Question 1

Assume,for Canada,that the domestic price of wheat without international trade is lower than the world price of wheat.This suggests that,in the production of wheat,

Accepted Answer

A)   Canada has a comparative advantage over other countries and Canada will export wheat.
B)   Canada has a comparative advantage over other countries and Canada will import wheat.
C)   other countries have a comparative advantage over Canada and Canada will export wheat.
D)   other countries have a comparative advantage over Canada and Canada will import wheat.E) A) and B)
F) A) and C)

Question 2

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Accepted Answer

A) True 
 B)False

Question 3

In September 2009,President Obama imposed a 35 percent tariff on

Accepted Answer

A)   tires imported from South Korea.
B)   tires imported from China.
C)   automobiles imported from South Korea.
D)   beef imported from Canada.E) A) and D)
F) All of the above

Question 4

Chile allows trade with the rest of the world.We know that Chile has a comparative advantage in producing lemons if we know that

Accepted Answer

A)   Chile imports lemons.
B)   the world price of lemons is higher than the price of lemons that would prevail in Chile if trade with other countries were not allowed.
C)   consumer surplus in Chile would exceed producer surplus in Chile if trade with other countries were not allowed.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 5

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. 0) (P1 - P0) . B)  Consumer surplus with trade = (1/2) (Q0) (P3 - P0) . C)  Consumer surplus with trade = (1/2) (Q1) (P3 - P1) . D)  None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-7.Which of the following is a valid equation for Welsh consumer surplus with trade?

Accepted Answer

A)   Consumer surplus with trade = (1/2) (Q0) (P1 - P0) .
B)   Consumer surplus with trade = (1/2) (Q0) (P3 - P0) .
C)   Consumer surplus with trade = (1/2) (Q1) (P3 - P1) .
D)   None of the above is correct.E) A) and C)
F) A) and D)

Question 6

Suppose Iran imposes a tariff on lumber.For the tariff to have any effect,it must be the case that

Accepted Answer

A)   Iran is an exporter of lumber.
B)   the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the tariff.
C)   the world price without the tariff is less than the price of lumber without trade.
D)   the world price without the tariff is greater than the price of lumber without trade.E) A) and B)
F) C) and D)

Question 7

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. 0Q0. B)  Producer surplus with trade = (1/2) P1Q1. C)  Producer surplus with trade = (1/2) P1Q2. D)  None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-7.Which of the following is a valid equation for Welsh producer surplus with trade?

Accepted Answer

A)   Producer surplus with trade = (1/2) P0Q0.
B)   Producer surplus with trade = (1/2) P1Q1.
C)   Producer surplus with trade = (1/2) P1Q2.
D)   None of the above is correct.E) B) and C)
F) None of the above

Question 8

Suppose England exports cars to Australia and imports cheese from Mexico.This situation suggests that

Accepted Answer

A)   England has a comparative advantage relative to Mexico in producing cheese,and Australia has a comparative advantage relative to England in producing cars.
B)   England has a comparative advantage relative to Australia in producing cars,and Mexico has a comparative advantage relative to England in producing cheese.
C)   England has an absolute advantage relative to Mexico in producing cheese,and Australia has an absolute advantage relative to England in producing cars.
D)   England has an absolute advantage relative to Australia in producing cars,and Mexico has an absolute advantage relative to England in producing cheese.E) All of the above
F) A) and B)

Question 9

Suppose New Zealand goes from being an isolated country to being an exporter of wool.As a result,

Accepted Answer

A)   consumer surplus increases for consumers of wool in New Zealand.
B)   producer surplus increases for producers of wool in New Zealand.
C)   total surplus remains unchanged in the wool market in New Zealand.
D)   it is reasonable to infer that other countries have a comparative advantage over New Zealand in wool production.E) None of the above
F) B) and C)

Question 10

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) C) and D)

Question 11

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 many units will domestic consumers demand,and how many units will domestic producers produce?

Accepted Answer

Domestic consumers w...

Question 12

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

Question 13

A tariff

Accepted Answer

A)   lowers the domestic price of the exported good below the world price.
B)   keeps the domestic price of the exported good the same as the world price.
C)   raises the domestic price of the imported good above the world price.
D)   lowers the domestic price of the imported good below the world price.E) C) and D)
F) None of the above

Question 14

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

Accepted Answer

A)   cause these factories to pay the U.S.minimum wage.
B)   increase the rate of technological advance in poor countries so that they can afford to pay higher wages.
C)   increase poverty in poor countries and benefit U.S.firms which compete with these imports.
D)   harm U.S.firms which compete with these imports.E) All of the above
F) A) and D)

Question 15

Figure 9-17 
-Refer to Figure 9-17.With free 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 D)

Question 16

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

Accepted Answer

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

Question 17

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 C)

Question 18

Figure 9-15 3 - Q1. B)  Q3 - Q2. C)  Q4 - Q1. D)  Q4 - Q2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-15.With the tariff,the quantity of saddles imported is

Accepted Answer

A)   Q3 - Q1.
B)   Q3 - Q2.
C)   Q4 - Q1.
D)   Q4 - Q2.E) A) and B)
F) A) and C)

Question 19

Figure 9-6 
-Refer to Figure 9-6.The amount of revenue collected by the government from the tariff is

Accepted Answer

A)   $200.
B)   $400.
C)   $500.
D)   $600.E) B) and C)
F) A) and B)

Question 20

Spain is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Spain imposes a $5 tariff on chips.As a result,

Accepted Answer

A)   Spanish consumers of chips and Spanish producers of chips both gain.
B)   Spanish consumers of chips gain and Spanish producers of chips lose.
C)   Spanish consumers of chips lose and Spanish producers of chips gain.
D)   Spanish consumers of chips and Spanish producers of chips both lose.E) B) and D)
F) All of the above

Exam 9: Application: International Trade

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 9-6 -Refer to Figure 9-6.The amount of revenue collected by the government from the tariff 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 many units will domestic consumers demand,and how many units will domestic producers produce?

Correct AnswerverifiedDomestic consumers w...View AnswerShow Answer

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

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

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Suppose England exports cars to Australia and imports cheese from Mexico.This situation suggests that

Correct AnswerverifiedShow Answer

In September 2009,President Obama imposed a 35 percent tariff on

Correct AnswerverifiedShow Answer

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

Correct AnswerverifiedShow Answer

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Correct AnswerverifiedShow Answer

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.Which of the following is a valid equation for Welsh consumer surplus with trade?

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,producer surplus in Scotland

Correct AnswerverifiedShow Answer

Assume,for Canada,that the domestic price of wheat without international trade is lower than the world price of wheat.This suggests that,in the production of wheat,

Correct AnswerverifiedShow Answer

Suppose Iran imposes a tariff on lumber.For the tariff to have any effect,it must be the case that

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15.With the tariff,the quantity of saddles imported is

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17.With free trade,consumer surplus is

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Suppose New Zealand goes from being an isolated country to being an exporter of wool.As a result,

Correct AnswerverifiedShow Answer

Spain is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Spain imposes a $5 tariff on chips.As a result,

Correct AnswerverifiedShow Answer

Chile allows trade with the rest of the world.We know that Chile has a comparative advantage in producing lemons if we know that

Correct AnswerverifiedShow Answer

A tariff

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Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.Which of the following is a valid equation for Welsh producer surplus with trade?

Correct AnswerverifiedShow Answer

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Domestic consumers w...
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