Question 1

When a country allows international trade and becomes an importer of a good,

Accepted Answer

A)  domestic producers of the good become better off. 
B)  domestic consumers of the good become better off. 
C)  the gains of the winners fall short of the losses of the losers. 
D)  All of the above are correct. 
A)  domestic producers of the good become better off. 
B)  domestic consumers of the good become better off. 
C)  the gains of the winners fall short of the losses of the losers. 
D)  All of the above are correct.

Question 2

Figure 9-9  
-Refer to Figure 9-9. Total surplus in this market after trade is

Accepted Answer

A)  A + B. 
B)  A + B + C. 
C)  A + B + C + D. 
D)  B + C + D. 
A)  A + B. 
B)  A + B + C. 
C)  A + B + C + D. 
D)  B + C + D.

Question 3

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Accepted Answer

A)  United States should protect its domestic steel industry from this unfair competition. 
B)  harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel. 
C)  harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. 
D)  United States should subsidize the products it sells to Korea. 
A)  United States should protect its domestic steel industry from this unfair competition. 
B)  harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel. 
C)  harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. 
D)  United States should subsidize the products it sells to Korea.

Question 4

Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed. If the world price of oranges is $10 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of oranges?

Accepted Answer

Nash will

Question 5

When a country allows trade and becomes an exporter of a good,

Accepted Answer

A)  domestic producers gain and domestic consumers lose. 
B)  domestic producers lose and domestic consumers gain. 
C)  domestic producers and domestic consumers both gain. 
D)  domestic producers and domestic consumers both lose. 
A)  domestic producers gain and domestic consumers lose. 
B)  domestic producers lose and domestic consumers gain. 
C)  domestic producers and domestic consumers both gain. 
D)  domestic producers and domestic consumers both lose.

Question 6

"Trade raises the economic well­being of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods, but it is not correct for a nation that imports manufactured goods.

Accepted Answer

A) True 
 B)False

Question 7

Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles,

Accepted Answer

A)  Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B)  Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C)  other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D)  other countries have a comparative advantage over Vietnam and Vietnam will export textiles. 
A)  Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B)  Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C)  other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D)  other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

Question 8

Figure 9-5
The figure illustrates the market for tricycles in a country.  
-Refer to Figure 9-5. With trade, this country

Accepted Answer

A)  exports 160 tricycles. 
B)  exports 320 tricycles. 
C)  imports 160 tricycles. 
D)  imports 320 tricycles. 
A)  exports 160 tricycles. 
B)  exports 320 tricycles. 
C)  imports 160 tricycles. 
D)  imports 320 tricycles.

Question 9

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 produces which of the following results for Boxland?

Accepted Answer

A)  It increases consumer surplus, decreases producer surplus, and increases total surplus. 
B)  It increases consumer surplus, increases producer surplus, and increases total surplus. 
C)  It increases consumer surplus, decreases producer surplus, and decreases total surplus. 
D)  It decreases consumer surplus, increases producer surplus, and increases total surplus. 
A)  It increases consumer surplus, decreases producer surplus, and increases total surplus. 
B)  It increases consumer surplus, increases producer surplus, and increases total surplus. 
C)  It increases consumer surplus, decreases producer surplus, and decreases total surplus. 
D)  It decreases consumer surplus, increases producer surplus, and increases total surplus.

Question 10

Figure 9-12  
-Refer to Figure 9-12. Producer surplus before trade is

Accepted Answer

A)  $14,400. 
B)  $16,800. 
C)  $21,600. 
D)  $24,800. 
A)  $14,400. 
B)  $16,800. 
C)  $21,600. 
D)  $24,800.

Question 11

Figure 9-11  
-Refer to Figure 9-11. Consumer surplus in this market after trade is

Accepted Answer

A)  A. 
B)  C + B. 
C)  A + B + D. 
D)  B + C + D. 
A)  A. 
B)  C + B. 
C)  A + B + D. 
D)  B + C + D.

