Question 1

Graph 9-4
This graph refers to the market for kiwifruit in New Zealand. 
-According to Graph 9-4, total surplus in New Zealand after the trade in kiwifruit is:

Accepted Answer

A)  a + b
B)  a + b + c
C)  a + b + c + d
D)  b + c + dE) All of the above
F) A) and B)

Question 2

According to this statement, if a quota on corn is then imposed, the price of corn in Australia:

Accepted Answer

A)  will fall compared to the price with free trade
B)  will remain the same as with free trade
C)  will rise compared to the price with free trade
D)  will remain the same as before tradeE) B) and D)
F) None of the above

Question 3

Graph 9-6
This graph refers to the market for oil in Spain. 
-According to Graph 9-6, producer surplus plus consumer surplus in Spain after trade would be:

Accepted Answer

A)  A + B
B)  A + B + C
C)  A + B + C + D
D)  B + C + DE) B) and D)
F) B) and C)

Question 4

"Lower costs through economies of scale" refers to:

Accepted Answer

A)  one of the reasons for restricting international trade
B)  the advantage that can sometimes arise when companies can sell to international markets
C)  the way in which big companies can dominate domestic markets when there is no trade
D)  the increased variety of goods that can be accessed in a free-trade economyE) B) and C)
F) A) and D)

Question 5

According to this statement, if trade in corn is allowed, Australian consumers of corn:

Accepted Answer

A)  will be better off
B)  will be worse off
C)  will be unaffected
D)  could be better off or worse offE) A) and C)
F) A) and B)

Question 6

Which of the following is NOT a claim policymakers often use to justify imposing a tariff?

Accepted Answer

A)  protection is necessary in order for young industries to grow up and be successful
B)  the threat of a trade restriction will encourage other countries to remove existing trade restrictions
C)  protection is sometimes necessary because many countries protect their industries
D)  trade restrictions will cause wages in certain domestic industries to riseE) B) and D)
F) All of the above

Question 7

When goods that are produced in China are sold to Australia, the goods are:

Accepted Answer

A)  exported by Australia and imported by China
B)  imported by Australia and exported by China
C)  exported by Australia and exported by China
D)  imported by Australia and imported by ChinaE) B) and D)
F) None of the above

Question 8

A multilateral approach to free trade is about involving large corporations in trade negotiations.

Accepted Answer

A) True 
 B)False

Question 9

Graph 9-9 
-Which of the following is NOT an argument for restricting trade?

Accepted Answer

A)  the jobs argument
B)  the national security argument
C)  the infant industry argument
D)  the efficiency argumentE) A) and D)
F) All of the above

Question 10

A country is deemed to have a comparative advantage in a product if:

Accepted Answer

A)  the world price is lower than its domestic price
B)  the world price is higher than its domestic price
C)  the world price is equal to its domestic price
D)  none of the aboveE) A) and B)
F) All of the above

Question 11

When a government imposes a tariff on a product, the domestic price will equal the world price.

Accepted Answer

A) True 
 B)False

Question 12

When a quota is imposed on a market, the:

Accepted Answer

A)  supply curve (above the world price)  shifts to the right by the amount of the quota
B)  supply curve (above the world price)  shifts to the left by the amount of the quota
C)  demand curve (above the world price)  shifts to the right by the amount of the quota
D)  demand curve (above the world price)  shifts to the left by the amount of the quotaE) A) and D)
F) None of the above

Question 13

Now that Austria is open to trade, it is:

Accepted Answer

A)  an importer of tape measures and a price taker
B)  an importer of tape measures but imposes a quota on imports
C)  an exporter of tape measures but imposes a quota on exports
D)  an importer of tape measures but imposes a tariff on importsE) None of the above
F) All of the above

Question 14

Graph 9-7 
-According to Graph 9-7, equilibrium price and quantity before trade would be:

Accepted Answer

A)  $20, 2000
B)  $20, 2400
C)  $10, 2000
D)  $10, 2400E) A) and B)
F) A) and C)

Question 15

Graph 9-5
This graph refers to the market for oil in Spain. 
-According to Graph 9-5, the quantity of oil imported into Spain is:

Accepted Answer

A)  q₀
B)  Q₁
C)  Q₂
D)  Q₂ minus Q₁E) A) and B)
F) B) and C)

Question 16

Import quotas make domestic buyers better off and domestic sellers worse off.

Accepted Answer

A) True 
 B)False

Question 17

Sometimes countries suffer a net loss of jobs due to free trade, because they do not have a comparative advantage in producing anything.

Accepted Answer

A) True 
 B)False

Question 18

Graph 9-8 
-According to Graph 9-8, domestic production and domestic consumption after trade would be:

Accepted Answer

A)  600, 600
B)  600, 300
C)  300, 900
D)  600, 900E) A) and C)
F) C) and D)

Question 19

Economists contend that imposing trade restrictions in order to protect industries for national security reasons is never justified.

Accepted Answer

A) True 
 B)False

Question 20

One of the important outcomes of international trade is that countries specialise in the output of things they are best at.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

Economists contend that imposing trade restrictions in order to protect industries for national security reasons is never justified.

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Sometimes countries suffer a net loss of jobs due to free trade, because they do not have a comparative advantage in producing anything.

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Import quotas make domestic buyers better off and domestic sellers worse off.

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A multilateral approach to free trade is about involving large corporations in trade negotiations.

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"Lower costs through economies of scale" refers to:

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One of the important outcomes of international trade is that countries specialise in the output of things they are best at.

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Which of the following is NOT a claim policymakers often use to justify imposing a tariff?

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Graph 9-7 -According to Graph 9-7, equilibrium price and quantity before trade would be:

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According to this statement, if a quota on corn is then imposed, the price of corn in Australia:

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Graph 9-4 This graph refers to the market for kiwifruit in New Zealand. -According to Graph 9-4, total surplus in New Zealand after the trade in kiwifruit is:

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Graph 9-8 -According to Graph 9-8, domestic production and domestic consumption after trade would be:

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Graph 9-6 This graph refers to the market for oil in Spain. -According to Graph 9-6, producer surplus plus consumer surplus in Spain after trade would be:

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Graph 9-5 This graph refers to the market for oil in Spain. -According to Graph 9-5, the quantity of oil imported into Spain is:

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Now that Austria is open to trade, it is:

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When a quota is imposed on a market, the:

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A country is deemed to have a comparative advantage in a product if:

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When goods that are produced in China are sold to Australia, the goods are:

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Graph 9-9 -Which of the following is NOT an argument for restricting trade?

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When a government imposes a tariff on a product, the domestic price will equal the world price.

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According to this statement, if trade in corn is allowed, Australian consumers of corn:

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