Question 1

Figure 9-17 
-Refer to Figure 9-17. The deadweight loss caused by the tariff is

Accepted Answer

A)  $24.
B)  $72.
C)  $96.
D)  $144.E) A) and D)
F) B) and C)

Question 2

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Accepted Answer

A) True 
 B)False

Question 3

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) None of the above

Question 4

A tax on an imported good is called a ______ .

Accepted Answer

The answer of A tax on an imported good is...

Question 5

Trade decisions are based on the principle of absolute advantage.

Accepted Answer

A) True 
 B)False

Question 6

Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that

Accepted Answer

A)  if Canada were to allow trade, it would export hockey sticks.
B)  Canada has an absolute advantage, relative to other countries, in producing hockey sticks.
C)  Canada has a comparative advantage, relative to other countries, in producing baseball bats.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 7

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Accepted Answer

A)  representatives of industry.
B)  representatives of the defense establishment.
C)  members of households.
D)  foreign government officials.E) B) and D)
F) A) and B)

Question 8

Honduras is an importer of goose-down pillows. The world price of these pillows is $50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras

Accepted Answer

A)  remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases.
B)  increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases.
C)  increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases.
D)  increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.E) A) and B)
F) All of the above

Question 9

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Accepted Answer

A)  A multilateral approach can reduce trade restrictions abroad as well as at home.
B)  A multilateral approach has the potential to result in freer trade.
C)  A multilateral approach requires the agreement of two or more nations.
D)  A multilateral approach may have political advantages.E) A) and B)
F) B) and C)

Question 10

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Accepted Answer

A)  The domestic price of the good increases.
B)  Consumer surplus of domestic consumers increases.
C)  Producer surplus of domestic producers increases.
D)  A deadweight loss is experienced by the domestic country.E) A) and B)
F) A) and C)

Question 11

Figure 9-12 
-Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are

Accepted Answer

A)  $54 and 800.
B)  $54 and 1,600.
C)  $42 and 800.
D)  $42 and 1,200.E) None of the above
F) B) and D)

Question 12

​Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

Accepted Answer

A) True 
 B)False

Question 13

Most economists view the United States' experience with trade as

Accepted Answer

A)  one from which no firm conclusions about the virtues of free trade can be reached, due to the relatively short history of international trade in the U.S.
B)  one from which no firm conclusions about the virtues of free trade can be reached, due to the lack of trade within the U.S. throughout most of the early history of the U.S.
C)  an ongoing experiment that confirms the virtues of free trade.
D)  an ongoing experiment that calls into serious question the notion that free trade enhances the economic well-being of a nation.E) All of the above
F) A) and C)

Question 14

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

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) A) and C)

Question 15

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. With trade, total surplus is

Accepted Answer

A)  $3,240.
B)  $6,480.
C)  $7,760.
D)  $15,520.E) All of the above
F) A) and B)

Question 16

Figure 9-13 
-Refer to Figure 9-13. Consumer surplus after trade is

Accepted Answer

A)  $3,600.
B)  $5,400.
C)  $7,200.
D)  $8,100.E) A) and D)
F) A) and C)

Question 17

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) A) and B)
F) None of the above

Question 18

The small-economy assumption is necessary to analyze the gains and losses from international trade.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

Figure 9-21
The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-21. Producer surplus with free trade is

Accepted Answer

A)  $14,000.
B)  $18,000.
C)  $24,000.
D)  $32,000.E) A) and C)
F) B) and C)

Exam 9: Application: International Trade

​Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

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Most economists view the United States' experience with trade as

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Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

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Honduras is an importer of goose-down pillows. The world price of these pillows is $50. Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras

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Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, total surplus is

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For any country that allows free trade,

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Figure 9-13 -Refer to Figure 9-13. Consumer surplus after trade is

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Figure 9-12 -Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are

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Trade decisions are based on the principle of absolute advantage.

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Import quotas and tariffs produce similar results. Which of the following is not one of those results?

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One should be especially wary of the national-security argument for restricting trade when that argument is made by

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A tax on an imported good is called a ______ .

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Figure 9-21 The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-21. Producer surplus with free trade is

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Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. The deadweight loss caused by the tariff is

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

Correct AnswerverifiedShow Answer

The small-economy assumption is necessary to analyze the gains and losses from international trade.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Since a tariff can increase employment in an industry, the result is a net increase in total surplus.

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