world price. 
B)  domestic quantity demanded is greater than domestic quantity supplied at the world price. 
C)  both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported. 
D)  the domestic price is equal to the world price. 
A)  domestic quantity demanded is equal to domestic quantity supplied at the world price. 
B)  domestic quantity demanded is greater than domestic quantity supplied at the world price. 
C)  both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported. 
D)  the domestic price is equal to the world price.

Question 13

Figure 9-12  
-Refer to Figure 9-12. Producer surplus after trade is

Accepted Answer

A)  $28,000. 
B)  $30,000. 
C)  $35,200. 
D)  $38,400. 
A)  $28,000. 
B)  $30,000. 
C)  $35,200. 
D)  $38,400.

Question 14

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 15

When a country moves away from a free trade position and imposes a tariff on imports, it causes

Accepted Answer

A)  a decrease in total surplus in the market. 
B)  a decrease in producer surplus in the market. 
C)  an increase in consumer surplus in the market. 
D)  a decrease in revenue to the government. 
A)  a decrease in total surplus in the market. 
B)  a decrease in producer surplus in the market. 
C)  an increase in consumer surplus in the market. 
D)  a decrease in revenue to the government.

Question 16

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. With trade, Guatemala will

Accepted Answer

A)  export 22 units of coffee. 
B)  export 10 units of coffee. 
C)  import 30 units of coffee. 
D)  import 12 units of coffee. 
A)  export 22 units of coffee. 
B)  export 10 units of coffee. 
C)  import 30 units of coffee. 
D)  import 12 units of coffee.

Question 17

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. Without trade, consumer surplus is

Accepted Answer

A)  $423. 
B)  $845. 
C)  $1,690. 
D)  $3,380. 
A)  $423. 
B)  $845. 
C)  $1,690. 
D)  $3,380.

Question 18

A tariff on a product makes

Accepted Answer

A)  domestic sellers better off and domestic buyers worse off. 
B)  domestic sellers worse off and domestic buyers worse off. 
C)  domestic sellers better off and domestic buyers better off. 
D)  domestic sellers worse off and domestic buyers better off. 
A)  domestic sellers better off and domestic buyers worse off. 
B)  domestic sellers worse off and domestic buyers worse off. 
C)  domestic sellers better off and domestic buyers better off. 
D)  domestic sellers worse off and domestic buyers better off.

Question 19

A country has a comparative advantage in a product if the world price is

Accepted Answer

A)  lower than that country's domestic price without trade. 
B)  higher than that country's domestic price without trade. 
C)  equal to that country's domestic price without trade. 
D)  not subject to manipulation by organizations that govern international trade. 
A)  lower than that country's domestic price without trade. 
B)  higher than that country's domestic price without trade. 
C)  equal to that country's domestic price without trade. 
D)  not subject to manipulation by organizations that govern international trade.

Question 20

Figure 9-3. The domestic country is China.  
-Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes with trade?

Accepted Answer

A)  Consumer surplus increases by $1,800 and producer surplus increases by $1,600. 
B)  Consumer surplus decreases by $1,000 and producer surplus increases by $1,500. 
C)  Consumer surplus decreases by $1,000 and producer surplus increases by $1,750. 
D)  Total surplus increases by $400. 
A)  Consumer surplus increases by $1,800 and producer surplus increases by $1,600. 
B)  Consumer surplus decreases by $1,000 and producer surplus increases by $1,500. 
C)  Consumer surplus decreases by $1,000 and producer surplus increases by $1,750. 
D)  Total surplus increases by $400.

Exam 9: Application: International Trade

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

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

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

Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: -Refer to Scenario 9-3. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

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

A common argument in favor of restricting trade

Figure 9-13 -Refer to Figure 9-13. Producer surplus before trade is

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 United States

For any country that allows free trade,

Figure 9-12 -Refer to Figure 9-12. Producer surplus after trade is

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

When a country moves away from a free trade position and imposes a tariff on imports, it causes

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. With trade, Guatemala will

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. Without trade, consumer surplus is

A tariff on a product makes

A country has a comparative advantage in a product if the world price is

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes 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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