Question 1

Import quotas and tariffs produce some common results. Which of the following is not one of those common results?

Accepted Answer

A) Total surplus in the domestic country falls. 
B) Producer surplus in the domestic country increases. 
C) The domestic country experiences a deadweight loss. 
D) Revenue is raised for the domestic government.

Question 2

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.

Question 3

Figure 9-1
The figure illustrates the market for coffee in Guatemala. 
-Refer to Figure 9-1. In the absence of trade, total surplus in the Guatemalan coffee market amounts to

Accepted Answer

A) 750. 
B) 1,100. 
C) 1,514. 
D) 1,650.

Question 4

Suppose Brazil has a comparative advantage over other countries in producing almonds, but other countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

Accepted Answer

A) will import almonds. 
B) will export almonds. 
C) will either import almonds or export almonds, but it is not clear from the given information. 
D) would have nothing to gain either from exporting or importing almonds.

Question 5

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

The answer of Figure 9-28
The following diagram shows the domestic...

Question 6

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

Accepted Answer

A) Incomes of domestic citizens increase, and tricycles are a normal good. 
B) Within this country, the price of a substitute for tricycles decreases. 
C) Within this country, the price of a complement to tricycles decreases. 
D) Wages increase for domestic workers who produce tricycles.

Question 7

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 total surplus?

Accepted Answer

The answer of Figure 9-28
The following diagram shows the domestic...

Question 8

Figure 9-24
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. 
-Refer to Figure 9-24. With free trade, the country

Accepted Answer

A) exports 20 units of the good. 
B) imports 20 units of the good. 
C) exports 30 units of the good. 
D) imports 30 units of the good.

Question 9

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.

Question 10

Figure 9-3. The domestic country is China. 
-Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes with trade?

Accepted Answer

A) Consumer surplus increases by $1,800 and producer surplus increases by $1,600. 
B) Consumer surplus decreases by $1,000 and producer surplus increases by $1,500. 
C) Consumer surplus decreases by $1,000 and producer surplus increases by $1,750. 
D) Total surplus increases by $400.

Question 11

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.

Question 12

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off.

Accepted Answer

A) True 
 B)False

Question 13

Figure 9-3. The domestic country is China. 
-Refer to Figure 9-3. With trade, China will

Accepted Answer

A) import 100 pencil sharpeners. 
B) import 250 pencil sharpeners. 
C) export 150 pencil sharpeners. 
D) export 250 pencil sharpeners.

Question 14

When a nation first begins to trade with other countries and the nation becomes an importer of corn,

Accepted Answer

A) this is an indication that the world price of corn exceeds the nation's domestic price of corn in the absence of trade. 
B) this is an indication that the nation has a comparative advantage in producing corn. 
C) the nation's consumers of corn become better off and the nation's producers of corn become worse off. 
D) All of the above are correct.

Question 15

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

Accepted Answer

A) national-security argument. 
B) infant-industry argument. 
C) unfair-competition argument. 
D) jobs argument.

Question 16

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

The answer of Figure 9-28
The following diagram shows the domestic...

Question 17

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 $60. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. 
B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. 
C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. 
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.

Question 18

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

Accepted Answer

A) the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good. 
B) the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good. 
C) the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good. 
D) the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good.

Question 19

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.

Question 20

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. Suppose the government imposes a tariff of $5 per unit. The amount of revenue collected by the government from the tariff is

Accepted Answer

A) $50. 
B) $100. 
C) $150. 
D) $200.

Exam 9: Application: International Trade

Import quotas and tariffs produce some common results. Which of the following is not one of those common results?

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 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. In the absence of trade, total surplus in the Guatemalan coffee market amounts to

Suppose Brazil has a comparative advantage over other countries in producing almonds, but other countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

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?

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

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 total surplus?

Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. With free trade, the country

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 9-3. The domestic country is China. -Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes with trade?

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

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off.

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With trade, China will

When a nation first begins to trade with other countries and the nation becomes an importer of corn,

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

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?

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

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

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. Suppose the government imposes a tariff of $5 per unit. The amount of revenue collected by the government from the tariff is