Question 1

Some time ago,the nation of Republica opened up its paper market to international trade.Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

Accepted Answer

A)   The price of paper in Republica decreased as a result of the policy change.
B)   Republica began exporting paper as a result of the policy change.
C)   The domestic demand curve for paper shifted to the right as a result of the policy change.
D)   The domestic quantity of paper demanded increased as a result of the policy change.E) A) and B)
F) A) and C)

Question 2

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer 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) B) and C)
F) A) and B)

Question 3

Figure 9-1
The figure illustrates the market for wool in New Zealand. 
-Refer to Figure 9-1.In the absence of trade,the equilibrium price of wool in New Zealand is

Accepted Answer

A)   $15.
B)   $45.
C)   $55.
D)   $70.E) A) and B)
F) A) and C)

Question 4

Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers. 
-Refer to Figure 9-14.A result of this country allowing international trade in computers is as follows:

Accepted Answer

A)   The well-being of domestic computer producers is now higher in that they now sell more computers at a higher price per computer.
B)   The effect on the well-being of domestic computer consumers is unclear in that they now buy more computers,but at a higher price per computer.
C)   The effect on the well-being of the country is unclear in that domestic producer surplus increases,while the effect on domestic consumer surplus is unclear.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 5

Figure 9-15 
-Refer to Figure 9-15.Consumer surplus with trade and without a tariff is

Accepted Answer

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

Question 6

Scenario 9-1
The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes.
-Refer to Scenario 9-1.If trade in tomatoes is allowed,the United States

Accepted Answer

A)   will become an importer of tomatoes.
B)   will become an exporter of tomatoes.
C)   may become either an importer or an exporter of tomatoes,but this cannot be determined.
D)   will experience increases in both consumer surplus and producer surplus.E) B) and C)
F) All of the above

Question 7

Figure 9-6 
-Refer to Figure 9-6.The amount of deadweight loss caused by the tariff equals

Accepted Answer

A)   $100.
B)   $200.
C)   $400.
D)   $500.E) All of the above
F) A) and B)

Question 8

Figure 9-6 
-The before-trade price of fish in Germany is $8.00 per pound.The world price of fish is $6.00 per pound.Germany is a price-taker in the fish market.If Germany allows trade in fish,then Germany will become an

Accepted Answer

A)   importer of fish and the price of fish in Germany will be $6.00.
B)   importer of fish and the price of fish in Germany will be $8.00.
C)   exporter of fish and the price of fish in Germany will be $6.00.
D)   exporter of fish and the price of fish in Germany will be $8.00.E) A) and D)
F) None of the above

Question 9

When a country allows international trade and becomes an importer 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) C) and D)

Question 10

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 D)
F) A) and B)

Question 11

Figure 9-17 
-Refer to Figure 9-17.With trade and a tariff,consumer surplus is

Accepted Answer

A)   $202 and producer surplus is $50.
B)   $202 and producer surplus is $98.
C)   $256 and producer surplus is $50.
D)   $256 and producer surplus is $98.E) C) and D)
F) B) and D)

Question 12

When a country that imports a particular good imposes an import quota on that 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) A) and B)
F) C) and D)

Question 13

Which of the following is not a commonly-advanced argument for trade restrictions?

Accepted Answer

A)   the jobs argument
B)   the national-security argument
C)   the infant-industry argument
D)   the efficiency argumentE) C) and D)
F) A) and D)

Question 14

Domestic consumers gain and domestic producers lose when the government imposes a tariff on imports.

Accepted Answer

A) True 
 B)False

Question 15

Some goods can be produced at low cost only if they are produced in large quantities.This phenomenon is called

Accepted Answer

A)   marginal cost of production.
B)   marginal benefit of size.
C)   economies of scale.
D)   economies of production.E) B) and C)
F) None of the above

Question 16

For any country that allows free trade,

Accepted Answer

A)   domestic quantity demanded is equal to domestic quantity supplied at the world price.
B)   domestic quantity demanded is greater than domestic quantity supplied at the world price.
C)   both producers and consumers in that country gain when domestic products are exported,but both groups lose when foreign products are imported.
D)   the domestic price is equal to the world price.E) None of the above
F) All of the above

Question 17

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

Accepted Answer

A)   A + B.
B)   A + B + C.
C)   A + B + C + D.
D)   B + C + D.E) All of the above
F) C) and D)

Question 18

When a country allows trade and becomes an importer 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) B) and D)

Question 19

Import quotas and tariffs both cause the quantity of imports to fall.

Accepted Answer

A) True 
 B)False

Question 20

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Accepted Answer

A)   People face tradeoffs.
B)   Trade can make everyone better off.
C)   Governments can sometimes improve market outcomes.
D)   Prices rise when the government prints too much money.E) All of the above
F) B) and C)

Exam 9: Application: International Trade

Which of the following is not a commonly-advanced argument for trade restrictions?

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Figure 9-15 -Refer to Figure 9-15.Consumer surplus with trade and without a tariff is

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For any country that allows free trade,

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Some time ago,the nation of Republica opened up its paper market to international trade.Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

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Scenario 9-1 The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes. -Refer to Scenario 9-1.If trade in tomatoes is allowed,the United States

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With which of the Ten Principles of Economics is the study of international trade most closely connected?

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Import quotas and tariffs both cause the quantity of imports to fall.

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Figure 9-17 -Refer to Figure 9-17.With trade and a tariff,consumer surplus is

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Domestic consumers gain and domestic producers lose when the government imposes a tariff on imports.

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

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

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Figure 9-6 -Refer to Figure 9-6.The amount of deadweight loss caused by the tariff equals

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

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When a country that imports a particular good imposes an import quota on that good,

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Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers. -Refer to Figure 9-14.A result of this country allowing international trade in computers is as follows:

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Figure 9-6 -The before-trade price of fish in Germany is $8.00 per pound.The world price of fish is $6.00 per pound.Germany is a price-taker in the fish market.If Germany allows trade in fish,then Germany will become an

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

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Some goods can be produced at low cost only if they are produced in large quantities.This phenomenon is called

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Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.In the absence of trade,the equilibrium price of wool in New Zealand is

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

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