Question 1

When a country takes a unilateral approach to free trade,it

Accepted Answer

A)   removes trade restrictions on its own.
B)   reduces its trade restrictions while other countries do the same.
C)   does not remove trade restrictions no matter what other countries do.
D)   is willing to trade with multiple countries at once.E) All of the above
F) None of the above

Question 2

Figure 9-12 
-Refer to Figure 9-12.With trade,the domestic price and domestic quantity demanded are

Accepted Answer

A)   $27 and 400.
B)   $27 and 800.
C)   $21 and 400.
D)   $21 and 600.E) B) and D)
F) None of the above

Question 3

When the nation of Brownland first permitted trade with other nations,domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million.We can conclude that

Accepted Answer

A)   Brownland became an exporter of wheat.
B)   consumer surplus in Brownland increased by $3 million.
C)   the opening of trade caused the domestic supply curve for wheat in Brownland to shift to the left.
D)   this example is inconsistent with the economic theory of international trade.E) B) and C)
F) A) and D)

Question 4

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.These taxes

Accepted Answer

A)   benefit the United States as a whole,because they generate revenue for the government.In addition,because the goods are priced below cost,the taxes do not harm domestic consumers.
B)   benefit the United States as a whole,because they generate revenue for the government and increase producer surplus.
C)   harm the United States as a whole,because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue.
D)   harm the United States as a whole,because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue.E) A) and C)
F) A) and D)

Question 5

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A)   protectionism based on the national-security argument.
B)   protectionism based on the infant-industry argument.
C)   protectionism based on the unfair-competition argument.
D)   keeping world markets relatively open.E) None of the above
F) B) and C)

Question 6

Figure 9-4
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 9-4.With no trade allowed,how much are consumer surplus,producer surplus,and total surplus?

Accepted Answer

Without trade,consum...

Question 7

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

Accepted Answer

A)   $3,600.
B)   $4,200.
C)   $5,400.
D)   $6,000.E) None of the above
F) B) and D)

Question 8

A tariff is a tax placed on

Accepted Answer

A)   an exported good and it lowers the domestic price of the good below the world price.
B)   an exported good and it ensures that the domestic price of the good stays the same as the world price.
C)   an imported good and it lowers the domestic price of the good below the world price.
D)   an imported good and it raises the domestic price of the good above the world price.E) None of the above
F) B) and C)

Question 9

When a country allows trade and becomes an importer of bottled water,which of the following is not a consequence?

Accepted Answer

A)   The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water.
B)   The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water.
C)   The price paid by domestic consumers of bottled water decreases.
D)   The price received by domestic producers of bottled water decreases.E) B) and C)
F) None of the above

Question 10

Relative to a situation in which domestic firms do not compete with foreign firms,firms in countries that engage in free trade

Accepted Answer

A)   can realize economies of scale more fully.
B)   have greater market power.
C)   experience larger producer surplus.
D)   All of the above are correct.E) A) and C)
F) B) and D)

Question 11

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.E) None of the above
F) A) and B)

Question 12

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies,the United States will be

Accepted Answer

A)   better off no matter how Honduras responds.
B)   better off if Honduras gives in,and will be no worse off if it doesn't.
C)   worse off if Honduras doesn't give in to the threat.
D)   worse off no matter how Honduras responds.E) All of the above
F) A) and B)

Question 13

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

Accepted Answer

A)   in increase in exports of low-priced goods from developing countries to developed countries.
B)   the replacement of manufacturing jobs with service jobs in developed countries.
C)   economic dislocations caused by the North American Free Trade Agreement (NAFT
A)  in the 1990s.
D)   high tariffs imposed during the Great Depression of the 1930s.E) A) and B)
F) A) and C)

Question 14

Suppose in the country of Nash that the price of corn is $4 per bushel with no trade allowed.If the world price of corn is $3 per bushel and if Nash allows free trade,will Nash be an importer or an exporter of corn?

Accepted Answer

Nash will ...

Question 15

In recent years,which countries have taken a unilateral approach to the removal of trade restrictions?

Accepted Answer

A)   China and North Korea
B)   Chile and South Korea
C)   Russia and Japan
D)   the United States and MexicoE) A) and B)
F) None of the above

Question 16

Figure 9-12 
-Refer to Figure 9-12.With trade allowed,this country

Accepted Answer

A)   exports 200 units of the good.
B)   exports 400 units of the good.
C)   imports 200 units of the good.
D)   exports 800 units of the good.E) All of the above
F) B) and D)

Question 17

Both tariffs and import quotas

Accepted Answer

A)   increase the quantity of imports and raise the domestic price of the good.
B)   increase the quantity of imports and lower the domestic price of the good.
C)   decrease the quantity of imports and raise the domestic price of the good.
D)   decrease the quantity of imports and lower the domestic price of the good.E) A) and B)
F) All of the above

Question 18

Figure 9-9 
-Refer to Figure 9-9.Producer surplus in this market before trade is

Accepted Answer

A)   A.
B)   A + B.
C)   B + C + D.
D)   C.E) A) and D)
F) All of the above

Question 19

If a small country imposes a tariff on an imported good,domestic sellers will gain producer surplus,the government will gain tariff revenue,and domestic consumers will gain consumer surplus.

Accepted Answer

A) True 
 B)False

Question 20

Figure 9-5 
-Refer to Figure 9-5.With trade,consumer surplus is

Accepted Answer

A)   $245.
B)   $362.50.
C)   $367.50.
D)   $607.50.E) B) and D)
F) A) and C)

Exam 9: Application: International Trade

A tariff is a tax placed on

Correct AnswerverifiedShow Answer

Figure 9-4 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 9-4.With no trade allowed,how much are consumer surplus,producer surplus,and total surplus?

Correct AnswerverifiedWithout trade,consum...View AnswerShow Answer

In a December 2007 New York Times column Paul Krugman argued in favor of

Correct AnswerverifiedShow Answer

Both tariffs and import quotas

Correct AnswerverifiedShow Answer

Figure 9-9 -Refer to Figure 9-9.Producer surplus in this market before trade is

Correct AnswerverifiedShow Answer

Figure 9-12 -Refer to Figure 9-12.With trade,the domestic price and domestic quantity demanded are

Correct AnswerverifiedShow Answer

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.These taxes

Correct AnswerverifiedShow Answer

Suppose in the country of Nash that the price of corn is $4 per bushel with no trade allowed.If the world price of corn is $3 per bushel and if Nash allows free trade,will Nash be an importer or an exporter of corn?

Correct AnswerverifiedNash will ...View AnswerShow Answer

When the nation of Brownland first permitted trade with other nations,domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million.We can conclude that

Correct AnswerverifiedShow Answer

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies,the United States will be

Correct AnswerverifiedShow Answer

Relative to a situation in which domestic firms do not compete with foreign firms,firms in countries that engage in free trade

Correct AnswerverifiedShow Answer

Figure 9-5 -Refer to Figure 9-5.With trade,consumer surplus is

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

When a country takes a unilateral approach to free trade,it

Correct AnswerverifiedShow Answer

Figure 9-12 -Refer to Figure 9-12.With trade allowed,this country

Correct AnswerverifiedShow Answer

When a country allows trade and becomes an importer of bottled water,which of the following is not a consequence?

Correct AnswerverifiedShow Answer

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

Correct AnswerverifiedShow Answer

In recent years,which countries have taken a unilateral approach to the removal of trade restrictions?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a small country imposes a tariff on an imported good,domestic sellers will gain producer surplus,the government will gain tariff revenue,and domestic consumers will gain consumer surplus.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Without trade,consum...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Nash will ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified