Question 1

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The deadweight loss caused by the tariff is

Accepted Answer

A)   $6,000.
B)   $9,000.
C)   $12,000.
D)   $15,000.E) None of the above
F) C) and D)

Question 2

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 D)
F) A) and B)

Question 3

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Accepted Answer

A) True 
 B)False

Question 4

Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. 
-Refer to Figure 9-29. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

Accepted Answer

With trade, consumer...

Question 5

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Accepted Answer

A)   export copper.
B)   import copper.
C)   neither export nor import copper, since that country cannot gain from trade.
D)   neither export nor import copper, since that country already produces copper at a low cost compared to other countries.E) A) and D)
F) None of the above

Question 6

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

Accepted Answer

A)   the country becomes an importer of the good as a result.
B)   the world price exceeds the domestic price of the good that prevailed before international trade was allowed.
C)   other countries have a comparative advantage, relative to the country in question, in producing the good.
D)   total surplus does not change as a result.E) B) and C)
F) A) and D)

Question 7

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

Accepted Answer

A)   exports 160 tricycles.
B)   exports 320 tricycles.
C)   imports 160 tricycles.
D)   imports 320 tricycles.E) None of the above
F) A) and D)

Question 8

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 consumer surplus with trade?

Accepted Answer

A)   Consumer surplus with trade = 1/2) Q0) P1 - P0) .
B)   Consumer surplus with trade = 1/2) Q0) P3 - P0) .
C)   Consumer surplus with trade = 1/2) Q1) P3 - P1) .
D)   None of the above is correct.E) A) and B)
F) None of the above

Question 9

When a government imposes a tariff on a product, the domestic price will equal the world price.

Accepted Answer

A) True 
 B)False

Question 10

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)   $6,000.
B)   $9,000.
C)   $12,000.
D)   $15,000.E) A) and B)
F) B) and C)

Question 11

If the Korean 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 Korean 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 Korea.E) None of the above
F) A) and B)

Question 12

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles. 
-Refer to Figure 9-19. With free trade, consumer surplus in the textile market amounts to

Accepted Answer

A)   $210.
B)   $320.
C)   $405.
D)   $910.E) A) and B)
F) All of the above

Question 13

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market. 
-Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric...

Question 14

Trade enhances the economic well-being of a nation in the sense that

Accepted Answer

A)   both domestic producers and domestic consumers of a good become better off with trade, regardless of whether the nation imports or exports the good in question.
B)   the gains of domestic producers of a good exceed the losses of domestic consumers of a good, regardless of whether the nation imports or exports the good in question.
C)   trade results in an increase in total surplus.
D)   trade puts downward pressure on the prices of all goods.E) B) and D)
F) All of the above

Question 15

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

Accepted Answer

A)   $14,400.
B)   $16,800.
C)   $21,600.
D)   $24,800.E) A) and D)
F) None of the above

Question 16

When a country that exported 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) All of the above
F) A) and B)

Question 17

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

Accepted Answer

A)   Wheatland has a comparative advantage, relative to other countries, in producing corn.
B)   other countries have a comparative advantage, relative to Wheatland, in producing fish.
C)   the price of fish in Wheatland exceeds the world price of fish.
D)   if Wheatland were to allow trade, it would import corn.E) A) and B)
F) All of the above

Question 18

Figure 9-17 
-Refer to Figure 9-17. With free trade, the country imports

Accepted Answer

A)   16 units of the good.
B)   24 units of the good.
C)   60 units of the good.
D)   64 units of the good.E) B) and C)
F) A) and D)

Question 19

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

Accepted Answer

A)   national-security argument.
B)   infant-industry argument.
C)   unfair-competition argument.
D)   jobs argument.E) None of the above
F) B) and C)

Question 20

Figure 9-15 
-Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Accepted Answer

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

Exam 9: Application: International Trade

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

Correct Answer
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Figure 9-15 -Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Correct Answer
verified

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19. With free trade, consumer surplus in the textile market amounts to

Correct Answer
verified

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 consumer surplus with trade?

Correct Answer
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Correct Answer
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Figure 9-12 -Refer to Figure 9-12. Producer surplus before trade is

Correct Answer
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Figure 9-17 -Refer to Figure 9-17. With free trade, the country imports

Correct Answer
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If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Correct Answer
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For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Correct Answer
verified

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

Correct Answer
verified

Figure 9-29 The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. -Refer to Figure 9-29. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

Correct Answer
verified
With trade, consumer...
View Answer

Trade enhances the economic well-being of a nation in the sense that

Correct Answer
verified

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

Correct Answer
verified

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

Correct Answer
verified

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Correct Answer
verified
The equilibrium pric...
View Answer

When a government imposes a tariff on a product, the domestic price will equal the world price.

Correct Answer
verified

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The deadweight loss caused by the tariff is

Correct Answer
verified

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

Correct Answer
verified

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

Correct Answer
verified

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

Correct Answer
verified

Exam 9: Application: International Trade

Domestic producers of a good become better off, and domestic consumers of a good become worse off, when a country begins allowing international trade in that good and

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Correct AnswerverifiedShow Answer

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19. With free trade, consumer surplus in the textile market amounts to

Correct AnswerverifiedShow Answer

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 consumer surplus with trade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. With free trade, the country imports

Correct AnswerverifiedShow Answer

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Correct AnswerverifiedShow Answer

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-29 The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. -Refer to Figure 9-29. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

Correct AnswerverifiedWith trade, consumer...View AnswerShow Answer

Trade enhances the economic well-being of a nation in the sense that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

Correct AnswerverifiedShow Answer

Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

When a government imposes a tariff on a product, the domestic price will equal the world price.

Correct AnswerverifiedShow Answer

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The deadweight loss caused by the tariff is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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With trade, consumer...
View Answer

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The equilibrium pric...
View Answer

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