Question 1

In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that

Accepted Answer

A)  Moldova can only import goods; it cannot export goods. 
B)  Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. 
C)  only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant. 
D)  Moldova is a price taker. 
A)  Moldova can only import goods; it cannot export goods. 
B)  Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. 
C)  only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant. 
D)  Moldova is a price taker.

Question 2

Figure 9-3. The domestic country is China.  
-Refer to Figure 9-3. With no international trade,

Accepted Answer

A)  the equilibrium price is $12 and the equilibrium quantity is 300. 
B)  the equilibrium price is $16 and the equilibrium quantity is 200. 
C)  the equilibrium price is $16 and the equilibrium quantity is 300. 
D)  the equilibrium price is $16 and the equilibrium quantity is 450. 
A)  the equilibrium price is $12 and the equilibrium quantity is 300. 
B)  the equilibrium price is $16 and the equilibrium quantity is 200. 
C)  the equilibrium price is $16 and the equilibrium quantity is 300. 
D)  the equilibrium price is $16 and the equilibrium quantity is 450.

Question 3

Figure 9-13  
-Refer to Figure 9-13. With trade, producer surplus is

Accepted Answer

A)  $900. 
B)  $1,100. 
C)  $1,500. 
D)  $2,000. 
A)  $900. 
B)  $1,100. 
C)  $1,500. 
D)  $2,000.

Question 4

In a December 2007 New York Times column, Paul Krugman noted that

Accepted Answer

A)  it is difficult to find instances of trade between high-wage countries in the modern era. 
B)  it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern era. 
C)  the United States now imports more oil and other raw materials from other advanced countries than from the third world. 
D)  the United States now imports more manufactured goods from the third world than from other advanced countries. 
A)  it is difficult to find instances of trade between high-wage countries in the modern era. 
B)  it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern era. 
C)  the United States now imports more oil and other raw materials from other advanced countries than from the third world. 
D)  the United States now imports more manufactured goods from the third world than from other advanced countries.

Question 5

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began

Accepted Answer

A)  exporting almonds and the price per pound in Uruguay remained at $3.00. 
B)  exporting almonds and the price per pound in Uruguay increased to $4.50. 
C)  importing almonds and the price per pound in Uruguay remained at $3.00. 
D)  importing almonds and the price per pound in Uruguay increased to $4.50. 
A)  exporting almonds and the price per pound in Uruguay remained at $3.00. 
B)  exporting almonds and the price per pound in Uruguay increased to $4.50. 
C)  importing almonds and the price per pound in Uruguay remained at $3.00. 
D)  importing almonds and the price per pound in Uruguay increased to $4.50.

Question 6

Figure 9-17  
-Refer to Figure 9-17. With trade and a tariff, total surplus is

Accepted Answer

A)  $1,224. 
B)  $1,416. 
C)  $1,512. 
D)  $1,704. 
A)  $1,224. 
B)  $1,416. 
C)  $1,512. 
D)  $1,704.

Question 7

Suppose the world price of coffee is $3 per pound and Brazil's domestic price of coffee without trade is $2 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

Accepted Answer

Brazil wil

Question 8

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. Vietnam's gains from trade in rice amount to

Accepted Answer

A)  750. 
B)  1,000. 
C)  1,250. 
D)  1,500. 
A)  750. 
B)  1,000. 
C)  1,250. 
D)  1,500.

Question 9

Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Accepted Answer

A)  know whether Costa Rica imports or exports pharmaceuticals. 
B)  compare the world price of pharmaceuticals to the price of pharmaceuticals that would prevail in Costa Rica if trade with the rest of the world were not allowed. 
C)  compare the quantity of pharmaceuticals consumed in Costa Rica with the quantity of pharmaceuticals that would be consumed in Costa Rica if trade with the rest of the world were not allowed. 
D)  All of the above are correct. 
A)  know whether Costa Rica imports or exports pharmaceuticals. 
B)  compare the world price of pharmaceuticals to the price of pharmaceuticals that would prevail in Costa Rica if trade with the rest of the world were not allowed. 
C)  compare the quantity of pharmaceuticals consumed in Costa Rica with the quantity of pharmaceuticals that would be consumed in Costa Rica if trade with the rest of the world were not allowed. 
D)  All of the above are correct.

Question 10

Which of the following assertions is not correct about the multilateral approach to free trade?

Accepted Answer

A)  The multilateral approach has the potential to result in freer trade than does the unilateral approach. 
B)  The multilateral approach may have a political advantage over the unilateral approach. 
C)  The multilateral approach is simpler than the unilateral approach. 
D)  NAFTA and GATT both represent multilateral approaches to free trade. 
A)  The multilateral approach has the potential to result in freer trade than does the unilateral approach. 
B)  The multilateral approach may have a political advantage over the unilateral approach. 
C)  The multilateral approach is simpler than the unilateral approach. 
D)  NAFTA and GATT both represent multilateral approaches to free trade.

Question 11

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Accepted Answer

A)  abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. 
B)  abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. 
C)  abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. 
D)  abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples. 
A)  abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples. 
B)  abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples. 
C)  abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples. 
D)  abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples.

