Question 1

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 2

The before-trade price of fish in Greece is $3.00 per pound.The world price of fish is $5.00 per pound.Greece is a price-taker in the fish market.If Greece allows trade in fish,then Greece will become an

Accepted Answer

A)  importer of fish and the price of fish in Greece will be $3.00.
B)  importer of fish and the price of fish in Greece will be $5.00.
C)  exporter of fish and the price of fish in Greece will be $3.00.
D)  exporter of fish and the price of fish in Greece will be $5.00.E) C) and D)
F) A) and C)

Question 3

Figure 9-4
 
-Refer to Figure 9-4.If this country allows free trade in wagons,

Accepted Answer

A)  consumers will gain more than producers will lose.
B)  producers will gain more than consumers will lose.
C)  producers and consumers will both gain equally.
D)  producers and consumers will both lose equally.E) None of the above
F) A) and D)

Question 4

The North American Free Trade Agreement

Accepted Answer

A)  increased trade restrictions among Canada, Mexico and the United States.
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)  None of the above is correct.E) A) and B)
F) None of the above

Question 5

Workers displaced by trade eventually find jobs in

Accepted Answer

A)  another country.
B)  the government sector.
C)  the industries in which the country has a comparative advantage.
D)  a different company in the same industry.E) All of the above
F) A) and D)

Question 6

If the Japanese steel industry subsidizes the steel that it sells to the United States,the

Accepted Answer

A)  United States should protect its domestic steel industry from this unfair competition.
B)  harm done to U.S.steel producers from this unfair competition exceeds the gain to U.S.consumers of cheap Japanese steel.
C)  harm done to U.S.steel producers is less than the benefit that accrues to U.S.consumers of steel.
D)  United States should subsidize the products it sells to Japan.E) B) and C)
F) A) and B)

Question 7

When a country allows trade and becomes an exporter of a good,which of the following is not a consequence?

Accepted Answer

A)  The price paid by domestic consumers of the good increases.
B)  The price received by domestic producers of the good increases.
C)  The losses of domestic consumers of the good exceed the gains of domestic producers of the good.
D)  The gains of domestic producers of the good exceed the losses of domestic consumers of the good.E) A) and C)
F) A) and B)

Question 8

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) B) and C)
F) None of the above

Question 9

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) None of the above
F) All of the above

Question 10

Figure 9-8
 
-Refer to Figure 9-8.Producer surplus in this market after trade is

Accepted Answer

A)  a.
B)  A + B.
C)  B + C + D.
D)  C.E) C) and D)
F) None of the above

Question 11

If Belgium exports chocolate to the rest of the world,then Belgian chocolate producers benefit from higher producer surplus,Belgian chocolate consumers are worse off because of lower consumer surplus,and total surplus in Belgium increases because of the exports of chocolate.

Accepted Answer

A) True 
 B)False

Question 12

Figure 9-5
 
-Refer to Figure 9-5.Without trade,the equilibrium price of carnations is

Accepted Answer

A)  $8 and the equilibrium quantity is 300.
B)  $6 and the equilibrium quantity is 200.
C)  $6 and the equilibrium quantity is 400.
D)  $4 and the equilibrium quantity is 500.E) B) and D)
F) B) and C)

Question 13

At the end of 2004,the United States government changed its policies pertaining to imports of textiles from China,with the result that

Accepted Answer

A)  both American consumers of textiles and American producers of textiles experienced gains in surplus.
B)  American consumers of textiles experienced a gain in surplus, while American producers of textiles experienced a loss of surplus.
C)  American consumers of textiles experienced a loss of surplus, while American producers of textiles experienced a gain in surplus.
D)  both American consumers of textiles and American producers of textiles experienced losses of surplus.E) A) and B)
F) A) and C)

Question 14

Figure 9-1
 
-Refer to Figure 9-1.The world price for baskets represents

Accepted Answer

A)  the demand for baskets from the rest of the world.
B)  the supply of baskets from the rest of the world.
C)  the level of inefficiency in the domestic market caused by trade.
D)  the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.E) B) and C)
F) A) and D)

Question 15

Since World War II,GATT has been responsible for reducing the average tariff among member countries from about

Accepted Answer

A)  40 percent to about 5 percent.
B)  40 percent to about 20 percent.
C)  80 percent to about 20 percent.
D)  20 percent to about 10 percent.E) A) and B)
F) A) and C)

Question 16

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

Accepted Answer

A)  domestic producers of the good become better off.
B)  domestic consumers of the good become worse off.
C)  the gains of the winners exceed the losses of the losers.
D)  All of the above are correct.E) B) and D)
F) B) and C)

Question 17

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

Accepted Answer

A) True 
 B)False

Question 18

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) C) and D)
F) None of the above

Question 19

Figure 9-8
 
-Refer to Figure 9-8.Consumer surplus in this market after trade is

Accepted Answer

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

Question 20

Figure 9-3. The domestic country is Jamaica.
 
-Refer to Figure 9-3.The change in total surplus in Jamaica because of trade is

Accepted Answer

A)  $625, and this is an increase in total surplus.
B)  $750, and this is an increase in total surplus.
C)  $625, and this is a decrease in total surplus.
D)  $750, and this is a decrease in total surplus.E) None of the above
F) B) and D)

Exam 9: Application: International Trade

Figure 9-1 -Refer to Figure 9-1.The world price for baskets represents

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Figure 9-5 -Refer to Figure 9-5.Without trade,the equilibrium price of carnations is

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Figure 9-8 -Refer to Figure 9-8.Producer surplus in this market after trade is

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An import quota

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If Belgium exports chocolate to the rest of the world,then Belgian chocolate producers benefit from higher producer surplus,Belgian chocolate consumers are worse off because of lower consumer surplus,and total surplus in Belgium increases because of the exports of chocolate.

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Figure 9-8 -Refer to Figure 9-8.Consumer surplus in this market after trade is

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If the Japanese steel industry subsidizes the steel that it sells to the United States,the

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Figure 9-4 -Refer to Figure 9-4.If this country allows free trade in wagons,

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

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Workers displaced by trade eventually find jobs in

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The North American Free Trade Agreement

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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.

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When a country allows trade and becomes an exporter of a good,which of the following is not a consequence?

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

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Figure 9-3. The domestic country is Jamaica. -Refer to Figure 9-3.The change in total surplus in Jamaica because of trade is

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The before-trade price of fish in Greece is $3.00 per pound.The world price of fish is $5.00 per pound.Greece is a price-taker in the fish market.If Greece allows trade in fish,then Greece will become an

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Since World War II,GATT has been responsible for reducing the average tariff among member countries from about

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At the end of 2004,the United States government changed its policies pertaining to imports of textiles from China,with the result that

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Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

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The rules established under GATT are enforced by the

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