Question 1

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. When the tariff is imposed, domestic consumers

Accepted Answer

A)   lose by $200.
B)   lose by $450.
C)   gain by $200.
D)   gain by $450.E) C) and D)
F) B) and C)

Question 2

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Accepted Answer

A)   Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off.
B)   Turkish consumers of wheat become worse off and Turkish producers of wheat become better off.
C)   Turkish consumers of wheat become better off and Turkish producers of wheat become worse off.
D)   Turkish consumers of wheat become better off and Turkish producers of wheat become better off.E) B) and D)
F) All of the above

Question 3

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

Accepted Answer

A)   the gains of the winners exceed the losses of the losers.
B)   everyone in an economy gains from trade.
C)   since countries can choose what products to trade, they will pick those products that are most beneficial to society.
D)   the nation joins the international community when it begins to engage in trade.E) B) and D)
F) A) and B)

Question 4

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) A) and C)
F) A) and D)

Question 5

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 6

The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

Accepted Answer

A)   Farmland has a comparative advantage, relative to other countries, in producing beef.
B)   other countries have an absolute advantage, relative to Farmland, in producing beef.
C)   the price of beef in Farmland exceeds the world price of beef.
D)   if Farmland were to allow trade, it would export pepper.E) A) and D)
F) All of the above

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Figure 9-17 
-Refer to Figure 9-17. With free trade, total surplus is

Accepted Answer

A)   $600.
B)   $1,200.
C)   $1,800.
D)   $2,400.E) None of the above
F) All of the above

Question 9

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. With free trade, the domestic price and domestic quantity demanded are

Accepted Answer

A)   $90 and 5.
B)   $90 and 10.
C)   $120 and 5.
D)   $120 and 18.E) C) and D)
F) A) and C)

Question 10

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by

Accepted Answer

A)   $640.
B)   $1,280.
C)   $2,560.
D)   $3,840.E) All of the above
F) C) and D)

Question 11

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. With trade and a tariff, total surplus is

Accepted Answer

A)   $96,000.
B)   $114,000.
C)   $120,000.
D)   $126,000.E) A) and B)
F) A) and D)

Question 12

Figure 9-15 
-Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Accepted Answer

A)   Q2 - Q1.
B)   Q3 - Q2.
C)   Q4 - Q3.
D)   Q4 - Q3 + Q2 - Q1.E) B) and D)
F) B) and C)

Question 13

A quota is

Accepted Answer

A)   a tax placed on imports.
B)   a limit on the quantity of imports.
C)   a tax on exports to other countries.
D)   an excess of exports over imports.E) A) and B)
F) B) and D)

Question 14

Figure 9-13 
-Refer to Figure 9-13. With trade, domestic production and domestic consumption, respectively, are

Accepted Answer

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

Question 15

Both tariffs and import quotas

Accepted Answer

A)   increase the quantity of imports and raise the domestic price of the good.
B)   increase the quantity of imports and lower the domestic price of the good.
C)   decrease the quantity of imports and raise the domestic price of the good.
D)   decrease the quantity of imports and lower the domestic price of the good.E) B) and C)
F) A) and D)

Question 16

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

Accepted Answer

A)   may prompt Russian farmers to invoke the infant-industry argument.
B)   increase the consumer surplus of Russian buyers of wheat.
C)   decrease the total surplus of the Russian people.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 17

Figure 9-4. The domestic country is Nicaragua. 
-Refer to Figure 9-4. The change in total surplus in Nicaragua 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) A) and B)
F) B) and D)

Question 18

The history of the textile industry raises important questions for economic policy.

Accepted Answer

A) True 
 B)False

Question 19

How does an import quota differ from an equivalent tariff?

Accepted Answer

Both the import quota and the tariff rai...

Question 20

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Accepted Answer

A)   because it is impossible to analyze the gains and losses from international trade without making this assumption.
B)   because then we can assume that world prices of goods are unaffected by that country's participation in international trade.
C)   in order to rule out the possibility of tariffs or quotas.
D)   All of the above are correct.E) None of the above
F) A) and D)

Exam 9: Application: International Trade

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

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The history of the textile industry raises important questions for economic policy.

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Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

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Figure 9-13 -Refer to Figure 9-13. With trade, domestic production and domestic consumption, respectively, are

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Both tariffs and import quotas

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Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When the tariff is imposed, domestic consumers

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

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The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

Correct AnswerverifiedShow Answer

How does an import quota differ from an equivalent tariff?

Correct AnswerverifiedBoth the import quota and the tariff rai...View AnswerShow Answer

Figure 9-17 -Refer to Figure 9-17. With free trade, total surplus is

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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. With trade and a tariff, total surplus is

Correct AnswerverifiedShow Answer

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. The change in total surplus in Nicaragua because of trade is

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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. With free trade, the domestic price and domestic quantity demanded are

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A quota is

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Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Correct AnswerverifiedShow Answer

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Correct AnswerverifiedShow Answer

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With trade...
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Both the import quota and the tariff rai...
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