Question 1

​Imposing a quota on the import of a good is preferable to a tariff because a tariff creates a deadweight loss while a quota does not.

Accepted Answer

A) True 
 B)False

Question 2

The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia are now better off.

Accepted Answer

A) True 
 B)False

Question 3

A tariff

Accepted Answer

A)  lowers the domestic price of the exported good below the world price.
B)  keeps the domestic price of the exported good the same as the world price.
C)  raises the domestic price of the imported good above the world price.
D)  lowers the domestic price of the imported good below the world price.E) C) and D)
F) B) and D)

Question 4

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. The increase in total surplus resulting from trade is

Accepted Answer

A)  $640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120.
B)  $1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240.
C)  $2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000.
D)  $2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480.E) A) and C)
F) B) and C)

Question 5

Refer to Figure 9-15. For the saddle market, area E represents

Accepted Answer

A)  government's revenue from the tariff.
B)  producer surplus after the tariff becomes effective.
C)  the decrease in consumer surplus, relative to the free-trade situation, as a result of the tariff.
D)  the decrease in total surplus, relative to the free-trade situation, as a result of the tariff.E) A) and C)
F) A) and B)

Question 6

In 2008, the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy. Of those surveyed,

Accepted Answer

A)  57 percent said free international trade helped the economy.
B)  26 percent said free international trade helped the economy.
C)  30 percent said free international trade hurt the economy.
D)  16 percent said free international trade hurt the economy.E) B) and C)
F) All of the above

Question 7

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Accepted Answer

A) True 
 B)False

Question 8

Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers, with the tariff, is 8 million bottles per year, then we can conclude that

Accepted Answer

A)  the quantity of wine demanded by France, with the tariff, is 18 million bottles per year.
B)  the quantity of wine demanded by France, without the tariff, would be 24 million bottles per year.
C)  the amount of the deadweight loss is 24 million euros per year.
D)  the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff.E) A) and D)
F) A) and C)

Question 9

Refer to Figure 9-15. With the tariff, the price paid and quantity demanded by domestic buyers are

Accepted Answer

A)  P1 and Q1.
B)  P1 and Q4.
C)  P2 and Q2.
D)  P2 and Q3.E) C) and D)
F) None of the above

Question 10

A tariff is a

Accepted Answer

A)  limit on how much of a good can be exported.
B)  limit on how much of a good can be imported.
C)  tax on an exported good.
D)  tax on an imported good.E) All of the above
F) B) and C)

Question 11

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

Accepted Answer

A)  Consumer surplus decreases by $100; producer surplus increases by $100; and government revenue from the tariff amounts to $50.
B)  Consumer surplus decreases by $200; producer surplus increases by $100; and government revenue from the tariff amounts to $50.
C)  Consumer surplus increases by $100; producer surplus decreases by $200; and government revenue from the tariff amounts to $50.
D)  Consumer surplus decreases by $50; producer surplus increases by $200; and government revenue from the tariff amounts to $150.E) A) and B)
F) A) and C)

Question 12

Figure 9-13 
-Refer to Figure 9-13. The price and domestic quantity demanded after trade are

Accepted Answer

A)  $8 and 300.
B)  $8 and 900.
C)  $14 and 900.
D)  $14 and 600.E) None of the above
F) A) and B)

Question 13

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

Accepted Answer

A)  domestic producers become better off, and domestic consumers become worse off.
B)  domestic producers become worse off, and domestic consumers become better off.
C)  domestic producers become better off, but the effect on the well-being of domestic consumers is ambiguous.
D)  domestic consumers become worse off, but the effect on the well-being of domestic producers is ambiguous.E) None of the above
F) All of the above

Question 14

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)  $200.
B)  $400.
C)  $500.
D)  $600.E) B) and C)
F) None of the above

Question 15

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

Accepted Answer

A)  More Danish-produced chips are sold in Denmark.
B)  More foreign-produced chips are sold in Denmark.
C)  Danish consumers of chips become better off.
D)  Total surplus in the Danish chip market increases.E) A) and D)
F) All of the above

Question 16

A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

Accepted Answer

A) True 
 B)False

Question 17

Refer to Figure 9-16. The deadweight loss created by the tariff is represented by the area

Accepted Answer

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

Question 18

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. With trade, total surplus is

Accepted Answer

A)  $3,240.
B)  $6,480.
C)  $7,760.
D)  $15,520.E) A) and C)
F) None of the above

Question 19

William and Jamal live in the country of Dumexia. As a result of Dumexia's legalization of international trade in bananas, William becomes better off and Jamal becomes worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

Accepted Answer

A) True 
 B)False

Question 20

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. 
-Refer to Figure 9-8. The price corresponding to the horizontal dotted line on the graph represents the price of cars

Accepted Answer

A)  after trade is allowed.
B)  before trade is allowed.
C)  that maximizes total surplus when trade is allowed.
D)  that minimizes the well-being of domestic car producers when trade is allowed.E) None of the above
F) C) and D)

Exam 9: Application: International Trade

Refer to Figure 9-15. For the saddle market, area E represents

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Refer to Figure 9-16. The deadweight loss created by the tariff is represented by the area

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William and Jamal live in the country of Dumexia. As a result of Dumexia's legalization of international trade in bananas, William becomes better off and Jamal becomes worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

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Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The amount of revenue collected by the government from the tariff is

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Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers, with the tariff, is 8 million bottles per year, then we can conclude that

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A tariff

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Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, total surplus is

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A tariff is a

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Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

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Refer to Figure 9-15. With the tariff, the price paid and quantity demanded by domestic buyers are

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

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The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

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In 2008, the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy. Of those surveyed,

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The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia are now better off.

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Figure 9-13 -Refer to Figure 9-13. The price and domestic quantity demanded after trade are

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Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The increase in total surplus resulting from trade is

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​Imposing a quota on the import of a good is preferable to a tariff because a tariff creates a deadweight loss while a quota does not.

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Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8. The price corresponding to the horizontal dotted line on the graph represents the price of cars

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A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

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Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

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Imposing a quota on the import of a good is preferable to a tariff because a tariff creates a deadweight loss while a quota does not.

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