Question 1

​Suppose that Honduras opens its markets to international trade. As a result of this, the domestic price of coffee decreases. We can conclude that

Accepted Answer

A)  Honduras has a comparative advantage in the production of coffee.
B)  Honduras has begun to import coffee into the country.
C)  ​the price of coffee in Honduras prior to the opening of trade was lower than the world price.
D)  ​Honduras should specialize in the production of coffee.E) A) and B)
F) B) and C)

Question 2

Figure 9-17 
-Refer to Figure 9-17. With trade and a tariff, total surplus is

Accepted Answer

A)  $1,224.
B)  $1,416.
C)  $1,512.
D)  $1,704.E) C) and D)
F) All of the above

Question 3

The "unfair-competition" argument might be cited by an American who believes that

Accepted Answer

A)  almost every country has a comparative advantage, relative to the United States, in producing almost all goods.
B)  young industries should be protected against foreign competition until they become profitable.
C)  the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost.
D)  the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.E) All of the above
F) A) and B)

Question 4

In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Accepted Answer

A)  abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples.
B)  abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples.
C)  abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples.
D)  abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples.E) B) and D)
F) A) and D)

Question 5

Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This situation suggests

Accepted Answer

A)  Russia has a comparative advantage over Brazil in producing coffee, and Ireland has a comparative advantage over Russia in producing sunflower seeds.
B)  Russia has a comparative advantage over Ireland in producing sunflower seeds, and Brazil has a comparative advantage over Russia in producing coffee.
C)  Russia has an absolute advantage over Ireland in producing sunflower seeds, and Brazil has an absolute advantage over Russia in producing coffee.
D)  Russia has an absolute advantage over Brazil in producing coffee, and Ireland has an absolute advantage over Russia in producing sunflower seeds.E) A) and B)
F) A) and C)

Question 6

​Figure 9-26
The diagram below illustrates the market for baseballs in the U.S. 
-Refer to figure 9-26. After opening the U.S. baseball market to international trade, total surplus is

Accepted Answer

A)  ​$4800.
B)  ​$5400.
C)  ​$6000.
D)  ​$1200E) B) and D)
F) B) and C)

Question 7

In 2008, the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy. Of those surveyed,

Accepted Answer

A)  57 percent said free international trade helped the economy.
B)  26 percent said free international trade helped the economy.
C)  30 percent said free international trade hurt the economy.
D)  16 percent said free international trade hurt the economy.E) All of the above
F) C) and D)

Question 8

Figure 9-15 
-Refer to Figure 9-15. Producer surplus with the tariff is

Accepted Answer

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

Question 9

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

Accepted Answer

A)  Ireland has a comparative advantage relative to the United States in producing pineapples, and China has a comparative advantage relative to Ireland in producing beer.
B)  Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantage relative to Ireland in producing pineapples.
C)  Ireland has an absolute advantage relative to the United States in producing pineapples, and China has an absolute advantage relative to Ireland in producing beer.
D)  Ireland has an absolute advantage relative to China in producing beer, and the United States has an absolute advantage relative to Ireland in producing pineapples.E) A) and B)
F) B) and C)

Question 10

Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market. 
-Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how much is producer surplus?

Accepted Answer

With trade...

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Suppose a country begins to allow international trade in steel. Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?

Accepted Answer

A)  The sum of consumer surplus and producer surplus for domestic traders of steel increases.
B)  The quantity of steel demanded by domestic consumers increases.
C)  Domestic producers of steel receive a higher price for steel.
D)  The losses of the losers exceed the gains of the winners.E) None of the above
F) C) and D)

Question 14

When a country takes a unilateral approach to free trade, it

Accepted Answer

A)  removes trade restrictions on its own.
B)  reduces its trade restrictions while other countries do the same.
C)  does not remove trade restrictions no matter what other countries do.
D)  is willing to trade with multiple countries at once.E) All of the above
F) C) and D)

Question 15

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 C)
F) A) and D)

Question 16

A major difference between tariffs and import quotas is that

Accepted Answer

A)  tariffs create deadweight losses, but import quotas do not.
B)  tariffs help domestic consumers, and import quotas help domestic producers.
C)  tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import.
D)  All of the above are correct.E) None of the above
F) A) and B)

Question 17

Figure 9-24
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. 
-Refer to Figure 9-24. Suppose the government imposes a tariff of $10 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) None of the above
F) B) and D)

Question 18

Figure 9-17 
-Refer to Figure 9-17. With trade and a tariff, consumer surplus is

Accepted Answer

A)  $808 and producer surplus is $200.
B)  $808 and producer surplus is $392.
C)  $1,024 and producer surplus is $200.
D)  $1,024 and producer surplus is $392.E) A) and C)
F) B) and C)

Question 19

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

Accepted Answer

A)  this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade.
B)  this is an indication that the nation has a comparative advantage in producing soybeans.
C)  the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off.
D)  All of the above are correct.E) C) and D)
F) B) and C)

Question 20

Import quotas and tariffs both cause the quantity of imports to fall.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

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

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Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, consumer surplus is

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Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, total surplus is

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The "unfair-competition" argument might be cited by an American who believes that

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Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This situation suggests

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In 2008, the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy. Of those surveyed,

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

Correct AnswerverifiedShow Answer

​Suppose that Honduras opens its markets to international trade. As a result of this, the domestic price of coffee decreases. We can conclude that

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Figure 9-15 -Refer to Figure 9-15. Producer surplus with the tariff is

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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.

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Suppose a country begins to allow international trade in steel. Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?

Correct AnswerverifiedShow Answer

Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The amount of revenue collected by the government from the tariff is

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When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

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Import quotas and tariffs both cause the quantity of imports to fall.

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Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how much is producer surplus?

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​Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to figure 9-26. After opening the U.S. baseball market to international trade, total surplus is

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Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

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When a country takes a unilateral approach to free trade, it

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In the market for apples in a certain country, consumer surplus increases and total surplus increases when that country

Correct AnswerverifiedShow Answer

A major difference between tariffs and import quotas is that

Correct AnswerverifiedShow Answer

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Suppose that Honduras opens its markets to international trade. As a result of this, the domestic price of coffee decreases. We can conclude that

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With trade...
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Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to figure 9-26. After opening the U.S. baseball market to international trade, total surplus is

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