Question 1

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

Accepted Answer

A)   this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade.
B)   this is an indication that the nation has a comparative advantage in producing soybeans.
C)   the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 2

Trade decisions are based on the principle of absolute advantage.

Accepted Answer

A) True 
 B)False

Question 3

Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,then,other things equal,the price of wheat in Ivory Coast will increase,but by less than $1.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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

Question 5

Figure 9-3
The following diagram shows the domestic demand and domestic supply curves in a market. 
-Refer to Figure 9-3.Suppose the world price in this market is $7.If the country allows free trade,how much are consumer surplus,producer surplus,and total surplus with trade?

Accepted Answer

With trade,consumer ...

Question 6

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 deadweight loss created by the tariff is represented by the area

Accepted Answer

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

Question 7

Congresswoman Gaga represents a state in which several firms manufacture furniture.She wants to impose tariffs on all imported furniture.Which of the following is the least likely consequence of such tariffs?

Accepted Answer

A)   Domestic furniture buyers will lose consumer surplus,have less variety,and will pay higher prices.
B)   Domestic furniture producers will gain producer surplus.
C)   Domestic furniture producers will have a higher rate of technological advance.
D)   Domestic furniture producers will have more market power.E) A) and B)
F) C) and D)

Question 8

Zelzar has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.Which groups in Zelzar are better off as a result of the new free-trade policy?

Accepted Answer

A)   producers of incense and consumers of steel
B)   consumers of all three goods
C)   consumers of incense and producers of rugs
D)   producers of steel and consumers of incenseE) None of the above
F) B) and D)

Question 9

Figure 9-1
The following diagram shows the domestic demand and domestic supply for a market.In addition,assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-1.Producer surplus with free trade is

Accepted Answer

A)   $14,000.
B)   $18,000.
C)   $24,000.
D)   $32,000.E) All of the above
F) B) and C)

Question 10

Figure 9-2
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 9-2.Suppose the government imposes a tariff of $20 per unit.With trade and a tariff,total surplus is

Accepted Answer

A)   $96,000.
B)   $114,000.
C)   $120,000.
D)   $126,000.E) B) and C)
F) B) and D)

Question 11

Scenario 9-1
Suppose domestic demand and domestic supply in a market are given by the following equations: 
-Refer to Scenario 9-1.Suppose the world price in this market is $8 per unit.If the country allows free trade,how much are consumer surplus,producer surplus,and producer surplus with trade?

Accepted Answer

With trade,consumer ...

Question 12

When a country allows trade and becomes an importer 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 consumers become better off,but the effect on the well-being of domestic producers is ambiguous.
D)   domestic producers become worse off,but the effect on the well-being of domestic consumers is ambiguous.E) B) and C)
F) B) and D)

Question 13

Figure 9-2 
-Refer to Figure 9-2.This country

Accepted Answer

A)   has a comparative advantage in baskets.
B)   should export baskets.
C)   is a price taker in the world economy.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 14

Within a country,the domestic price of a product will equal the world price if

Accepted Answer

A)   trade restrictions are imposed on the product.
B)   the country allows free trade.
C)   the country chooses to import,but not export,the product.
D)   the country chooses to export,but not import,the product.E) B) and D)
F) A) and C)

Question 15

Figure 9-19.On the diagram below,Q represents the quantity of textiles and P represents the price of textiles. 
-Refer to Figure 9-19.With free trade,consumer surplus in the textile market amounts to

Accepted Answer

A)   $210.
B)   $320.
C)   $405.
D)   $910.E) A) and B)
F) A) and C)

Question 16

NAFTA is an example of a multilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 17

If Argentina exports oranges to the rest of the world,Argentina's producers of oranges are worse off,and Argentina's consumers of oranges are better off,as a result of trade.

Accepted Answer

A) True 
 B)False

Question 18

Figure 9-17 
-Refer to Figure 9-17.When the country moves from no trade to free trade,consumer surplus

Accepted Answer

A)   increases by $1,200 and producer surplus increases by $600.
B)   increases by $1,200 and producer surplus decreases by $600.
C)   decreases by $1,350 and producer surplus increases by $450.
D)   decreases by $1,350 and producer surplus decreases by $450.E) B) and C)
F) All of the above

Question 19

Figure 9-6 
-Refer to Figure 9-6.The size of the tariff on carnations is

Accepted Answer

A)   $8 per dozen.
B)   $6 per dozen.
C)   $4 per dozen.
D)   $2 per dozen.E) A) and D)
F) B) and D)

Question 20

Figure 9-5 
-Refer to Figure 9-5.With trade,producer surplus is

Accepted Answer

A)   $80.
B)   $150.
C)   $210.
D)   $245.E) A) and B)
F) B) and C)

Exam 9: Application: International Trade

Figure 9-1 The following diagram shows the domestic demand and domestic supply for a market.In addition,assume that the world price in this market is $40 per unit. -Refer to Figure 9-1.Producer surplus with free trade is

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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 deadweight loss created by the tariff is represented by the area

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Figure 9-19.On the diagram below,Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19.With free trade,consumer surplus in the textile market amounts to

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Figure 9-6 -Refer to Figure 9-6.The size of the tariff on carnations is

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Figure 9-2 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 9-2.Suppose the government imposes a tariff of $20 per unit.With trade and a tariff,total surplus is

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If Argentina exports oranges to the rest of the world,Argentina's producers of oranges are worse off,and Argentina's consumers of oranges are better off,as a result of trade.

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Scenario 9-1 Suppose domestic demand and domestic supply in a market are given by the following equations: -Refer to Scenario 9-1.Suppose the world price in this market is $8 per unit.If the country allows free trade,how much are consumer surplus,producer surplus,and producer surplus with trade?

Correct AnswerverifiedWith trade,consumer ...View AnswerShow Answer

Figure 9-17 -Refer to Figure 9-17.When the country moves from no trade to free trade,consumer surplus

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

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NAFTA is an example of a multilateral approach to achieving free trade.

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Zelzar has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.Which groups in Zelzar are better off as a result of the new free-trade policy?

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Figure 9-2 -Refer to Figure 9-2.This country

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Within a country,the domestic price of a product will equal the world price if

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

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Figure 9-5 -Refer to Figure 9-5.With trade,producer surplus is

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Figure 9-3 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-3.Suppose the world price in this market is $7.If the country allows free trade,how much are consumer surplus,producer surplus,and total surplus with trade?

Correct AnswerverifiedWith trade,consumer ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,then,other things equal,the price of wheat in Ivory Coast will increase,but by less than $1.

Correct AnswerverifiedShow Answer

Congresswoman Gaga represents a state in which several firms manufacture furniture.She wants to impose tariffs on all imported furniture.Which of the following is the least likely consequence of such tariffs?

Correct AnswerverifiedShow Answer

Trade decisions are based on the principle of absolute advantage.

Correct AnswerverifiedShow Answer

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With trade,consumer ...
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With trade,consumer ...
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