Question 1

A tariff on a product

Accepted Answer

A)  is a direct quantitative restriction on the amount of a good that can be imported. 
B)  increases the domestic quantity supplied. 
C)  increases domestic consumer surplus. 
D)  All of the above are correct. 
A)  is a direct quantitative restriction on the amount of a good that can be imported. 
B)  increases the domestic quantity supplied. 
C)  increases domestic consumer surplus. 
D)  All of the above are correct. B

Question 2

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

Accepted Answer

A)  $845. 
B)  $1,620. 
C)  $1,690. 
D)  $3,240. 
A)  $845. 
B)  $1,620. 
C)  $1,690. 
D)  $3,240. B

Question 3

Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-28. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium price is $4 and the equilibrium quantity is 20 units.

Question 4

A tariff is a tax placed on

Accepted Answer

A)  an exported good and it lowers the domestic price of the good below the world price. 
B)  an exported good and it ensures that the domestic price of the good stays the same as the world price. 
C)  an imported good and it lowers the domestic price of the good below the world price. 
D)  an imported good and it raises the domestic price of the good above the world price. 
A)  an exported good and it lowers the domestic price of the good below the world price. 
B)  an exported good and it ensures that the domestic price of the good stays the same as the world price. 
C)  an imported good and it lowers the domestic price of the good below the world price. 
D)  an imported good and it raises the domestic price of the good above the world price.

Question 5

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

Accepted Answer

A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good. 
A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good.

Question 6

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Accepted Answer

A)  because it is impossible to analyze the gains and losses from international trade without making this assumption. 
B)  because then we can assume that world prices of goods are unaffected by that country's participation in international trade. 
C)  in order to rule out the possibility of tariffs or quotas. 
D)  All of the above are correct. 
A)  because it is impossible to analyze the gains and losses from international trade without making this assumption. 
B)  because then we can assume that world prices of goods are unaffected by that country's participation in international trade. 
C)  in order to rule out the possibility of tariffs or quotas. 
D)  All of the above are correct.

Question 7

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

Accepted Answer

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

Question 8

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

Accepted Answer

A)  Ireland has a comparative advantage relative to the United States in producing pineapples, and China has a comparative advantage relative to Ireland in producing beer. 
B)  Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantage relative to Ireland in producing pineapples. 
C)  Ireland has an absolute advantage relative to the United States in producing pineapples, and China has an absolute advantage relative to Ireland in producing beer. 
D)  Ireland has an absolute advantage relative to China in producing beer, and the United States has an absolute advantage relative to Ireland in producing pineapples. 
A)  Ireland has a comparative advantage relative to the United States in producing pineapples, and China has a comparative advantage relative to Ireland in producing beer. 
B)  Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantage relative to Ireland in producing pineapples. 
C)  Ireland has an absolute advantage relative to the United States in producing pineapples, and China has an absolute advantage relative to Ireland in producing beer. 
D)  Ireland has an absolute advantage relative to China in producing beer, and the United States has an absolute advantage relative to Ireland in producing pineapples.

Question 9

When a nation first begins to trade with other countries and the nation becomes an importer of corn,

Accepted Answer

A)  this is an indication that the world price of corn exceeds the nation's domestic price of corn in the absence of trade. 
B)  this is an indication that the nation has a comparative advantage in producing corn. 
C)  the nation's consumers of corn become better off and the nation's producers of corn become worse off. 
D)  All of the above are correct. 
A)  this is an indication that the world price of corn exceeds the nation's domestic price of corn in the absence of trade. 
B)  this is an indication that the nation has a comparative advantage in producing corn. 
C)  the nation's consumers of corn become better off and the nation's producers of corn become worse off. 
D)  All of the above are correct.

Question 10

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good. 
A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good.

Question 11

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 the deadweight loss caused by the tariff?

Accepted Answer

The deadwe

Question 12

When a country that imports a particular good imposes an import quota on that good,

Accepted Answer

A)  producer surplus increases and total surplus increases in the market for that good. 
B)  producer surplus increases and total surplus decreases in the market for that good. 
C)  producer surplus decreases and total surplus increases in the market for that good. 
D)  producer surplus decreases and total surplus decreases in the market for that good. 
A)  producer surplus increases and total surplus increases in the market for that good. 
B)  producer surplus increases and total surplus decreases in the market for that good. 
C)  producer surplus decreases and total surplus increases in the market for that good. 
D)  producer surplus decreases and total surplus decreases in the market for that good.

Question 13

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

Accepted Answer

A)  both producers of automobiles and consumers of automobiles in that nation became better off as a result. 
B)  the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation. 
C)  the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation. 
D)  even though total surplus in that nation decreased, it was still true that consumer surplus and producer surplus increased. 
A)  both producers of automobiles and consumers of automobiles in that nation became better off as a result. 
B)  the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation. 
C)  the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation. 
D)  even though total surplus in that nation decreased, it was still true that consumer surplus and producer surplus increased.

Question 14

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

Accepted Answer

A) True 
 B)False

Question 15

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Accepted Answer

A) True 
 B)False

Question 16

Free trade causes job losses in industries in which a country does not have a comparative advantage, but it also causes job gains in industries in which the country has a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 17

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles.  
-Refer to Figure 9-19. With free trade, the country for which the figure is drawn will

Accepted Answer

A)  export 30 units of textiles. 
B)  export 50 units of textiles. 
C)  import 30 units of textiles. 
D)  import 50 units of textiles. 
A)  export 30 units of textiles. 
B)  export 50 units of textiles. 
C)  import 30 units of textiles. 
D)  import 50 units of textiles.

Question 18

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Accepted Answer

A)  The domestic price of the good increases. 
B)  Consumer surplus of domestic consumers increases. 
C)  Producer surplus of domestic producers increases. 
D)  A deadweight loss is experienced by the domestic country. 
A)  The domestic price of the good increases. 
B)  Consumer surplus of domestic consumers increases. 
C)  Producer surplus of domestic producers increases. 
D)  A deadweight loss is experienced by the domestic country.

Question 19

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 20

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.

Exam 9: Application: International Trade

A tariff on a product

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

Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

A tariff is a tax placed on

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

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

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

When a nation first begins to trade with other countries and the nation becomes an importer of corn,

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

When a country that imports a particular good imposes an import quota on that good,

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Free trade causes job losses in industries in which a country does not have a comparative advantage, but it also causes job gains in industries in which the country has a comparative advantage.

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19. With free trade, the country for which the figure is drawn will

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

A common argument in favor of restricting trade

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

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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