Question 12

Figure 9-15  
-Refer to Figure 9-15. The amount of government revenue created by the tariff is

Accepted Answer

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

Question 13

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, the price of peaches in the United States

Accepted Answer

A)  will increase, and this will cause consumer surplus to decrease. 
B)  will decrease, and this will cause consumer surplus to increase. 
C)  will be unaffected, and consumer surplus will be unaffected as well. 
D)  could increase or decrease or be unaffected; this cannot be determined. 
A)  will increase, and this will cause consumer surplus to decrease. 
B)  will decrease, and this will cause consumer surplus to increase. 
C)  will be unaffected, and consumer surplus will be unaffected as well. 
D)  could increase or decrease or be unaffected; this cannot be determined.

Question 14

Figure 9-12  
-Refer to Figure 9-12. Consumer surplus after trade is

Accepted Answer

A)  $6,400. 
B)  $9,600. 
C)  $12,800. 
D)  $14,400. 
A)  $6,400. 
B)  $9,600. 
C)  $12,800. 
D)  $14,400.

Question 15

Figure 9-17  
-Refer to Figure 9-17. Without trade, consumer surplus is

Accepted Answer

A)  $400 and producer surplus is $200. 
B)  $400 and producer surplus is $800. 
C)  $1,600 and producer surplus is $200. 
D)  $1,600 and producer surplus is $800. 
A)  $400 and producer surplus is $200. 
B)  $400 and producer surplus is $800. 
C)  $1,600 and producer surplus is $200. 
D)  $1,600 and producer surplus is $800.

Question 16

In a 2007 New York Times article Paul Krugman wrote that

Accepted Answer

A)  the infant-industry argument works well as an argument in favor of protection for the U.S. steel industry. 
B)  the negative effects of third world exports on U.S. wages may be increasing. 
C)  there are social gains to the U.S. from free trade. 
D)  high wage countries account for a growing share of U.S. imports of manufactured goods. 
A)  the infant-industry argument works well as an argument in favor of protection for the U.S. steel industry. 
B)  the negative effects of third world exports on U.S. wages may be increasing. 
C)  there are social gains to the U.S. from free trade. 
D)  high wage countries account for a growing share of U.S. imports of manufactured goods.

Question 17

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, how much are consumer surplus, producer surplus, and total surplus in this market?

Accepted Answer

Without trade, consu

Question 18

Figure 9-15  
-Refer to Figure 9-15. For the saddle market, area B represents

Accepted Answer

A)  government's revenue from the tariff. 
B)  the deadweight loss of the tariff. 
C)  the increase in producer surplus, relative to the free-trade situation, as a result of the tariff. 
D)  None of the above is correct. 
A)  government's revenue from the tariff. 
B)  the deadweight loss of the tariff. 
C)  the increase in producer surplus, relative to the free-trade situation, as a result of the tariff. 
D)  None of the above is correct.

Question 19

Figure 9-15  
-Refer to Figure 9-15. Producer surplus with the tariff is

Accepted Answer

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

Question 20

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. With trade and a tariff, total surplus is

Accepted Answer

A)  $96,000. 
B)  $114,000. 
C)  $120,000. 
D)  $126,000. 
A)  $96,000. 
B)  $114,000. 
C)  $120,000. 
D)  $126,000.

Exam 9: Application: International Trade

When a country allows international trade and becomes an importer of a good,

Figure 9-9 -Refer to Figure 9-9. Total surplus in this market after trade is

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed. If the world price of oranges is $10 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of oranges?

When a country allows trade and becomes an exporter of a good,

"Trade raises the economic well­being of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods, but it is not correct for a nation that imports manufactured goods.

Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles,

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, this country

Figure 9-12 -Refer to Figure 9-12. Producer surplus before trade is

Figure 9-11 -Refer to Figure 9-11. Consumer surplus in this market after trade is

Figure 9-15 -Refer to Figure 9-15. The amount of government revenue created by the tariff 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, the price of peaches in the United States

Figure 9-12 -Refer to Figure 9-12. Consumer surplus after trade is

Figure 9-17 -Refer to Figure 9-17. Without trade, consumer surplus is

In a 2007 New York Times article Paul Krugman wrote that

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, how much are consumer surplus, producer surplus, and total surplus in this market?

Figure 9-15 -Refer to Figure 9-15. For the saddle market, area B represents

Figure 9-15 -Refer to Figure 9-15. Producer surplus with the tariff is

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. With trade and a tariff, total 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

Filters

"Trade raises the economic wellbeing of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods, but it is not correct for a nation that imports manufactured goods.