Question 1

If the United States imports televisions and the U.S.government imposes a tariff on televisions,then

Accepted Answer

A)   total surplus in the American television market decreases.
B)   producer surplus in the American television market increases.
C)   U.S.imports of foreign televisions decrease.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 2

If a country's domestic price of a good is lower than the world price,then that country has a comparative advantage in producing that good.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-6 
-Refer to Figure 9-6.With trade and without a tariff,

Accepted Answer

A)   the domestic price is equal to the world price.
B)   carnations are sold at $8 in this market.
C)   there is a shortage of 400 carnations in this market.
D)   this country imports 200 carnations.E) A) and D)
F) None of the above

Question 4

Figure 9-9 
-Refer to Figure 9-9.The change in total surplus in this market because of trade is

Accepted Answer

A)   D,and this area represents a loss of total surplus because of trade.
B)   D,and this area represents a gain in total surplus because of trade.
C)   B + D,and this area represents a loss of total surplus because of trade.
D)   B + D,and this area represents a gain in total surplus because of trade.E) A) and B)
F) A) and C)

Question 5

William and Jamal live in the country of Dumexia.As a result of Dumexia's legalization of international trade in bananas,William becomes better off and Jamal becomes worse off.It follows that William is a seller,and Jamal is a buyer,of bananas.

Accepted Answer

A) True 
 B)False

Question 6

Figure 9-6 
-Refer to Figure 9-6.Without trade,the equilibrium price of carnations is

Accepted Answer

A)   $8 and the equilibrium quantity is 300.
B)   $6 and the equilibrium quantity is 200.
C)   $6 and the equilibrium quantity is 400.
D)   $4 and the equilibrium quantity is 500.E) A) and B)
F) None of the above

Question 7

Figure 9-12 
-Refer to Figure 9-12.Producer surplus after trade is

Accepted Answer

A)   $7,000.
B)   $7,500.
C)   $8,800.
D)   $9,600.E) C) and D)
F) B) and C)

Question 8

Figure 9-3.The domestic country is China. 
-Refer to Figure 9-3.If China were to abandon a no-trade policy in favor of a free-trade policy,

Accepted Answer

A)   Chinese producers of pencil sharpeners would become worse off.
B)   Chinese consumers of pencil sharpeners would become better off.
C)   total surplus in the Chinese economy would increase.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 9

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 10

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) A) and B)
F) A) and C)

Question 11

The rules established under the General Agreement on Tariffs and Trade (GATT)are enforced by an international body called the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 12

Figure 9-17 
-Refer to Figure 9-17.Without trade,consumer surplus is

Accepted Answer

A)   $400 and producer surplus is $200.
B)   $400 and producer surplus is $800.
C)   $1,600 and producer surplus is $200.
D)   $1,600 and producer surplus is $800.E) A) and B)
F) B) and C)

Question 13

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 D)
F) None of the above

Question 14

In the market for apples in a certain country,consumer surplus increases and total surplus increases when that country

Accepted Answer

A)   abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of apples.
B)   abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of apples.
C)   abandons a free-trade policy,adopts a no-trade policy,and becomes an importer of apples.
D)   abandons a free-trade policy,adopts a no-trade policy,and becomes an exporter of apples.E) A) and B)
F) All of the above

Question 15

Figure 9-17 
-Refer to Figure 9-17.Without trade,total surplus is

Accepted Answer

A)   $600.
B)   $1,200.
C)   $1,800.
D)   $2,250.E) B) and C)
F) C) and D)

Question 16

Figure 9-5 
-Refer to Figure 9-5.Bearing in mind that this country is "small," what would happen if there were a decrease in the price of horses within this country,given that wagons and horses are complements?

Accepted Answer

A)   The quantity of wagons that this country imports would increase.
B)   The quantity of wagons that this country imports would decrease,but the country would still be an importer of wagons.
C)   This country would switch from being an importer of wagons to an exporter of wagons.
D)   The domestic price without trade would move closer to the world price.E) C) and D)
F) B) and C)

Question 17

In a December 2007 New York Times column,Paul Krugman noted that

Accepted Answer

A)   it is difficult to find instances of trade between high-wage countries in the modern era.
B)   it is difficult to find instances of trade between high-wage countries and low-wage countries in the modern era.
C)   the United States now imports more oil and other raw materials from other advanced countries than from the third world.
D)   the United States now imports more manufactured goods from the third world than from other advanced countries.E) B) and C)
F) A) and D)

Question 18

If a country is an exporter of a good,then it must be the case that

Accepted Answer

A)   the world price is less than its domestic price.
B)   consumer surplus is higher than a no trade situation.
C)   the world price is greater than its domestic price.
D)   they used an infant-industry argument to protect its producers.E) B) and D)
F) A) and C)

Question 19

When a country takes a multilateral approach to free trade,it

Accepted Answer

A)   removes trade restrictions on its own.
B)   reduces its trade restrictions while other countries do the same.
C)   does not remove trade restrictions no matter what other countries do.
D)   is willing to trade with multiple countries at once.E) All of the above
F) A) and D)

Question 20

The North American Free Trade Agreement

Accepted Answer

A)   is an example of the unilateral approach to free trade.
B)   eliminated tariffs on imports to North America from the rest of the world.
C)   reduced trade restrictions among Canada,Mexico and the United States.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Exam 9: Application: International Trade

Figure 9-5 -Refer to Figure 9-5.Bearing in mind that this country is "small," what would happen if there were a decrease in the price of horses within this country,given that wagons and horses are complements?

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Figure 9-9 -Refer to Figure 9-9.The change in total surplus in this market because of trade is

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Figure 9-17 -Refer to Figure 9-17.Without trade,consumer surplus is

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William and Jamal live in the country of Dumexia.As a result of Dumexia's legalization of international trade in bananas,William becomes better off and Jamal becomes worse off.It follows that William is a seller,and Jamal is a buyer,of bananas.

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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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Figure 9-6 -Refer to Figure 9-6.With trade and without a tariff,

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Figure 9-12 -Refer to Figure 9-12.Producer surplus after trade is

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Figure 9-6 -Refer to Figure 9-6.Without trade,the equilibrium price of carnations is

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If the United States imports televisions and the U.S.government imposes a tariff on televisions,then

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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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When a country takes a multilateral approach to free trade,it

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

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The North American Free Trade Agreement

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If a country is an exporter of a good,then it must be the case that

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Figure 9-17 -Refer to Figure 9-17.Without trade,total surplus is

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In the market for apples in a certain country,consumer surplus increases and total surplus increases when that country

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In a December 2007 New York Times column,Paul Krugman noted that

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If a country's domestic price of a good is lower than the world price,then that country has a comparative advantage in producing that good.

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The rules established under the General Agreement on Tariffs and Trade (GATT)are enforced by an international body called the World Trade Organization (WTO).

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Figure 9-3.The domestic country is China. -Refer to Figure 9-3.If China were to abandon a no-trade policy in favor of a free-trade policy,

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