Question 1

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 2

Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

Accepted Answer

A)  The price of paper in Republica decreased as a result of the policy change.
B)  Republica began exporting paper as a result of the policy change.
C)  The domestic demand curve for paper shifted to the right as a result of the policy change.
D)  The domestic quantity of paper demanded increased as a result of the policy change.E) B) and C)
F) None of the above

Question 3

​Figure 9-26
The diagram below illustrates the market for baseballs in the U.S. 
-Refer to figure 9-26. Consumer surplus in the U.S. prior to the opening of the baseball market to international trade is the area

Accepted Answer

A)  ​A
B)  ​A + B + C
C)  ​A + B + E
D)  ​C + FE) A) and C)
F) C) and D)

Question 4

The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

Accepted Answer

A)  Farmland has a comparative advantage, relative to other countries, in producing beef.
B)  other countries have an absolute advantage, relative to Farmland, in producing beef.
C)  the price of beef in Farmland exceeds the world price of beef.
D)  if Farmland were to allow trade, it would export pepper.E) A) and D)
F) B) and D)

Question 5

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

Accepted Answer

A)  $15 and 80 calculators will be sold domestically.
B)  $15 and 130 calculators will be sold domestically.
C)  $20 and 80 calculators will be sold domestically.
D)  $20 and 130 calculators will be sold domestically.E) All of the above
F) None of the above

Question 6

​Mexico has imposed a tariff on the importation of chocolate. As a consequence of the tariff,

Accepted Answer

A)  ​Mexico as a whole is better off, since the tariff increases employment and production in the domestic chocolate industry.
B)  ​Mexico as a whole is better off, since the tariff results in tax revenue for the Mexican government.
C)  ​Mexico as a whole is worse off, since producer surplus and consumer surplus both decrease.
D)  ​Mexico as a whole is worse off, since the increase in producer surplus is smaller than the drop in consumer surplus plus tariff revenues.E) None of the above
F) A) and C)

Question 7

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular good,

Accepted Answer

A)  producer surplus increases and total surplus increases in the market for that good.
B)  producer surplus increases and total surplus decreases in the market for that good.
C)  producer surplus decreases and total surplus increases in the market for that good.
D)  producer surplus decreases and total surplus decreases in the market for that good.E) B) and C)
F) All of the above

Question 8

Which of the following assertions is not correct about the multilateral approach to free trade?

Accepted Answer

A)  The multilateral approach has the potential to result in freer trade than does the unilateral approach.
B)  The multilateral approach may have a political advantage over the unilateral approach.
C)  The multilateral approach is simpler than the unilateral approach.
D)  NAFTA and GATT both represent multilateral approaches to free trade.E) A) and B)
F) B) and D)

Question 9

When the nation of Duxembourg allows trade and becomes an importer of software,

Accepted Answer

A)  residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises.
B)  residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg falls.
C)  residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg rises.
D)  residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg falls.E) B) and C)
F) A) and B)

Question 10

The rules established under GATT are enforced by the

Accepted Answer

A)  governments of the nations that are involved in GATT.
B)  North American Free Trade Association.
C)  World Trade Organization.
D)  European Union.E) A) and B)
F) C) and D)

Question 11

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

Accepted Answer

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

Question 12

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

Question 13

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. Suppose the government imposes a tariff of $10 per unit. With trade and a tariff, total surplus is

Accepted Answer

A)  $750.
B)  $900.
C)  $950.
D)  $1,550.E) B) and C)
F) C) and D)

Question 14

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

Accepted Answer

A)  everyone in the country benefits.
B)  the gains of the winners exceed the losses of the losers.
C)  the losses of the losers exceed the gains of the winners.
D)  everyone in the country loses.E) B) and D)
F) All of the above

Question 15

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

Accepted Answer

A)  $28,000.
B)  $30,000.
C)  $35,200.
D)  $38,400.E) None of the above
F) All of the above

Question 16

Japan imposes a $300 per ton tariff on imported steel, raising the price charged in Japan to $1,000. Using only this information, which of the following statements is correct?

Accepted Answer

A)  The world price for steel is $300.
B)  The world price for steel is $700.
C)  The world price for steel is $1,000.
D)  The world price for steel is $1,300.E) B) and C)
F) A) and D)

Question 17

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

Accepted Answer

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

Question 19

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Accepted Answer

A)  Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off.
B)  Turkish consumers of wheat become worse off and Turkish producers of wheat become better off.
C)  Turkish consumers of wheat become better off and Turkish producers of wheat become worse off.
D)  Turkish consumers of wheat become better off and Turkish producers of wheat become better off.E) A) and B)
F) C) and D)

Question 20

A quota is

Accepted Answer

A)  a tax placed on imports.
B)  a limit on the quantity of imports.
C)  a tax on exports to other countries.
D)  an excess of exports over imports.E) A) and D)
F) A) and B)

Exam 9: Application: International Trade

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?

Correct AnswerverifiedWithout trade, consu...View AnswerShow Answer

​Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to figure 9-26. Consumer surplus in the U.S. prior to the opening of the baseball market to international trade is the area

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Which of the following assertions is not correct about the multilateral approach to free trade?

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

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A quota is

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

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When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular good,

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Japan imposes a $300 per ton tariff on imported steel, raising the price charged in Japan to $1,000. Using only this information, which of the following statements is correct?

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​Mexico has imposed a tariff on the importation of chocolate. As a consequence of the tariff,

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

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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. Suppose the government imposes a tariff of $10 per unit. With trade and a tariff, total surplus is

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The rules established under GATT are enforced by the

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Figure 9-9 -Refer to Figure 9-9. Consumer surplus in this market before trade 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 nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

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

Correct AnswerverifiedShow Answer

When the nation of Duxembourg allows trade and becomes an importer of software,

Correct AnswerverifiedShow Answer

Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

Correct AnswerverifiedShow Answer

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

Correct AnswerverifiedShow Answer

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Correct AnswerverifiedShow Answer

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Without trade, consu...
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Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to figure 9-26. Consumer surplus in the U.S. prior to the opening of the baseball market to international trade is the area

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Mexico has imposed a tariff on the importation of chocolate. As a consequence of the tariff,

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