Question 1

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

Accepted Answer

A) True 
 B)False

Question 2

Figure 9-5 
-Refer to Figure 9-5.If this country allows free trade in wagons,

Accepted Answer

A)   consumers will gain and producers will lose.
B)   consumers will lose and producers will gain.
C)   both consumers and producers will gain.
D)   both consumers and producers will lose.E) A) and B)
F) A) and C)

Question 3

Figure 9-3.The domestic country is China. 
-Refer to Figure 9-3.With trade,producer surplus in China is

Accepted Answer

A)   $800.
B)   $1,200.
C)   $1,800.
D)   $2,700.E) None of the above
F) A) and B)

Question 4

The world price of cotton is the highest price of cotton observed anywhere in the world.

Accepted Answer

A) True 
 B)False

Question 5

In 2001,the U.S.agreed to support China's entry into the World Trade Organization.Under a special "safeguard provision" of that agreement,American companies or workers harmed by imports from China can ask the government for protection by demonstrating that

Accepted Answer

A)   imports from China pose a hazard to the health of American citizens.
B)   China is competing unfairly or selling its products at less than their true cost.
C)   products that are allegedly "made in China" are actually made in a different country.
D)   American producers have suffered a "market disruption" or a "surge" in imports from China.E) None of the above
F) B) and C)

Question 6

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

Accepted Answer

A)   consumer surplus and producer surplus both increase.
B)   consumer surplus and producer surplus both decrease.
C)   consumer surplus increases and producer surplus decreases.
D)   consumer surplus decreases and producer surplus increases.E) A) and B)
F) None of the above

Question 7

Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. 
-Refer to Figure 9-8.The price corresponding to the horizontal dotted line on the graph represents the price of cars

Accepted Answer

A)   after trade is allowed.
B)   before trade is allowed.
C)   that maximizes total surplus when trade is allowed.
D)   that minimizes the well-being of domestic car producers when trade is allowed.E) B) and C)
F) All of the above

Question 8

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

Accepted Answer

A) True 
 B)False

Question 9

In a 2007 New York Times article Paul Krugman wrote that

Accepted Answer

A)   the infant-industry argument works well as an argument in favor of protection for the U.S.steel industry.
B)   the negative effects of third world exports on U.S.wages may be increasing.
C)   there are social gains to the U.S.from free trade.
D)   high wage countries account for a growing share of U.S.imports of manufactured goods.E) B) and D)
F) None of the above

Question 10

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) A) and B)
F) A) and C)

Question 11

A country has a comparative advantage in a product if the world price is

Accepted Answer

A)   lower than that country's domestic price without trade.
B)   higher than that country's domestic price without trade.
C)   equal to that country's domestic price without trade.
D)   not subject to manipulation by organizations that govern international trade.E) A) and B)
F) None of the above

Question 12

Figure 9-6 
-Refer to Figure 9-6.When the tariff is imposed,domestic consumers

Accepted Answer

A)   lose by $500.
B)   lose by $900.
C)   gain by $500.
D)   gain by $900.E) B) and D)
F) A) and D)

Question 13

In September 2009,President Obama imposed a 35 percent tariff on

Accepted Answer

A)   tires imported from South Korea.
B)   tires imported from China.
C)   automobiles imported from South Korea.
D)   beef imported from Canada.E) A) and B)
F) None of the above

Question 14

When,in our analysis of the gains and losses from international trade,we assume that a country is small,we are in effect assuming that the country

Accepted Answer

A)   cannot experience significant gains or losses by trading with other countries.
B)   cannot have a significant comparative advantage over other countries.
C)   cannot affect world prices by trading with other countries.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 15

A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   $400 and producer surplus is $200.
B)   $400 and producer surplus is $800.
C)   $1,600 and producer surplus is $200.
D)   $1,600 and producer surplus is $800.E) A) and B)
F) B) and D)

Question 17

Figure 9-17 
-Refer to Figure 9-17.When comparing no trade to free trade,the gains from trade amount to

Accepted Answer

A)   $400.
B)   $600.
C)   $750.
D)   $1,000.E) C) and D)
F) B) and C)

Question 18

When a country allows international trade and becomes an exporter 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) A) and D)
F) A) and C)

Question 19

Figure 9-20
The figure illustrates the market for rice in Vietnam. 
-Refer to Figure 9-20.Given that Vietnam is a small country,it is apparent from the figure that

Accepted Answer

A)   Vietnam will export rice if trade is allowed.
B)   Vietnam will import rice if trade is allowed.
C)   Vietnam has nothing to gain either by importing or exporting rice.
D)   the world price will fall if Vietnam begins to allow its citizens to trade with other countries.E) B) and C)
F) A) and D)

Question 20

The nation of Spritzland used to prohibit international trade,but now trade is allowed,and Spritzland is exporting wristwatches.Relative to the previous no-trade situation,total surplus in the market for wristwatches in Spritzland has increased.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

In a 2007 New York Times article Paul Krugman wrote that

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

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Figure 9-3.The domestic country is China. -Refer to Figure 9-3.With trade,producer surplus in China is

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In 2001,the U.S.agreed to support China's entry into the World Trade Organization.Under a special "safeguard provision" of that agreement,American companies or workers harmed by imports from China can ask the government for protection by demonstrating that

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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

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Figure 9-17 -Refer to Figure 9-17.When comparing no trade to free trade,the gains from trade amount to

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The nation of Spritzland used to prohibit international trade,but now trade is allowed,and Spritzland is exporting wristwatches.Relative to the previous no-trade situation,total surplus in the market for wristwatches in Spritzland has increased.

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If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

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Figure 9-5 -Refer to Figure 9-5.If this country allows free trade in wagons,

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Figure 9-6 -Refer to Figure 9-6.When the tariff is imposed,domestic consumers

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When,in our analysis of the gains and losses from international trade,we assume that a country is small,we are in effect assuming that the country

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A country has a comparative advantage in a product if the world price is

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

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Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8.The price corresponding to the horizontal dotted line on the graph represents the price of cars

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In September 2009,President Obama imposed a 35 percent tariff on

Correct AnswerverifiedShow Answer

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

Correct AnswerverifiedShow Answer

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20.Given that Vietnam is a small country,it is apparent from the figure that

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A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

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The world price of cotton is the highest price of cotton observed anywhere in the world.

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

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