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For Country A,the world price of soybeans exceeds the domestic equilibrium price of soybeans.As a result,international trade allows buyers of soybeans in Country A to experience greater consumer surplus than they otherwise would experience.

A) True
B) False

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Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus,increases producer surplus,and decreases total surplus. B) It decreases consumer surplus,increases producer surplus,and increases total surplus. C) It decreases consumer surplus,decreases producer surplus,and decreases total surplus. D) It increases consumer surplus,increases producer surplus,and increases total surplus. , where Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus,increases producer surplus,and decreases total surplus. B) It decreases consumer surplus,increases producer surplus,and increases total surplus. C) It decreases consumer surplus,decreases producer surplus,and decreases total surplus. D) It increases consumer surplus,increases producer surplus,and increases total surplus. represents the domestic quantity of cardboard demanded,in tons,and Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus,increases producer surplus,and decreases total surplus. B) It decreases consumer surplus,increases producer surplus,and increases total surplus. C) It decreases consumer surplus,decreases producer surplus,and decreases total surplus. D) It increases consumer surplus,increases producer surplus,and increases total surplus. represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus,increases producer surplus,and decreases total surplus. B) It decreases consumer surplus,increases producer surplus,and increases total surplus. C) It decreases consumer surplus,decreases producer surplus,and decreases total surplus. D) It increases consumer surplus,increases producer surplus,and increases total surplus. , where Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus,increases producer surplus,and decreases total surplus. B) It decreases consumer surplus,increases producer surplus,and increases total surplus. C) It decreases consumer surplus,decreases producer surplus,and decreases total surplus. D) It increases consumer surplus,increases producer surplus,and increases total surplus. represents the domestic quantity of cardboard supplied,in tons,and Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus,increases producer surplus,and decreases total surplus. B) It decreases consumer surplus,increases producer surplus,and increases total surplus. C) It decreases consumer surplus,decreases producer surplus,and decreases total surplus. D) It increases consumer surplus,increases producer surplus,and increases total surplus. again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland?


A) It decreases consumer surplus,increases producer surplus,and decreases total surplus.
B) It decreases consumer surplus,increases producer surplus,and increases total surplus.
C) It decreases consumer surplus,decreases producer surplus,and decreases total surplus.
D) It increases consumer surplus,increases producer surplus,and increases total surplus.

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

Correct Answer

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A tariff on a product makes


A) domestic sellers better off and domestic buyers worse off.
B) domestic sellers worse off and domestic buyers worse off.
C) domestic sellers better off and domestic buyers better off.
D) domestic sellers worse off and domestic buyers better off.

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

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Figure 9-10.The figure applies to Mexico and the good is rifles. Figure 9-10.The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10.The area bounded by the points (Q<sub>0</sub>,P<sub>0</sub>) ,(Q<sub>2</sub>,P<sub>1</sub>) ,and (Q<sub>1</sub>,P<sub>1</sub>) represents A) Mexico's gains from trade. B) the amount by which Mexico's gain in producer surplus exceeds its loss in consumer surplus due to trade. C) Mexico's loss in total surplus due to trade. D) All of the above are correct. -Refer to Figure 9-10.The area bounded by the points (Q0,P0) ,(Q2,P1) ,and (Q1,P1) represents


A) Mexico's gains from trade.
B) the amount by which Mexico's gain in producer surplus exceeds its loss in consumer surplus due to trade.
C) Mexico's loss in total surplus due to trade.
D) All of the above are correct.

E) All of the above
F) None of the above

Correct Answer

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Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

A) True
B) False

Correct Answer

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Most economists support the infant-industry argument because it is so easy to implement in practice.

A) True
B) False

Correct Answer

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Figure 9-20 The figure illustrates the market for rice in Vietnam. Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20.With trade,Vietnamese rice producers will produce A) 2,000 units of rice and their producer surplus will be 4,000. B) 2,000 units of rice and their producer surplus will be 7,500. C) 3,000 units of rice and their producer surplus will be 7,500. D) 3,000 units of rice and their producer surplus will be 9,000. -Refer to Figure 9-20.With trade,Vietnamese rice producers will produce


A) 2,000 units of rice and their producer surplus will be 4,000.
B) 2,000 units of rice and their producer surplus will be 7,500.
C) 3,000 units of rice and their producer surplus will be 7,500.
D) 3,000 units of rice and their producer surplus will be 9,000.

