Question 1

The principle of comparative advantage asserts that

Accepted Answer

A)  not all countries can benefit from trade with other countries. 
B)  the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C)  countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D)  countries can become better off by specializing in what they do best. 
A)  not all countries can benefit from trade with other countries. 
B)  the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. 
C)  countries can become better off by exporting goods, but they cannot become better off by importing goods. 
D)  countries can become better off by specializing in what they do best.

Question 2

Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the world price of televisions to the price of televisions in Teeveeland, we can determine whether

Accepted Answer

A)  consumer surplus exceeds producer surplus in Teeveeland. 
B)  Teeveeland has an absolute advantage in producing televisions. 
C)  Teeveeland has a comparative advantage in producing televisions. 
D)  All of the above are correct. 
A)  consumer surplus exceeds producer surplus in Teeveeland. 
B)  Teeveeland has an absolute advantage in producing televisions. 
C)  Teeveeland has a comparative advantage in producing televisions. 
D)  All of the above are correct.

Question 3

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. Suppose the country imposes a $5 per unit tariff. If the country allows trade with a tariff, how much are consumer surplus, producer surplus, tariff revenue, and total surplus?

Accepted Answer

With trade and a tariff, consu

Question 4

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 5

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 total surplus?

Accepted Answer

With trade

Question 6

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

Accepted Answer

A)  importing televisions and the price of a television in Paraguay decreased to $300. 
B)  importing televisions and the price of a television in Paraguay remained at $350. 
C)  exporting televisions and the price of a television in Paraguay decreased to $300. 
D)  exporting televisions and the price of a television in Paraguay remained at $350. 
A)  importing televisions and the price of a television in Paraguay decreased to $300. 
B)  importing televisions and the price of a television in Paraguay remained at $350. 
C)  exporting televisions and the price of a television in Paraguay decreased to $300. 
D)  exporting televisions and the price of a television in Paraguay remained at $350.

Question 7

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)  $200. 
B)  $400. 
C)  $500. 
D)  $600. 
A)  $200. 
B)  $400. 
C)  $500. 
D)  $600.

Question 8

Figure 9-21
The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit.  
-Refer to Figure 9-21. Producer surplus with free trade is

Accepted Answer

A)  $14,000. 
B)  $18,000. 
C)  $24,000. 
D)  $32,000. 
A)  $14,000. 
B)  $18,000. 
C)  $24,000. 
D)  $32,000.

Question 9

Figure 9-4. The domestic country is Nicaragua.  
-Refer to Figure 9-4. With trade, Nicaragua

Accepted Answer

A)  imports 150 calculators. 
B)  imports 250 calculators. 
C)  exports 100 calculators. 
D)  exports 250 calculators. 
A)  imports 150 calculators. 
B)  imports 250 calculators. 
C)  exports 100 calculators. 
D)  exports 250 calculators.

Question 10

The "unfair­competition" argument might be cited by an American who believes that

Accepted Answer

A)  almost every country has a comparative advantage, relative to the United States, in producing almost all goods. 
B)  young industries should be protected against foreign competition until they become profitable. 
C)  the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost. 
D)  the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products. 
A)  almost every country has a comparative advantage, relative to the United States, in producing almost all goods. 
B)  young industries should be protected against foreign competition until they become profitable. 
C)  the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost. 
D)  the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.

Question 11

Figure 9-6
The figure illustrates the market for roses in a country.  
-Refer to Figure 9-6. Before the tariff is imposed, this country

Accepted Answer

A)  imports 200 roses. 
B)  imports 400 roses. 
C)  exports 200 roses. 
D)  exports 400 roses. 
A)  imports 200 roses. 
B)  imports 400 roses. 
C)  exports 200 roses. 
D)  exports 400 roses.

Question 12

Figure 9-10. The figure applies to Mexico and the good is rifles.  
-Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is

Accepted Answer

A)  P0 and Q0. 
B)  P1 and Q1. 
C)  P2 and Q2. 
D)  P1 and Q0. 
A)  P0 and Q0. 
B)  P1 and Q1. 
C)  P2 and Q2. 
D)  P1 and Q0.

Question 13

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 14

When a country allows trade and becomes an importer of jet skis,

Accepted Answer

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

Question 15

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit.  
-Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)  $6,000. 
B)  $9,000. 
C)  $12,000. 
D)  $15,000. 
A)  $6,000. 
B)  $9,000. 
C)  $12,000. 
D)  $15,000.

Question 16

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, what are the equilibrium price and quantity in this market?

Accepted Answer

The equilibrium pric

Question 17

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. The increase in total surplus resulting from trade is

Accepted Answer

A)  $640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120. 
B)  $1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240. 
C)  $2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000. 
D)  $2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480. 
A)  $640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120. 
B)  $1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240. 
C)  $2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000. 
D)  $2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480.

Question 18

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, U.S. producers of peaches

Accepted Answer

A)  will be better off. 
B)  will be worse off. 
C)  will be unaffected. 
D)  will experience a decrease in their collective producer surplus. 
A)  will be better off. 
B)  will be worse off. 
C)  will be unaffected. 
D)  will experience a decrease in their collective producer surplus.

Question 19

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, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric

Question 20

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.  
-Refer to Figure 9-16. The deadweight loss created by the tariff is represented by the area

Accepted Answer

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

Exam 9: Application: International Trade

The principle of comparative advantage asserts that

Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the world price of televisions to the price of televisions in Teeveeland, we can determine whether

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The amount of revenue collected by the government from the tariff is

Figure 9-21 The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-21. Producer surplus with free trade is

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. With trade, Nicaragua

The "unfair­competition" argument might be cited by an American who believes that

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. Before the tariff is imposed, this country

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is

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.

When a country allows trade and becomes an importer of jet skis,

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, what are the equilibrium price and quantity in this market?

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The increase in total surplus resulting from 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, U.S. producers of peaches

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, what are the equilibrium price and equilibrium quantity in this market?

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The deadweight loss created by the tariff is represented by the area

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

Filters

The "unfaircompetition" argument might be cited by an American who believes that