Question 1

A logical starting point from which the study of international trade begins is

Accepted Answer

A)   the recognition that not all markets are competitive.
B)   the recognition that government intervention in markets sometimes enhances the economic welfare of the society.
C)   the principle of absolute advantage.
D)   the principle of comparative advantage.E) C) and D)
F) None of the above

Question 2

The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

Accepted Answer

A) True 
 B)False

Question 3

After a certain nation changed its policy from one that banned international trade in wheat to one that allowed international trade in wheat, the nation began importing wheat. As a result, total surplus in the wheat market increased by $10 million. Which of the following changes could have occurred as well?

Accepted Answer

A)   The price of wheat in that nation increased with the adoption of the new policy.
B)   The domestic quantity of wheat supplied increased with the adoption of the new policy.
C)   Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million.
D)   Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million.E) B) and D)
F) C) and D)

Question 4

Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. 
-Refer to Figure 9-29. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

With trade...

Question 5

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

Accepted Answer

A)   How does international trade affect consumer well-being?
B)   Who gains and who loses from free trade among countries?
C)   How do the gains from trade compare to the losses?
D)   Which argument for restricting free trade is politically feasible?E) A) and C)
F) A) and B)

Question 6

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...

Question 7

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Accepted Answer

A)   there is no evidence that any worker ever lost his or her job because of free trade.
B)   unemployment of labor is not a serious problem relative to other economic problems.
C)   the gains from trade are based on comparative advantage.
D)   the gains from trade are based on absolute advantage.E) None of the above
F) C) and D)

Question 8

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) B) and D)

Question 9

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Accepted Answer

A)   export copper.
B)   import copper.
C)   neither export nor import copper, since that country cannot gain from trade.
D)   neither export nor import copper, since that country already produces copper at a low cost compared to other countries.E) A) and D)
F) A) and C)

Question 10

Trade decisions are based on the principle of absolute advantage.

Accepted Answer

A) True 
 B)False

Question 11

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. 
-Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

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

Question 12

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Accepted Answer

A) True 
 B)False

Question 13

Figure 9-13 
-Refer to Figure 9-13. The price and domestic quantity demanded after trade are

Accepted Answer

A)   $8 and 300.
B)   $8 and 900.
C)   $14 and 900.
D)   $14 and 600.E) B) and C)
F) A) and D)

Question 14

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

Question 15

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 16

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. Suppose the country imposes a $5 per unit tariff. If the country allows trade with a tariff, how much is the deadweight loss caused by the tariff?

Accepted Answer

The deadwe...

Question 17

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. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric...

Question 18

Figure 9-1
The figure illustrates the market for coffee in Guatemala. 
-Refer to Figure 9-1. With trade, Guatemala will

Accepted Answer

A)   export 22 units of coffee.
B)   export 10 units of coffee.
C)   import 30 units of coffee.
D)   import 12 units of coffee.E) A) and C)
F) B) and D)

Question 19

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 country for which the figure is drawn

Accepted Answer

A)   has a comparative advantage relative to other countries in the production of cars and it will export cars.
B)   has a comparative advantage relative to other countries in the production of cars and it will import cars.
C)   has a comparative disadvantage relative to other countries in the production of cars and it will export cars.
D)   has a comparative disadvantage relative to other countries in the production of cars and it will import cars.E) None of the above
F) B) and C)

Question 20

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 consumer surplus?

Accepted Answer

With trade...

Exam 9: Application: International Trade

Correct Answer
verified

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. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Correct Answer
verified
The equilibrium pric...
View Answer

Correct Answer
verified
With trade...
View Answer

A logical starting point from which the study of international trade begins is

Correct Answer
verified

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 consumer surplus?

Correct Answer
verified
With trade...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. With trade, Guatemala will

Correct Answer
verified

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Correct Answer
verified

The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

Correct Answer
verified

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Correct Answer
verified

Correct Answer
verified
The deadwe...
View Answer

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

Correct Answer
verified

Trade decisions are based on the principle of absolute advantage.

Correct Answer
verified

Correct Answer
verified
With trade, domestic...
View Answer

Figure 9-13 -Refer to Figure 9-13. The price and domestic quantity demanded after trade are

Correct Answer
verified

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.

Correct Answer
verified

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Correct Answer
verified

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 country for which the figure is drawn

Correct Answer
verified

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Correct Answer
verified

Exam 9: Application: International Trade

Correct AnswerverifiedShow Answer

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. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

Correct AnswerverifiedWith trade...View AnswerShow Answer

A logical starting point from which the study of international trade begins is

Correct AnswerverifiedShow Answer

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 consumer surplus?

Correct AnswerverifiedWith trade...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. With trade, Guatemala will

Correct AnswerverifiedShow Answer

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Correct AnswerverifiedShow Answer

The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

Correct AnswerverifiedShow Answer

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe deadwe...View AnswerShow Answer

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

Correct AnswerverifiedShow Answer

Trade decisions are based on the principle of absolute advantage.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWith trade, domestic...View AnswerShow Answer

Figure 9-13 -Refer to Figure 9-13. The price and domestic quantity demanded after trade are

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Correct AnswerverifiedShow Answer

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 country for which the figure is drawn

Correct AnswerverifiedShow Answer

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The equilibrium pric...
View Answer

Correct Answer
verified
With trade...
View Answer

Correct Answer
verified

Correct Answer
verified
With trade...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The deadwe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
With trade, domestic...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified