Question 1

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. With trade and a tariff, total surplus is

Accepted Answer

A)   $750.
B)   $900.
C)   $950.
D)   $1,550.E) None of the above
F) A) and D)

Question 2

When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

Accepted Answer

A)   The price paid by domestic consumers of the good increases.
B)   The price received by domestic producers of the good increases.
C)   The losses of domestic consumers of the good exceed the gains of domestic producers of the good.
D)   The gains of domestic producers of the good exceed the losses of domestic consumers of the good.E) B) and C)
F) C) and D)

Question 3

Figure 9-11 
-Refer to Figure 9-11. Producer surplus in this market after trade is

Accepted Answer

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

Question 4

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular good,

Accepted Answer

A)   producer surplus increases and total surplus increases in the market for that good.
B)   producer surplus increases and total surplus decreases in the market for that good.
C)   producer surplus decreases and total surplus increases in the market for that good.
D)   producer surplus decreases and total surplus decreases in the market for that good.E) None of the above
F) A) and B)

Question 5

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

Accepted Answer

A)   $3,240.
B)   $6,480.
C)   $7,760.
D)   $15,520.E) All of the above
F) B) and C)

Question 6

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

Accepted Answer

A)   A + B.
B)   A + B + C.
C)   A + B + C + D.
D)   B + C + D.E) C) and D)
F) None of the above

Question 7

Tariffs and quotas are different in the sense that

Accepted Answer

A)   tariffs cause deadweight losses, while quotas do not cause deadweight losses.
B)   tariffs raise revenue for the government, while quotas do not raise revenue for the government.
C)   tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers.
D)   tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of domestic producers.E) A) and B)
F) All of the above

Question 8

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 9

Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers, with the tariff, is 8 million bottles per year, then we can conclude that

Accepted Answer

A)   the quantity of wine demanded by France, with the tariff, is 18 million bottles per year.
B)   the quantity of wine demanded by France, without the tariff, would be 24 million bottles per year.
C)   the amount of the deadweight loss is 24 million euros per year.
D)   the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff.E) A) and B)
F) A) and C)

Question 10

Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is
$52 per bushel. The U.S. is a price-taker in the market for peaches.
-Refer to Scenario 9-1. If trade in peaches is allowed, the price of peaches in the United States

Accepted Answer

A)   will increase, and this will cause consumer surplus to decrease.
B)   will decrease, and this will cause consumer surplus to increase.
C)   will be unaffected, and consumer surplus will be unaffected as well.
D)   could increase or decrease or be unaffected; this cannot be determined.E) A) and D)
F) A) and C)

Question 11

Domestic producers of a good become worse off, and domestic consumers of a good become better 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)   the country in question has a comparative advantage, relative to other countries, in producing the good.
D)   total surplus does not change as a result.E) None of the above
F) A) and B)

Question 12

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. 
-Refer to Figure 9-14. The country for which the figure is drawn

Accepted Answer

A)   has a comparative advantage relative to other countries in the production of crude oil and it will export crude oil.
B)   has a comparative advantage relative to other countries in the production of crude oil and it will import crude oil.
C)   has a comparative disadvantage relative to other countries in the production of crude oil and it will export crude oil.
D)   has a comparative disadvantage relative to other countries in the production of crude oil and it will import crude oil.E) A) and D)
F) B) and C)

Question 13

A possible outcome of the multilateral approach to free trade is that such an approach can

Accepted Answer

A)   win political support when a unilateral approach cannot.
B)   result in more restricted trade than under a unilateral approach, when international negotiations fail.
C)   result in drastic reductions in tariffs for many countries.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 14

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 C)

Question 15

Suppose Japan exports cars to Russia and imports wine from France. This situation suggests

Accepted Answer

A)   Japan has a comparative advantage relative to France in producing wine, and Russia has a comparative advantage to Japan in producing cars.
B)   Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine.
C)   Japan has an absolute advantage relative to Russia in producing cars, and France has an absolute advantage relative to Japan in producing wine.
D)   Japan has an absolute advantage relative to France in producing wine, and Russia has an absolute advantage relative to Japan in producing cars.E) A) and B)
F) A) and C)

Question 16

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be

Accepted Answer

A)   better off regardless of how Colombia responds.
B)   better off if Colombia removes the subsidies, and will be no worse off if it doesn't.
C)   worse off if Colombia doesn't remove the subsidies in response to the threat.
D)   worse off regardless of how Colombia responds.E) A) and C)
F) A) and D)

Question 17

Figure 9-10. The figure applies to Mexico and the good is rifles. 
-Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

Accepted Answer

A)   0, P0) , Q0, P0) , Q2, P1) , and 0, P1) .
B)   0, P1) , 0, P2) , Q0, P0) , and Q1, P1) .
C)   Q0, P0) , Q2, P1) , and Q1, P1) .
D)   0, P0) , 0, P2) , and Q0, P0) .E) A) and B)
F) A) and C)

Question 18

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market. 
-Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Accepted Answer

With trade, consumer surplus f...

Question 19

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, how much are consumer surplus, producer surplus, and total surplus in this market?

Accepted Answer

Consumer surplus is ...

Question 20

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. Without trade, producer surplus is

Accepted Answer

A)   $423.
B)   $845.
C)   $1,690.
D)   $3,380.E) C) and D)
F) A) and D)

Exam 9: Application: International Trade

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. Without trade, producer surplus is

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A possible outcome of the multilateral approach to free trade is that such an approach can

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Tariffs and quotas are different in the sense that

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When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

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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.

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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. With trade and a tariff, total surplus is

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

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If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be

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

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Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the price of peaches in the United States

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When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular good,

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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

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Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Correct AnswerverifiedWith trade, consumer surplus f...View AnswerShow 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, how much are consumer surplus, producer surplus, and total surplus in this market?

Correct AnswerverifiedConsumer surplus is ...View AnswerShow Answer

Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers, with the tariff, is 8 million bottles per year, then we can conclude that

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Suppose Japan exports cars to Russia and imports wine from France. This situation suggests

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

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Figure 9-11 -Refer to Figure 9-11. Producer surplus in this market after trade is

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Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

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Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14. The country for which the figure is drawn

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With trade, consumer surplus f...
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Consumer surplus is ...
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