Question 1

A logical starting point from which the study of international trade begins is

Accepted Answer

A)  the recognition that not all markets are competitive. 
B)  the recognition that government intervention in markets sometimes enhances the economic welfare of the society. 
C)  the principle of absolute advantage. 
D)  the principle of comparative advantage. 
A)  the recognition that not all markets are competitive. 
B)  the recognition that government intervention in markets sometimes enhances the economic welfare of the society. 
C)  the principle of absolute advantage. 
D)  the principle of comparative advantage.

Question 2

A country has a comparative advantage in a product if the world price is

Accepted Answer

A)  lower than that country's domestic price without trade. 
B)  higher than that country's domestic price without trade. 
C)  equal to that country's domestic price without trade. 
D)  not subject to manipulation by organizations that govern international trade. 
A)  lower than that country's domestic price without trade. 
B)  higher than that country's domestic price without trade. 
C)  equal to that country's domestic price without trade. 
D)  not subject to manipulation by organizations that govern international trade.

Question 3

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Accepted Answer

A)  export copper. 
B)  import copper. 
C)  neither export nor import copper, since that country cannot gain from trade. 
D)  neither export nor import copper, since that country already produces copper at a low cost compared to other countries. 
A)  export copper. 
B)  import copper. 
C)  neither export nor import copper, since that country cannot gain from trade. 
D)  neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

Question 4

If a country allows free trade and imports cars, then it is the case that the gains to domestic producers outweigh the losses to domestic consumers.

Accepted Answer

A) True 
 B)False

Question 5

Figure 9-13  
-Refer to Figure 9-13. The price and domestic quantity demanded after trade are

Accepted Answer

A)  $8 and 300. 
B)  $8 and 900. 
C)  $14 and 900. 
D)  $14 and 600. 
A)  $8 and 300. 
B)  $8 and 900. 
C)  $14 and 900. 
D)  $14 and 600.

Question 6

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. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric

Question 7

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Accepted Answer

A) True 
 B)False

Question 8

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Accepted Answer

A)  there is no evidence that any worker ever lost his or her job because of free trade. 
B)  unemployment of labor is not a serious problem relative to other economic problems. 
C)  the gains from trade are based on comparative advantage. 
D)  the gains from trade are based on absolute advantage. 
A)  there is no evidence that any worker ever lost his or her job because of free trade. 
B)  unemployment of labor is not a serious problem relative to other economic problems. 
C)  the gains from trade are based on comparative advantage. 
D)  the gains from trade are based on absolute advantage.

Question 9

Figure 9-1
The figure illustrates the market for coffee in Guatemala.  
-Refer to Figure 9-1. With trade, Guatemala will

Accepted Answer

A)  export 22 units of coffee. 
B)  export 10 units of coffee. 
C)  import 30 units of coffee. 
D)  import 12 units of coffee. 
A)  export 22 units of coffee. 
B)  export 10 units of coffee. 
C)  import 30 units of coffee. 
D)  import 12 units of coffee.

Question 10

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.  
-Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

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

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. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

With trade

Question 12

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

Accepted Answer

A)  How does international trade affect consumer well-being? 
B)  Who gains and who loses from free trade among countries? 
C)  How do the gains from trade compare to the losses? 
D)  Which argument for restricting free trade is politically feasible? 
A)  How does international trade affect consumer well-being? 
B)  Who gains and who loses from free trade among countries? 
C)  How do the gains from trade compare to the losses? 
D)  Which argument for restricting free trade is politically feasible?

Question 13

The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

Accepted Answer

A) True 
 B)False

Question 14

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 consumer surplus?

Accepted Answer

With trade

Question 15

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 is the deadweight loss caused by the tariff?

Accepted Answer

The deadwe

Question 16

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

Accepted Answer

With trade, domestic

Question 17

Figure 9-20
The figure illustrates the market for rice in Vietnam.  
-Refer to Figure 9-20. In the absence of trade, total surplus in the Vietnamese rice market amounts to

Accepted Answer

A)  9,250. 
B)  10,000. 
C)  12,000. 
D)  13,000. 
A)  9,250. 
B)  10,000. 
C)  12,000. 
D)  13,000.

Question 18

Trade decisions are based on the principle of absolute advantage.

Accepted Answer

A) True 
 B)False

Question 19

After a certain nation changed its policy from one that banned international trade in wheat to one that allowed international trade in wheat, the nation began importing wheat. As a result, total surplus in the wheat market increased by $10 million. Which of the following changes could have occurred as well?

Accepted Answer

A)  The price of wheat in that nation increased with the adoption of the new policy. 
B)  The domestic quantity of wheat supplied increased with the adoption of the new policy. 
C)  Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. 
D)  Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million. 
A)  The price of wheat in that nation increased with the adoption of the new policy. 
B)  The domestic quantity of wheat supplied increased with the adoption of the new policy. 
C)  Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. 
D)  Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million.

Question 20

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars.  
-Refer to Figure 9-8. The country for which the figure is drawn

Accepted Answer

A)  has a comparative advantage relative to other countries in the production of cars and it will export cars. 
B)  has a comparative advantage relative to other countries in the production of cars and it will import cars. 
C)  has a comparative disadvantage relative to other countries in the production of cars and it will export cars. 
D)  has a comparative disadvantage relative to other countries in the production of cars and it will import cars. 
A)  has a comparative advantage relative to other countries in the production of cars and it will export cars. 
B)  has a comparative advantage relative to other countries in the production of cars and it will import cars. 
C)  has a comparative disadvantage relative to other countries in the production of cars and it will export cars. 
D)  has a comparative disadvantage relative to other countries in the production of cars and it will import cars.

Exam 9: Application: International Trade

A logical starting point from which the study of international trade begins is

A country has a comparative advantage in a product if the world price is

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

If a country allows free trade and imports cars, then it is the case that the gains to domestic producers outweigh the losses to domestic consumers.

Figure 9-13 -Refer to Figure 9-13. The price and domestic quantity demanded after trade are

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. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. With trade, Guatemala will

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

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 consumer surplus?

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. In the absence of trade, total surplus in the Vietnamese rice market amounts to

Trade decisions are based on the principle of absolute advantage.

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8. The country for which the figure is drawn

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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