Question 1

Figure 9-17  
-Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer surplus

Accepted Answer

A)  decreases by $576 and producer surplus does not change. 
B)  decreases by $576 and producer surplus increases by $192. 
C)  decreases by $792 and producer surplus does not change. 
D)  decreases by $792 and producer surplus increases by $192. 
A)  decreases by $576 and producer surplus does not change. 
B)  decreases by $576 and producer surplus increases by $192. 
C)  decreases by $792 and producer surplus does not change. 
D)  decreases by $792 and producer surplus increases by $192.

Question 2

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 3

Scenario 9-3
Suppose domestic demand and domestic supply in a market are given by the following equations:  
-Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country allows free trade, by how much do consumer surplus, producer surplus, and producer surplus change?

Accepted Answer

With trade, consumer surplus i

Question 4

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 5

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 6

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 many units will domestic consumers demand, and how many units will domestic producers supply?

Accepted Answer

Domestic consumers w

Question 7

Figure 9-15  
-Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Accepted Answer

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

Question 8

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Accepted Answer

A) True 
 B)False

Question 9

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents

Accepted Answer

A)  Mexico's gains from trade. 
B)  the amount by which Mexico's gain in producer surplus exceeds its loss in consumer surplus due to trade. 
C)  Mexico's loss in total surplus due to trade. 
D)  All of the above are correct. 
A)  Mexico's gains from trade. 
B)  the amount by which Mexico's gain in producer surplus exceeds its loss in consumer surplus due to trade. 
C)  Mexico's loss in total surplus due to trade. 
D)  All of the above are correct.

Question 10

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

Accepted Answer

A)  $15 and 80 calculators will be sold domestically. 
B)  $15 and 130 calculators will be sold domestically. 
C)  $20 and 80 calculators will be sold domestically. 
D)  $20 and 130 calculators will be sold domestically. 
A)  $15 and 80 calculators will be sold domestically. 
B)  $15 and 130 calculators will be sold domestically. 
C)  $20 and 80 calculators will be sold domestically. 
D)  $20 and 130 calculators will be sold domestically.

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, the Welsh price of cheese and the Welsh quantity of cheese demanded are

Accepted Answer

A)  P1 and Q2. 
B)  P1 and Q1. 
C)  P0 and Q0. 
D)  P3 and Q1. 
A)  P1 and Q2. 
B)  P1 and Q1. 
C)  P0 and Q0. 
D)  P3 and Q1.

Question 12

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

Accepted Answer

A)  increases the number of roses imported by 100. 
B)  increases the number of roses imported by 200. 
C)  decreases the number of roses imported by 200. 
D)  decreases the number of roses imported by 400. 
A)  increases the number of roses imported by 100. 
B)  increases the number of roses imported by 200. 
C)  decreases the number of roses imported by 200. 
D)  decreases the number of roses imported by 400.

Question 13

Without free trade, the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 14

The rules established under the General Agreement on Tariffs and Trade (GATT) are enforced by an international body called the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 15

Figure 9-4. The domestic country is Nicaragua.  
-Refer to Figure 9-4. Which of the following statements is accurate?

Accepted Answer

A)  Consumer surplus with trade is $3,200. 
B)  Producer surplus with trade is $375. 
C)  The gains from trade amount to $800. 
D)  The gains from trade are represented on the graph by the area bounded by the points (0, $12), (300, $12), (300, $7) and (0, $7). 
A)  Consumer surplus with trade is $3,200. 
B)  Producer surplus with trade is $375. 
C)  The gains from trade amount to $800. 
D)  The gains from trade are represented on the graph by the area bounded by the points (0, $12), (300, $12), (300, $7) and (0, $7).

Question 16

Assume, for Colombia, that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Accepted Answer

A)  other countries have a comparative advantage over Colombia in producing coffee. 
B)  Colombia has an absolute advantage over other countries in producing coffee. 
C)  Colombia will export coffee if international trade is allowed. 
D)  Colombian coffee buyers will become worse off if international trade is allowed. 
A)  other countries have a comparative advantage over Colombia in producing coffee. 
B)  Colombia has an absolute advantage over other countries in producing coffee. 
C)  Colombia will export coffee if international trade is allowed. 
D)  Colombian coffee buyers will become worse off if international trade is allowed.

Question 17

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices, the Swedish economy would be worse off.

Accepted Answer

A) True 
 B)False

Question 18

Most economists support the infant-industry argument because it is so easy to implement in practice.

Accepted Answer

A) True 
 B)False

Question 19

A tax on an imported good is called a .

Accepted Answer

The answer of A tax on an imported good is...

Question 20

Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to German wheat farmers. As a result of the French subsidy, sales of French wheat to Germany

Accepted Answer

A)  may prompt German farmers to invoke the unfair-competition argument. 
B)  increase the consumer surplus of German buyers of wheat. 
C)  increase the total surplus of the German people. 
D)  All of the above are correct. 
A)  may prompt German farmers to invoke the unfair-competition argument. 
B)  increase the consumer surplus of German buyers of wheat. 
C)  increase the total surplus of the German people. 
D)  All of the above are correct.

Exam 9: Application: International Trade

Figure 9-17 -Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer surplus

Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: -Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country allows free trade, by how much do consumer surplus, producer surplus, and producer surplus change?

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

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. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

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

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

Without free trade, the domestic price of a good must be equal to the world price of a good.

The rules established under the General Agreement on Tariffs and Trade (GATT) are enforced by an international body called the World Trade Organization (WTO).

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. Which of the following statements is accurate?

Assume, for Colombia, that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices, the Swedish economy would be worse off.

Most economists support the infant-industry argument because it is so easy to implement in practice.

A tax on an imported good is called a .

Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to German wheat farmers. As a result of the French subsidy, sales of French wheat to Germany

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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