E) B) and D)
F) None of the above

Correct Answer

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Figure 9-1 The figure illustrates the market for wool in Scotland. Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1.In the absence of trade,total surplus in the Scotland wool market amounts to A) 187.5 B) 275.0 C) 378.5 D) 412.5 -Refer to Figure 9-1.In the absence of trade,total surplus in the Scotland wool market amounts to


A) 187.5
B) 275.0
C) 378.5
D) 412.5

E) None of the above
F) All of the above

Correct Answer

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The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.We can conclude that Aquilonia's new free-trade policy has


A) increased consumer surplus and producer surplus in the incense market.
B) increased consumer surplus in the steel market and left producer surplus in the rug market unchanged.
C) decreased consumer surplus in both the steel and rug markets.
D) decreased consumer surplus in the steel market and increased total surplus in the incense market.

E) A) and D)
F) B) and D)

Correct Answer

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Figure 9-13 Figure 9-13 -Refer to Figure 9-13.With trade,domestic production and domestic consumption,respectively,are A) 600 and 600. B) 600 and 300. C) 300 and 900. D) 600 and 900. -Refer to Figure 9-13.With trade,domestic production and domestic consumption,respectively,are


A) 600 and 600.
B) 600 and 300.
C) 300 and 900.
D) 600 and 900.

E) None of the above
F) A) and B)

Correct Answer

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The nation of Pineland forbids international trade.In Pineland,you can buy 1 pound of fish for 2 pounds of pineapples.In other countries,you can buy 1 pound of fish for 1.5 pounds of pineapples.These facts indicate that


A) Pineland has a comparative advantage,relative to other countries,in producing fish.
B) other countries have a comparative advantage,relative to Pineland,in producing pineapples.
C) the price of pineapples in Pineland exceeds the world price of pineapples.
D) if Pineland were to allow trade,it would import fish.

E) A) and D)
F) All of the above

Correct Answer

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Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries.The likely flaw in Congressman Smith's reasoning is that he ignores the fact that


A) there is no evidence that any worker ever lost his or her job because of free trade.
B) unemployment of labor is not a serious problem relative to other economic problems.
C) the gains from trade are based on comparative advantage.
D) the gains from trade are based on absolute advantage.

E) B) and C)
F) All of the above

Correct Answer

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A tariff is a tax placed on


A) an exported good and it lowers the domestic price of the good below the world price.
B) an exported good and it ensures that the domestic price of the good stays the same as the world price.
C) an imported good and it lowers the domestic price of the good below the world price.
D) an imported good and it raises the domestic price of the good above the world price.

E) B) and D)
F) A) and B)

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Free trade causes job losses in industries in which a country does not have a comparative advantage,but it also causes job gains in industries in which the country has a comparative advantage.

A) True
B) False

Correct Answer

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Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

A) True
B) False

Correct Answer

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Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. , where Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. represents the domestic quantity of cardboard demanded,in tons,and Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. , where Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. represents the domestic quantity of cardboard supplied,in tons,and Scenario 9-2 For a small country called Boxland,the equation of the domestic demand curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard. For Boxland,the equation of the domestic supply curve for cardboard is <sub> </sub> <sub> </sub> , where represents the domestic quantity of cardboard supplied,in tons,and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then Boxland's gains from international trade in cardboard amount to


A) $88.75.
B) $102.50.
C) $122.50.
D) $135.00.

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

Correct Answer

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When the nation of Mooseland first permitted trade with other nations,domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million.We can conclude that


A) Mooseland became an exporter of sugar.
B) the overall economic well-being of participants in the sugar market in Mooseland fell because of trade.
C) consumer surplus in Mooseland increased by $7 million.
D) the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

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

Correct Answer

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Figure 9-7.The figure applies to the nation of Wales and the good is cheese. Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are A) P<sub>1</sub> and Q<sub>2.</sub> B) P<sub>1</sub> and Q<sub>1</sub>. C) P<sub>0</sub> and Q<sub>0</sub>. D) P<sub>0</sub> and Q<sub>1</sub>. -Refer to Figure 9-7.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are


A) P1 and Q2.
B) P1 and Q1.
C) P0 and Q0.
D) P0 and Q1.

E) None of the above
F) A) and B)

Correct Answer

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If a country allows free trade and imports cars,then it is the case that the gains to domestic producers outweigh the losses to domestic consumers.

A) True
B) False

Correct Answer

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Tariffs and quotas are different in the sense that


A) tariffs cause deadweight losses,while quotas do not cause deadweight losses.
B) tariffs raise revenue for the government,while quotas do not raise revenue for the government.
C) tariffs enhance the well-being of domestic consumers,while quotas diminish the well-being of domestic consumers.
D) tariffs enhance the well-being of domestic producers,while quotas diminish the well-being of domestic producers.

E) None of the above
F) All of the above

Correct Answer

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