Question 1

When a country allows trade and becomes an exporter of a good,

Accepted Answer

A)   domestic producers become better off, and domestic consumers become worse off.
B)   domestic producers become worse off, and domestic consumers become better off.
C)   domestic producers become better off, but the effect on the well-being of domestic consumers is ambiguous.
D)   domestic consumers become worse off, but the effect on the well-being of domestic producers is ambiguous.E) A) and D)
F) None of the above

Question 2

When a country allows international trade and becomes an importer of a good,

Accepted Answer

A)   domestic producers of the good become better off.
B)   domestic consumers of the good become worse off.
C)   the gains of the winners exceed the losses of the losers.
D)   All of the above are correct.E) B) and C)
F) C) and D)

Question 3

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

Accepted Answer

A)   better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off.
B)   worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off.
C)   worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off.
D)   better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off.E) B) and C)
F) None of the above

Question 4

Which of the following assertions is not correct about the multilateral approach to free trade?

Accepted Answer

A)   The multilateral approach has the potential to result in freer trade than does the unilateral approach.
B)   The multilateral approach may have a political advantage over the unilateral approach.
C)   The multilateral approach is simpler than the unilateral approach.
D)   NAFTA and GATT both represent multilateral approaches to free trade.E) None of the above
F) A) and C)

Question 5

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. 
-Refer to Figure 9-16. The tariff

Accepted Answer

A)   decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F.
B)   decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F.
C)   increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F.
D)   increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F.E) All of the above
F) C) and D)

Question 6

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Accepted Answer

A)   The domestic price of the good increases.
B)   Consumer surplus of domestic consumers increases.
C)   Producer surplus of domestic producers increases.
D)   A deadweight loss is experienced by the domestic country.E) B) and D)
F) A) and C)

Question 7

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

Accepted Answer

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

Question 8

When the nation of Brownland first permitted trade with other nations, domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million.
We can conclude that

Accepted Answer

A)   Brownland became an exporter of wheat.
B)   consumer surplus in Brownland increased by $3 million.
C)   the opening of trade caused the domestic supply curve for wheat in Brownland to shift to the left.
D)   this example is inconsistent with the economic theory of international trade.E) A) and D)
F) B) and D)

Question 9

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 10

Figure 9-9 
-Refer to Figure 9-9. Producer surplus in this market after trade is

Accepted Answer

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

Question 11

Figure 9-13 
-Refer to Figure 9-13. Consumer surplus after trade is

Accepted Answer

A)   $3,600.
B)   $5,400.
C)   $7,200.
D)   $8,100.E) A) and B)
F) B) and D)

Question 12

Economists view free trade as a way to raise living standards both at home and abroad.

Accepted Answer

A) True 
 B)False

Question 13

The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

Accepted Answer

A)   exporting steel and the price per ton in Russia remained at $650.
B)   exporting steel and the price per ton in Russia increased to $1,000.
C)   importing steel and the price per ton in Russia remained at $650.
D)   importing steel and the price per ton in Russia increased to $1,000.E) None of the above
F) C) and D)

Question 14

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Accepted Answer

A)   the domestic price of coffee will be greater than the world price of coffee.
B)   the domestic price of coffee will be lower than the world price of coffee.
C)   the domestic price of coffee will equal the world price of coffee.
D)   The world price of coffee does not matter; the domestic price of coffee prevails.E) A) and B)
F) None of the above

Question 15

Scenario 9-2
-For a small country called Boxland, the equation of the domestic demand curve for cardboard is
  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
  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

Accepted Answer

A)   $88.75.
B)   $102.50.
C)   $122.50.
D)   $135.00.E) A) and B)
F) A) and C)

Question 16

Without free trade, the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 17

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. With free trade, the country imports

Accepted Answer

A)   300 units of the good.
B)   600 units of the good.
C)   900 units of the good.
D)   1,200 units of the good.E) C) and D)
F) A) and B)

Question 18

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 C)
F) A) and B)

Question 19

Figure 9-10. The figure applies to Mexico and the good is rifles. 
-Refer to Figure 9-10. The area bounded by the points (Q0, P0) , (Q2, P1) , and (Q1, P1)  represents

Accepted Answer

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

Question 20

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, how many units will domestic consumers demand and how many units will domestic producers produce?

Accepted Answer

With trade, domestic...

Exam 9: Application: International Trade

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The tariff

Correct Answer
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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 Answer
verified

Without free trade, the domestic price of a good must be equal to the world price of a good.

Correct Answer
verified

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 Answer
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When the nation of Brownland first permitted trade with other nations, domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million. We can conclude that

Correct Answer
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The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

Correct Answer
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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. With free trade, the country imports

Correct Answer
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After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Correct Answer
verified

Figure 9-13 -Refer to Figure 9-13. Consumer surplus after trade is

Correct Answer
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When a nation first begins to trade with other countries and the nation becomes an importer of corn,

Correct Answer
verified

When a country allows international trade and becomes an importer of a good,

Correct Answer
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Which of the following assertions is not correct about the multilateral approach to free trade?

Correct Answer
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Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The area bounded by the points (Q0, P0) , (Q2, P1) , and (Q1, P1) represents

Correct Answer
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Correct Answer
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With trade, domestic...
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When a country allows trade and becomes an exporter of a good,

Correct Answer
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The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

Correct Answer
verified

Economists view free trade as a way to raise living standards both at home and abroad.

Correct Answer
verified

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Correct Answer
verified

Correct Answer
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Figure 9-9 -Refer to Figure 9-9. Producer surplus in this market after trade is

Correct Answer
verified

Exam 9: Application: International Trade

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The tariff

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

Without free trade, the domestic price of a good must be equal to the world price of a good.

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 the nation of Brownland first permitted trade with other nations, domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million. We can conclude that

Correct AnswerverifiedShow Answer

The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

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. With free trade, the country imports

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After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

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Figure 9-13 -Refer to Figure 9-13. Consumer surplus after trade is

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

Correct AnswerverifiedShow Answer

When a country allows international trade and becomes an importer of a good,

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Which of the following assertions is not correct about the multilateral approach to free trade?

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Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. The area bounded by the points (Q0, P0) , (Q2, P1) , and (Q1, P1) represents

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWith trade, domestic...View AnswerShow Answer

When a country allows trade and becomes an exporter of a good,

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The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

Correct AnswerverifiedShow Answer

Economists view free trade as a way to raise living standards both at home and abroad.

Correct AnswerverifiedShow Answer

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 9-9 -Refer to Figure 9-9. Producer surplus in this market after trade is

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With trade, domestic...
View Answer

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