Question 1

When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

Accepted Answer

A)  The price paid by domestic consumers of the good increases. 
B)  The price received by domestic producers of the good increases. 
C)  The losses of domestic consumers of the good exceed the gains of domestic producers of the good. 
D)  The gains of domestic producers of the good exceed the losses of domestic consumers of the good. 
A)  The price paid by domestic consumers of the good increases. 
B)  The price received by domestic producers of the good increases. 
C)  The losses of domestic consumers of the good exceed the gains of domestic producers of the good. 
D)  The gains of domestic producers of the good exceed the losses of domestic consumers of the good.

Question 2

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. Without trade, consumer 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 3

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Accepted Answer

A)  54 percent 
B)  72 percent 
C)  89 percent 
D)  97 percent 
A)  54 percent 
B)  72 percent 
C)  89 percent 
D)  97 percent

Question 4

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 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 9-23. With free trade, the domestic price and domestic quantity demanded are

Accepted Answer

A)  $90 and 5. 
B)  $90 and 10. 
C)  $120 and 5. 
D)  $120 and 18. 
A)  $90 and 5. 
B)  $90 and 10. 
C)  $120 and 5. 
D)  $120 and 18.

Question 6

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 9-23. Consumer surplus with free trade is

Accepted Answer

A)  $75. 
B)  $150. 
C)  $200. 
D)  $300. 
A)  $75. 
B)  $150. 
C)  $200. 
D)  $300.

Question 7

When a country allows trade and becomes an importer of bottled water, which of the following is not a consequence?

Accepted Answer

A)  The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water. 
B)  The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water. 
C)  The price paid by domestic consumers of bottled water decreases. 
D)  The price received by domestic producers of bottled water decreases. 
A)  The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water. 
B)  The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water. 
C)  The price paid by domestic consumers of bottled water decreases. 
D)  The price received by domestic producers of bottled water decreases.

Question 8

Free trade allows firms to realize economies of scale, resulting in higher costs of production.

Accepted Answer

A) True 
 B)False

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 producer surplus?

Accepted Answer

With trade

Question 10

If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the tariff.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Figure 9-9  
-Refer to Figure 9-9. Consumer surplus in this market before 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 13

Figure 9-17  
-Refer to Figure 9-17. The deadweight loss caused by the tariff is

Accepted Answer

A)  $24. 
B)  $72. 
C)  $96. 
D)  $144. 
A)  $24. 
B)  $72. 
C)  $96. 
D)  $144.

Question 14

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 15

Figure 9-25
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit.  
-Refer to Figure 9-25. With free trade, total surplus is

Accepted Answer

A)  $800. 
B)  $1,200. 
C)  $1,600. 
D)  $2,000. 
A)  $800. 
B)  $1,200. 
C)  $1,600. 
D)  $2,000.

Question 16

Scenario 9-2
-For a small country called Boxland, the equation of the domestic demand curve for cardboard is   where     represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard.
-For Boxland, the equation of the domestic supply curve for cardboard is   where     represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard.
-Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard

Accepted Answer

A)  benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. 
B)  benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. 
C)  benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. 
D)  harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. 
A)  benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. 
B)  benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. 
C)  benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. 
D)  harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00.

Question 17

Japan imposes a $300 per ton tariff on imported steel, raising the price charged in Japan to $1,000. Using only this information, which of the following statements is correct?

Accepted Answer

A)  The world price for steel is $300. 
B)  The world price for steel is $700. 
C)  The world price for steel is $1,000. 
D)  The world price for steel is $1,300. 
A)  The world price for steel is $300. 
B)  The world price for steel is $700. 
C)  The world price for steel is $1,000. 
D)  The world price for steel is $1,300.

Question 18

If the United States imports televisions and the U.S. government imposes a tariff on televisions, then

Accepted Answer

A)  total surplus in the American television market decreases. 
B)  producer surplus in the American television market increases. 
C)  U.S. imports of foreign televisions decrease. 
D)  All of the above are correct. 
A)  total surplus in the American television market decreases. 
B)  producer surplus in the American television market increases. 
C)  U.S. imports of foreign televisions decrease. 
D)  All of the above are correct.

Question 19

The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic sellers of soybeans if

Accepted Answer

A)  consumer surplus equals producer surplus in the Canadian soybean market. 
B)  total surplus exceeds consumer surplus in the Canadian soybean market. 
C)  Canada permits international trade in soybeans. 
D)  Canada forbids international trade in soybeans. 
A)  consumer surplus equals producer surplus in the Canadian soybean market. 
B)  total surplus exceeds consumer surplus in the Canadian soybean market. 
C)  Canada permits international trade in soybeans. 
D)  Canada forbids international trade in soybeans.

Question 20

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

Exam 9: Application: International Trade

When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

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

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

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?

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 9-23. With free trade, the domestic price and domestic quantity demanded are

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 9-23. Consumer surplus with free trade is

When a country allows trade and becomes an importer of bottled water, which of the following is not a consequence?

Free trade allows firms to realize economies of scale, resulting in higher costs of production.

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 producer surplus?

If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the tariff.

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

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

Figure 9-17 -Refer to Figure 9-17. The deadweight loss caused by the tariff 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 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. With free trade, total surplus is

Japan imposes a $300 per ton tariff on imported steel, raising the price charged in Japan to $1,000. Using only this information, which of the following statements is correct?

If the United States imports televisions and the U.S. government imposes a tariff on televisions, then

The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic sellers of soybeans if

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?

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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