Question 1

Figure 9-9 
-Refer to Figure 9-9.The change in total surplus in this market because of trade is

Accepted Answer

A)   D,and this area represents a loss of total surplus because of trade.
B)   D,and this area represents a gain in total surplus because of trade.
C)   B + D,and this area represents a loss of total surplus because of trade.
D)   B + D,and this area represents a gain in total surplus because of trade.E) A) and D)
F) C) and D)

Question 2

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) B) and D)
F) B) and C)

Question 3

Figure 9-4.The domestic country is Jamaica. 
-Refer to Figure 9-4.Which of the following statements is accurate?

Accepted Answer

A)   Consumer surplus with trade is $3,200.
B)   Producer surplus with trade is $375.
C)   The gains from trade amount to $800.
D)   The gains from trade are represented on the graph by the area bounded by the points (0,$12) ,(300,$12) ,(300,$7) and (0,$7) .E) All of the above
F) A) and B)

Question 4

Without free trade,the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 5

Figure 9-17 
-Refer to Figure 9-17.With free trade,the country imports

Accepted Answer

A)   5 units of the good.
B)   10 units of the good.
C)   15 units of the good.
D)   20 units of the good.E) C) and D)
F) A) and B)

Question 6

When a country allows trade and becomes an importer of steel,

Accepted Answer

A)   the losses of the domestic producers of steel exceed the gains of the domestic consumers of steel.
B)   the losses of the domestic consumers of steel exceed the gains of the domestic producers of steel.
C)   the gains of the domestic producers of steel exceed the losses of the domestic consumers of steel.
D)   the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel.E) A) and C)
F) B) and D)

Question 7

The nation of Waterland forbids international trade.In Waterland,you can obtain a computer by trading 2 bicycles.In other countries,you can obtain a computer by trading 3 bicycles.These facts indicate that

Accepted Answer

A)   if Waterland were to allow trade,it would export computers.
B)   Waterland has an absolute advantage,relative to other countries,in producing computers.
C)   Waterland has a comparative advantage,relative to other countries,in producing bicycles.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 8

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Accepted Answer

A)   representatives of industry.
B)   representatives of the defense establishment.
C)   members of households.
D)   foreign government officials.E) None of the above
F) All of the above

Question 9

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.E) C) and D)
F) B) and C)

Question 10

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.E) A) and C)
F) B) and C)

Question 11

In principle,trade can make a nation better off,because the gains to the winners exceed the losses to the losers.

Accepted Answer

A) True 
 B)False

Question 12

An import quota

Accepted Answer

A)   is preferable to a tariff since an import quota does not create a deadweight loss.
B)   is a tax on imported goods.
C)   reduces the welfare of domestic consumers.
D)   reduces the welfare of domestic producers.E) All of the above
F) None of the above

Question 13

Honduras is an importer of goose-down pillows.The world price of these pillows is $50.Honduras imposes a $7 tariff on pillows.Honduras is a price-taker in the pillow market.As a result of the tariff,the price of goose-down pillows in Honduras

Accepted Answer

A)   remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases.
B)   increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases.
C)   increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases.
D)   increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.E) A) and B)
F) A) and C)

Question 14

The North American Free Trade Agreement

Accepted Answer

A)   is an example of the unilateral approach to free trade.
B)   eliminated tariffs on imports to North America from the rest of the world.
C)   reduced trade restrictions among Canada,Mexico and the United States.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 15

Figure 9-5 
-Refer to Figure 9-5.Total surplus with trade exceeds total surplus without trade by

Accepted Answer

A)   $60.
B)   $75.
C)   $135.
D)   $210.E) All of the above
F) None of the above

Question 16

For a country that is considering the adoption of either a tariff or an import quota on a particular good,an important difference is that

Accepted Answer

A)   an import quota has no effect on consumer surplus,while a tariff decreases consumer surplus.
B)   an import quota has no effect on producer surplus,while a tariff decreases producer surplus.
C)   a tariff raises total surplus,while an import quota does not.
D)   a tariff raises revenue for that country's government,while an import quota does not.E) A) and B)
F) A) and C)

Question 17

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

Accepted Answer

A)   consumer surplus and producer surplus both increase.
B)   consumer surplus and producer surplus both decrease.
C)   consumer surplus increases and producer surplus decreases.
D)   consumer surplus decreases and producer surplus increases.E) A) and C)
F) A) and B)

Question 18

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. 0Q0. B)  Producer surplus with trade = (1/2) P1Q1. C)  Producer surplus with trade = (1/2) P1Q2. D)  None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-7.Which of the following is a valid equation for Welsh producer surplus with trade?

Accepted Answer

A)   Producer surplus with trade = (1/2) P0Q0.
B)   Producer surplus with trade = (1/2) P1Q1.
C)   Producer surplus with trade = (1/2) P1Q2.
D)   None of the above is correct.E) All of the above
F) A) and D)

Question 19

Figure 9-2 
-Refer to Figure 9-2.At the world price and with free trade,

Accepted Answer

A)   the domestic quantity of baskets demanded is greater than the domestic quantity of baskets supplied.
B)   the basket market is in equilibrium.
C)   the domestic demand for baskets is perfectly inelastic.
D)   both domestic producers of baskets and domestic consumers of baskets are better off than they were without free trade.E) All of the above
F) A) and B)

Question 20

Figure 9-15 3 - Q1. B)  Q3 - Q2. C)  Q4 - Q1. D)  Q4 - Q2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-15.With the tariff,the quantity of saddles imported is

Accepted Answer

A)   Q3 - Q1.
B)   Q3 - Q2.
C)   Q4 - Q1.
D)   Q4 - Q2.E) All of the above
F) B) and C)

Exam 9: Application: International Trade

Figure 9-15 -Refer to Figure 9-15.With the tariff,the quantity of saddles imported is

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For a country that is considering the adoption of either a tariff or an import quota on a particular good,an important difference is that

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In principle,trade can make a nation better off,because the gains to the winners exceed the losses to the losers.

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

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Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.Which of the following is a valid equation for Welsh producer surplus with trade?

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The North American Free Trade Agreement

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Figure 9-5 -Refer to Figure 9-5.Total surplus with trade exceeds total surplus without trade by

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

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One should be especially wary of the national-security argument for restricting trade when that argument is made by

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Honduras is an importer of goose-down pillows.The world price of these pillows is $50.Honduras imposes a $7 tariff on pillows.Honduras is a price-taker in the pillow market.As a result of the tariff,the price of goose-down pillows in Honduras

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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?

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Figure 9-2 -Refer to Figure 9-2.At the world price and with free trade,

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Figure 9-17 -Refer to Figure 9-17.With free trade,the country imports

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Figure 9-4.The domestic country is Jamaica. -Refer to Figure 9-4.Which of the following statements is accurate?

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

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The nation of Waterland forbids international trade.In Waterland,you can obtain a computer by trading 2 bicycles.In other countries,you can obtain a computer by trading 3 bicycles.These facts indicate that

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When a country allows trade and becomes an importer of steel,

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Figure 9-9 -Refer to Figure 9-9.The change in total surplus in this market because of trade is

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Without free trade,the domestic price of a good must be equal to the world price of a good.

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An import quota

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