Question 1

Which of the following is the most accurate statement?

Accepted Answer

A)   Protection is necessary in order for young industries to grow up and be successful.
B)   Protection is not necessary for an industry to grow.
C)   Protection is necessary because if young industries are not protected, they may suffer losses.
D)   Protection may not always be necessary for infant industries, but it has proven to be useful in most cases.E) A) and D)
F) C) and D)

Question 2

Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed. If the world price of oranges is $10 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of oranges?

Accepted Answer

Nash will ...

Question 3

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 total surplus?

Accepted Answer

With trade...

Question 4

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

Accepted Answer

A)   $30.
B)   $90.
C)   $110.
D)   $140.E) A) and B)
F) A) and C)

Question 5

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. With free trade, producer surplus is

Accepted Answer

A)   $845.
B)   $1,620.
C)   $1,690.
D)   $3,240.E) A) and B)
F) All of the above

Question 6

The nation of Aquilonia 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. We can conclude that Aquilonia's new free­trade policy has

Accepted Answer

A)   increased consumer surplus and producer surplus in the incense market.
B)   increased consumer surplus in the steel market and left producer surplus in the rug market unchanged.
C)   decreased consumer surplus in both the steel and rug markets.
D)   decreased consumer surplus in the steel market and increased total surplus in the incense market.E) A) and C)
F) All of the above

Question 7

Which of the following arguments for trade restrictions is often advanced?

Accepted Answer

A)   Trade restrictions make all Americans better off.
B)   Trade restrictions increase economic efficiency.
C)   Trade restrictions are necessary for economic growth.
D)   Trade restrictions are sometimes necessary for national security.E) A) and C)
F) All of the above

Question 8

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by

Accepted Answer

A)   $640.
B)   $1,280.
C)   $2,560.
D)   $3,840.E) None of the above
F) B) and D)

Question 9

The price of a good that prevails in a world market is called the

Accepted Answer

A)   absolute price.
B)   relative price.
C)   comparative price.
D)   world price.E) B) and C)
F) A) and C)

Question 10

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. A result of this country allowing international trade in crude oil is as follows:

Accepted Answer

A)   The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel.
B)   The effect on the well-being of domestic crude-oil consumers is unclear in that they now buy more crude oil, but at a higher price per barrel.
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 D)
F) A) and B)

Question 11

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

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. When the country for which the figure is drawn allows international trade in crude oil,

Accepted Answer

A)   consumer surplus for domestic crude-oil consumers decreases.
B)   the demand for crude oil by domestic crude-oil consumers decreases.
C)   the losses of the domestic losers outweigh the gains of the domestic winners.
D)   domestic crude-oil producers sell less crude oil.E) A) and C)
F) B) and C)

Question 13

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?

Accepted Answer

A)   More Danish-produced chips are sold in Denmark.
B)   More foreign-produced chips are sold in Denmark.
C)   Danish consumers of chips become better off.
D)   Total surplus in the Danish chip market increases.E) All of the above
F) A) and C)

Question 14

A tariff on a product

Accepted Answer

A)   is a direct quantitative restriction on the amount of a good that can be imported.
B)   increases the domestic quantity supplied.
C)   increases domestic consumer surplus.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 15

The nation of Spritzland used to prohibit international trade, but now trade is allowed, and Spritzland is exporting wristwatches. Relative to the previous no-trade situation, total surplus in the market for wristwatches in Spritzland has increased.

Accepted Answer

A) True 
 B)False

Question 16

Figure 9-4. The domestic country is Nicaragua. 
-Refer to Figure 9-4. With trade, Nicaragua

Accepted Answer

A)   imports 150 calculators.
B)   imports 250 calculators.
C)   exports 100 calculators.
D)   exports 250 calculators.E) B) and C)
F) A) and D)

Question 17

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

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 C)
F) A) and D)

Question 18

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. 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) A) and B)
F) A) and D)

Question 19

When a country allows trade and becomes an exporter of bicycles,

Accepted Answer

A)   domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country rises.
B)   domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country falls.
C)   domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country rises.
D)   domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country falls.E) B) and C)
F) None of the above

Question 20

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

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) B) and D)

Exam 9: Application: International Trade

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 total surplus?

Correct AnswerverifiedWith trade...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

When a country allows trade and becomes an exporter of bicycles,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following arguments for trade restrictions is often advanced?

Correct AnswerverifiedShow Answer

Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed. If the world price of oranges is $10 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of oranges?

Correct AnswerverifiedNash will ...View AnswerShow Answer

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Correct AnswerverifiedShow Answer

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. A result of this country allowing international trade in crude oil is as follows:

Correct AnswerverifiedShow Answer

The nation of Spritzland used to prohibit international trade, but now trade is allowed, and Spritzland is exporting wristwatches. Relative to the previous no-trade situation, total surplus in the market for wristwatches in Spritzland has increased.

Correct AnswerverifiedShow Answer

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. With trade, Nicaragua

Correct AnswerverifiedShow Answer

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Correct AnswerverifiedShow Answer

The nation of Aquilonia 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. We can conclude that Aquilonia's new free­trade policy has

Correct AnswerverifiedShow Answer

Which of the following is the most accurate statement?

Correct AnswerverifiedShow Answer

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by

Correct AnswerverifiedShow Answer

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. When the country for which the figure is drawn allows international trade in crude oil,

Correct AnswerverifiedShow Answer

A tariff on a product

Correct AnswerverifiedShow Answer

The price of a good that prevails in a world market is called the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. With free trade, producer surplus is

Correct AnswerverifiedShow Answer

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Nash will ...
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The nation of Aquilonia 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. We can conclude that Aquilonia's new freetrade policy has

Correct Answer
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