Question 1

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   consumer surplus increases by the area B.
B)   producer surplus decreases by the area B + D.
C)   total surplus increases by the area D.
D)   All of the above are correct.E) C) and D)
F) A) and D)

Question 3

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price,then it must be the case that

Accepted Answer

A)   both consumer surplus and producer surplus increase.
B)   consumer surplus increases and producer surplus decreases.
C)   consumer surplus decreases and producer surplus increases.
D)   both consumer surplus and producer surplus decrease.E) A) and B)
F) C) and D)

Question 4

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Accepted Answer

A) True 
 B)False

Question 5

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.The country for which the figure is drawn

Accepted Answer

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

Question 6

Suppose Haiti has an absolute advantage over other countries in producing oranges,but other countries have a comparative advantage over Haiti in producing oranges.If trade in oranges is allowed,Haiti

Accepted Answer

A)   will import oranges.
B)   will export oranges.
C)   will either export oranges or export oranges,but it is not clear from the given information.
D)   would have nothing to gain either from exporting or importing oranges.E) All of the above
F) B) and C)

Question 7

According to the principle of comparative advantage,all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Accepted Answer

A) True 
 B)False

Question 8

When a country moves away from a free trade position and imposes a tariff on imports,it causes

Accepted Answer

A)   a decrease in total surplus in the market.
B)   a decrease in producer surplus in the market.
C)   an increase in consumer surplus in the market.
D)   a decrease in revenue to the government.E) A) and D)
F) B) and C)

Question 9

An important factor in the decline of the U.S.textile industry over the past 100 or so years is

Accepted Answer

A)   foreign competitors that can produce quality textile goods at low cost.
B)   lower prices of goods that are substitutes for clothing.
C)   a decrease in Americans' demand for clothing,due to increased incomes and the fact that clothing is an inferior good.
D)   the fact that the minimum wage in the U.S.has failed to keep pace with the cost of living.E) A) and D)
F) B) and C)

Question 10

If the demand curve and the supply curve for a good are straight lines,then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by

Accepted Answer

A)   the area of one triangle.
B)   the area of one rectangle.
C)   the combined areas of two different triangles.
D)   the combined areas of two different rectangles.E) A) and B)
F) None of the above

Question 11

Since World War II,GATT has been responsible for reducing the average tariff among member countries from about

Accepted Answer

A)   40 percent to about 5 percent.
B)   40 percent to about 20 percent.
C)   80 percent to about 20 percent.
D)   20 percent to about 10 percent.E) All of the above
F) A) and B)

Question 12

Figure 9-20
The figure illustrates the market for rice in Vietnam. 
-Refer to Figure 9-20.From the figure it is apparent that

Accepted Answer

A)   Vietnam will experience a shortage of rice if trade is not allowed.
B)   Vietnam will experience a surplus of rice if trade is not allowed.
C)   Vietnam has a comparative advantage in producing rice,relative to the rest of the world.
D)   foreign countries have a comparative advantage in producing rice,relative to Vietnam.E) C) and D)
F) A) and B)

Question 13

Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel.The world price of peaches is $52 per bushel.The U.S.is a price-taker in the market for peaches.
-Refer to Scenario 9-1.If trade in peaches is allowed,the price of peaches in the United States

Accepted Answer

A)   will increase,and this will cause consumer surplus to decrease.
B)   will decrease,and this will cause consumer surplus to increase.
C)   will be unaffected,and consumer surplus will be unaffected as well.
D)   could increase or decrease or be unaffected; this cannot be determined.E) A) and C)
F) All of the above

Question 14

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 C)
F) A) and B)

Question 15

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

Question 16

Figure 9-4.The domestic country is Nicaragua. 
-Refer to Figure 9-4.The change in total surplus in Nicaragua because of trade is

Accepted Answer

A)   $625,and this is an increase in total surplus.
B)   $750,and this is an increase in total surplus.
C)   $625,and this is a decrease in total surplus.
D)   $750,and this is a decrease in total surplus.E) B) and C)
F) A) and C)

Question 17

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

Accepted Answer

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

Question 18

In recent years,which countries have taken a unilateral approach to the removal of trade restrictions?

Accepted Answer

A)   China and North Korea
B)   Chile and South Korea
C)   Russia and Japan
D)   the United States and MexicoE) B) and C)
F) A) and D)

Question 19

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

Question 20

Figure 9-1
The figure illustrates the market for wool in Scotland. 
-Refer to Figure 9-1.When trade in wool is allowed,consumer surplus in Scotland

Accepted Answer

A)   increases by the area B + D.
B)   increases by the area C + F.
C)   decreases by the area B + D.
D)   decreases by the area D + G.E) A) and B)
F) C) and D)

Exam 9: Application: International Trade

Suppose Haiti has an absolute advantage over other countries in producing oranges,but other countries have a comparative advantage over Haiti in producing oranges.If trade in oranges is allowed,Haiti

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An important factor in the decline of the U.S.textile industry over the past 100 or so years is

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

Correct AnswerverifiedShow Answer

According to the principle of comparative advantage,all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Since World War II,GATT has been responsible for reducing the average tariff among member countries from about

Correct AnswerverifiedShow Answer

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

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.The country for which the figure is drawn

Correct AnswerverifiedShow Answer

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Correct AnswerverifiedShow Answer

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price,then it must be the case that

Correct AnswerverifiedShow Answer

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

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In recent years,which countries have taken a unilateral approach to the removal of trade restrictions?

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Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20.From the figure it is apparent that

Correct AnswerverifiedShow Answer

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

Correct AnswerverifiedShow Answer

When a country moves away from a free trade position and imposes a tariff on imports,it causes

Correct AnswerverifiedShow Answer

If the demand curve and the supply curve for a good are straight lines,then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by

Correct AnswerverifiedShow Answer

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1.When trade in wool is allowed,consumer surplus in Scotland

Correct AnswerverifiedShow Answer

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel.The world price of peaches is $52 per bushel.The U.S.is a price-taker in the market for peaches. -Refer to Scenario 9-1.If trade in peaches is allowed,the price of peaches in the United States

Correct AnswerverifiedShow Answer

Figure 9-4.The domestic country is Nicaragua. -Refer to Figure 9-4.The change in total surplus in Nicaragua because of trade is

Correct AnswerverifiedShow Answer

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