Question 12

Figure 9-15  
-Refer to Figure 9-15. Consumer surplus with trade and without a tariff is

Accepted Answer

A)  A. 
B)  A + B. 
C)  A + C + G. 
D)  A + B + C + D + E + F. 
A)  A. 
B)  A + B. 
C)  A + C + G. 
D)  A + B + C + D + E + F.

Question 13

Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,

Accepted Answer

A)  consumer surplus increases for consumers of coats in Iceland. 
B)  producer surplus increases for producers of coats in Iceland. 
C)  total surplus remains unchanged in the coat market in Iceland. 
D)  it is reasonable to infer that Iceland has a comparative advantage over other countries in coat production. 
A)  consumer surplus increases for consumers of coats in Iceland. 
B)  producer surplus increases for producers of coats in Iceland. 
C)  total surplus remains unchanged in the coat market in Iceland. 
D)  it is reasonable to infer that Iceland has a comparative advantage over other countries in coat production.

Question 14

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. From the figure it is apparent that

Accepted Answer

A)  Vietnam has a comparative advantage in producing rice, relative to the rest of the world. 
B)  foreign countries have a comparative advantage in producing rice, relative to Vietnam. 
C)  Vietnam has an absolute advantage in producing rice, relative to the rest of the world. 
D)  foreign countries have an absolute advantage in producing rice, relative to Vietnam. 
A)  Vietnam has a comparative advantage in producing rice, relative to the rest of the world. 
B)  foreign countries have a comparative advantage in producing rice, relative to Vietnam. 
C)  Vietnam has an absolute advantage in producing rice, relative to the rest of the world. 
D)  foreign countries have an absolute advantage in producing rice, relative to Vietnam.

Question 15

Figure 9-2
The figure illustrates the market for calculators in a country.  
-Refer to Figure 9-2. As a result of trade, total surplus increases by

Accepted Answer

A)  $50. 
B)  $100. 
C)  $250. 
D)  $500. 
A)  $50. 
B)  $100. 
C)  $250. 
D)  $500.

Question 16

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market.  
-Refer to Figure 9-26. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

Accepted Answer

Consumer surplus is

Question 17

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Accepted Answer

A)  both consumer surplus and producer surplus increase. 
B)  consumer surplus increases and producer surplus decreases. 
C)  consumer surplus decreases and producer surplus increases. 
D)  both consumer surplus and producer surplus decrease. 
A)  both consumer surplus and producer surplus increase. 
B)  consumer surplus increases and producer surplus decreases. 
C)  consumer surplus decreases and producer surplus increases. 
D)  both consumer surplus and producer surplus decrease.

Question 18

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. With trade, Vietnamese rice producers will produce

Accepted Answer

A)  2,000 units of rice and their producer surplus will be 4,000. 
B)  2,000 units of rice and their producer surplus will be 7,500. 
C)  3,000 units of rice and their producer surplus will be 7,500. 
D)  3,000 units of rice and their producer surplus will be 9,000. 
A)  2,000 units of rice and their producer surplus will be 4,000. 
B)  2,000 units of rice and their producer surplus will be 7,500. 
C)  3,000 units of rice and their producer surplus will be 7,500. 
D)  3,000 units of rice and their producer surplus will be 9,000.

Question 19

Suppose a country begins to allow international trade in steel. Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?

Accepted Answer

A)  The sum of consumer surplus and producer surplus for domestic traders of steel increases. 
B)  The quantity of steel demanded by domestic consumers increases. 
C)  Domestic producers of steel receive a higher price for steel. 
D)  The losses of the losers exceed the gains of the winners. 
A)  The sum of consumer surplus and producer surplus for domestic traders of steel increases. 
B)  The quantity of steel demanded by domestic consumers increases. 
C)  Domestic producers of steel receive a higher price for steel. 
D)  The losses of the losers exceed the gains of the winners.

Question 20

Figure 9-17  
-Refer to Figure 9-17. With trade and a tariff, consumer surplus is

Accepted Answer

A)  $808 and producer surplus is $200. 
B)  $808 and producer surplus is $392. 
C)  $1,024 and producer surplus is $200. 
D)  $1,024 and producer surplus is $392. 
A)  $808 and producer surplus is $200. 
B)  $808 and producer surplus is $392. 
C)  $1,024 and producer surplus is $200. 
D)  $1,024 and producer surplus is $392.

Exam 9: Application: International Trade

In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With no international trade,

Figure 9-13 -Refer to Figure 9-13. With trade, producer surplus is

In a December 2007 New York Times column, Paul Krugman noted that

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began

Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, total surplus is

Suppose the world price of coffee is $3 per pound and Brazil's domestic price of coffee without trade is $2 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. Vietnam's gains from trade in rice amount to

Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Which of the following assertions is not correct about the multilateral approach to free trade?

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Figure 9-15 -Refer to Figure 9-15. Consumer surplus with trade and without a tariff is

Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. From the figure it is apparent that

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. As a result of trade, total surplus increases by

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. With trade, Vietnamese rice producers will produce

Suppose a country begins to allow international trade in steel. Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?

Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, consumer surplus is

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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