Question 1

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 2

When the nation of Duxembourg allows trade and becomes an importer of software,

Accepted Answer

A)   residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises.
B)   residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg falls.
C)   residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg rises.
D)   residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg falls.E) A) and C)
F) C) and D)

Question 3

Figure 9-15 
-Refer to Figure 9-15. With the tariff, the domestic price and domestic quantity demanded are

Accepted Answer

A)   P1 and Q1.
B)   P1 and Q4.
C)   P2 and Q2.
D)   P2 and Q3.E) C) and D)
F) All of the above

Question 4

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) B) and C)
F) None of the above

Question 5

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

Question 6

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

Accepted Answer

A)   importing televisions and the price of a television in Paraguay decreased to $300.
B)   importing televisions and the price of a television in Paraguay remained at $350.
C)   exporting televisions and the price of a television in Paraguay decreased to $300.
D)   exporting televisions and the price of a television in Paraguay remained at $350.E) A) and D)
F) None of the above

Question 7

If the United Kingdom imports tea cups from other countries, then U.K. producers of tea cups are better off, and U.K. consumers of tea cups are worse off, as a result of trade.

Accepted Answer

A) True 
 B)False

Question 8

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 9-24. With free trade, the country

Accepted Answer

A)   exports 20 units of the good.
B)   imports 20 units of the good.
C)   exports 30 units of the good.
D)   imports 30 units of the good.E) B) and D)
F) C) and D)

Question 9

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) All of the above
F) A) and B)

Question 10

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

Accepted Answer

A)   Japan has a comparative advantage over other countries and Japan will import automobiles.
B)   Japan has a comparative advantage over other countries and Japan will export automobiles.
C)   other countries have a comparative advantage over Japan and Japan will import automobiles.
D)   other countries have a comparative advantage over Japan and Japan will export automobiles.E) B) and C)
F) None of the above

Question 11

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

Accepted Answer

A)   $11, with 200 tricycles produced in this country and another 320 tricycles imported.
B)   $11, with 360 tricycles produced in this country and another 160 tricycles imported.
C)   $19, with 200 tricycles produced in this country and another 160 tricycles imported.
D)   $19, with 360 tricycles produced in this country and another 320 tricycles imported.E) C) and D)
F) A) and B)

Question 12

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) B) and C)
F) C) and D)

Question 13

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, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

The countr...

Question 14

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland.
 
-Refer to Figure 9-18. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

Accepted Answer

A)   above $2.
B)   below $4.
C)   above $4.
D)   below $7.E) C) and D)
F) A) and B)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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, consumer surplus is

Accepted Answer

A)   $48,000 and producer surplus is $48,000.
B)   $18,000 and producer surplus is $12,000.
C)   $108,000 and producer surplus is $12,000.
D)   $18,000 and producer surplus is $48,000.E) None of the above
F) All of the above

Question 17

Figure 9-20
The figure illustrates the market for rice in Vietnam. 
-Refer to Figure 9-20. In the absence of trade, total surplus in the Vietnamese rice market amounts to

Accepted Answer

A)   9,250.
B)   10,000.
C)   12,000.
D)   13,000.E) None of the above
F) A) and D)

Question 18

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

Exam 9: Application: International Trade

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

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When the nation of Duxembourg allows trade and becomes an importer of software,

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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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Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

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Figure 9-15 -Refer to Figure 9-15. With the tariff, the domestic price and domestic quantity demanded are

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

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Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. In the absence of trade, total surplus in the Vietnamese rice market amounts to

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If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

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

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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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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, will the country import or export this good, and how many units will be imported/exported?

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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

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Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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If the United Kingdom imports tea cups from other countries, then U.K. producers of tea cups are better off, and U.K. consumers of tea cups are worse off, as a result of trade.

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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 9-24. With free trade, the country

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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, consumer surplus is

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Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland. -Refer to Figure 9-18. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

Correct AnswerverifiedShow Answer

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