Question 1

Assume, for Colombia, that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Accepted Answer

A)   other countries have a comparative advantage over Colombia in producing coffee.
B)   Colombia has an absolute advantage over other countries in producing coffee.
C)   Colombia will export coffee if international trade is allowed.
D)   Colombian coffee buyers will become worse off if international trade is allowed.E) A) and D)
F) A) and C)

Question 2

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals

Accepted Answer

A)   $100.
B)   $200.
C)   $400.
D)   $500.E) B) and C)
F) All of the above

Question 3

Figure 9-4. The domestic country is Nicaragua. 
-Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is

Accepted Answer

A)   $375.
B)   $2,000.
C)   $2,250.
D)   $8,700.E) A) and B)
F) B) and D)

Question 4

Figure 9-25
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. 
-Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)   $50.
B)   $100.
C)   $150.
D)   $200.E) B) and C)
F) A) and C)

Question 5

Figure 9-21
The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-21. With free trade allowed, this country

Accepted Answer

A)   exports 200 units of the good.
B)   exports 400 units of the good.
C)   imports 400 units of the good.
D)   exports 800 units of the good.E) B) and C)
F) All of the above

Question 6

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

Question 7

Figure 9-21
The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-21. With free trade, the domestic price and domestic quantity demanded are

Accepted Answer

A)   $30 and 1,200.
B)   $40 and 800.
C)   $30 and 800.
D)   $40 and 1,600.E) A) and B)
F) A) and C)

Question 8

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an

Accepted Answer

A)   importer of fish and the price of fish in Germany will be $6.00.
B)   importer of fish and the price of fish in Germany will be $8.00.
C)   exporter of fish and the price of fish in Germany will be $6.00.
D)   exporter of fish and the price of fish in Germany will be $8.00.E) A) and B)
F) A) and C)

Question 9

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

Accepted Answer

A)   government's revenue from the tariff.
B)   the deadweight loss of the tariff.
C)   the increase in producer surplus, relative to the free-trade situation, as a result of the tariff.
D)   None of the above is correct.E) None of the above
F) B) and D) D

Question 10

Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

Accepted Answer

A) True 
 B)False  False

Question 11

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. 
-Refer to Figure 9-27. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

With trade...

Question 12

Figure 9-23
The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. 
-Refer to Figure 9-23. Producer surplus with free trade is

Accepted Answer

A)   $200.
B)   $450.
C)   $630.
D)   $1,080E) A) and D)
F) C) and D)

Question 13

GATT is an example of a successful unilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 14

Figure 9-1
The figure illustrates the market for coffee in Guatemala. 
-Refer to Figure 9-1. When trade is allowed,

Accepted Answer

A)   Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off.
B)   Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off.
C)   both Guatemalan producers and consumers of coffee become better off.
D)   both Guatemalan producers and consumers of coffee become worse off.E) B) and C)
F) A) and D)

Question 15

Figure 9-20
The figure illustrates the market for rice in Vietnam. 
-Refer to Figure 9-20. Vietnam's gains from trade in rice amount to

Accepted Answer

A)   750.
B)   1,000.
C)   1,250.
D)   1,500.E) B) and D)
F) A) and D)

Question 16

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

A)   consumer surplus increases and total surplus increases in the market for that good.
B)   consumer surplus increases and total surplus decreases in the market for that good.
C)   consumer surplus decreases and total surplus increases in the market for that good.
D)   consumer surplus decreases and total surplus decreases in the market for that good.E) B) and C)
F) A) and D) D

Question 17

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

Accepted Answer

A)   $11, with 200 tricycles produced in this country and another 320 tricycles imported.
B)   $11, with 360 tricycles produced in this country and another 160 tricycles imported.
C)   $19, with 200 tricycles produced in this country and another 160 tricycles imported.
D)   $19, with 360 tricycles produced in this country and another 320 tricycles imported.E) None of the above
F) A) and B)

Question 18

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

Accepted Answer

A)   $600.
B)   $1,200.
C)   $1,800.
D)   $2,250.E) A) and D)
F) None of the above

Question 19

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

Question 20

Figure 9-13 
-Refer to Figure 9-13. With trade, producer surplus is

Accepted Answer

A)   $900.
B)   $1,100.
C)   $1,500.
D)   $2,000.E) A) and C)
F) B) and C)

Exam 9: Application: International Trade

Assume, for Colombia, that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Correct AnswerverifiedShow Answer

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals

Correct AnswerverifiedShow Answer

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is

Correct AnswerverifiedShow Answer

Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. The amount of revenue collected by the government from the tariff is

Correct AnswerverifiedShow Answer

Figure 9-21 The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-21. With free trade allowed, this country

Correct AnswerverifiedShow Answer

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

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Figure 9-21 The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-21. With free trade, the domestic price and domestic quantity demanded are

Correct AnswerverifiedShow Answer

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price of wheat in Ivory Coast will increase, but by less than $1.

Correct AnswerverifiedFalse

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Correct AnswerverifiedWith trade...View AnswerShow Answer

Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. Producer surplus with free trade is

Correct AnswerverifiedShow Answer

GATT is an example of a successful unilateral approach to achieving free trade.

Correct AnswerverifiedShow Answer

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade is allowed,

Correct AnswerverifiedShow Answer

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. Vietnam's gains from trade in rice amount to

Correct AnswerverifiedShow Answer

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The rules established under GATT are enforced by the

Correct AnswerverifiedShow Answer

Figure 9-13 -Refer to Figure 9-13. With trade, producer surplus is

Correct AnswerverifiedShow Answer

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D

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False

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With trade...
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D

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