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Exam 9: Application: International Trade

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Question 161

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

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

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Question 162

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For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

A) True
B) False

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Question 163

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Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Without trade, consumer surplus amounts to

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

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,

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

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.

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus?

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. Suppose the country imposes a $5 per unit tariff. If the country allows trade with a tariff, how much are consumer surplus, producer surplus, tariff revenue, and total surplus?

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

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

List four benefits of international trade.

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. The amount of revenue collected by the government from the tariff is

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. Suppose the country imposes a $5 per unit tariff. If the country allows trade with a tariff, how much is the deadweight loss caused by the tariff?

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that amounts to

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. With free trade, the domestic price and domestic quantity demanded are

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?