Question 1

Figure 9-1
 
-Refer to Figure 9-1.As a result of trade,total surplus increases by

Accepted Answer

A)  $80.
B)  $97.50.
C)  $162.50.
D)  $495.50.E) B) and C)
F) A) and B)

Question 2

A major difference between tariffs and import quotas is that

Accepted Answer

A)  tariffs create deadweight losses, but import quotas do not.
B)  tariffs help domestic consumers, and import quotas help domestic producers.
C)  tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 3

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Accepted Answer

A) True 
 B)False

Question 4

How does an import quota differ from an equivalent tariff?

Accepted Answer

Both the import quota and the tariff rai...

Question 5

Figure 9-4
 
-Refer to Figure 9-4.The increase in total surplus resulting from trade is

Accepted Answer

A)  $60, since producer surplus increases by $180 and consumer surplus falls by $240.
B)  $60, since consumer surplus increases by $180 and producer surplus falls by $240.
C)  $75, since consumer surplus increases by $240 and producer surplus falls by $165.
D)  $75, since consumer surplus increases by $300 and producer surplus falls by $225.E) A) and C)
F) A) and B)

Question 6

A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

Accepted Answer

A) True 
 B)False

Question 7

Figure 9-6. The figure applies to the nation of Wales and the good is cheese.
 
-Refer to Figure 9-6.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

A)  P₁ and Q₂.
B)  P₁ and Q₁.
C)  P₀ and Q₀.
D)  P₀ and Q₁.E) None of the above
F) A) and D)

Question 8

Figure 9-1
 
-Refer to Figure 9-1.If this country chooses to trade,the price of baskets in this country will be

Accepted Answer

A)  $10 and 40 baskets will be sold domestically.
B)  $10 and 105 baskets will be domestically.
C)  $7 and 70 baskets will be sold domestically.
D)  $7 and 40 baskets will be sold domestically.E) All of the above
F) A) and B)

Question 9

Figure 9-12
 
-Refer to Figure 9-12.The price and domestic quantity demanded after trade are

Accepted Answer

A)  $8 and 300.
B)  $8 and 900.
C)  $14 and 900.
D)  $14 and 600.E) B) and D)
F) B) and C)

Question 10

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

Question 11

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

Accepted Answer

A) True 
 B)False

Question 12

Figure 9-15. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.
 
-Refer to Figure 9-15.The tariff

Accepted Answer

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

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Figure 9-2. The domestic country is China.
 
-Refer to Figure 9-2.The increase in total surplus in China when trade becomes allowed is

Accepted Answer

A)  $400.
B)  $500.
C)  $600.
D)  $750.E) None of the above
F) A) and D)

Question 15

Figure 9-10
 
-Refer to Figure 9-10.Consumer surplus in this market before trade is

Accepted Answer

A)  a.
B)  B + C.
C)  A + B + D.
D)  C.E) All of the above
F) A) and B)

Question 16

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

Accepted Answer

A)  the domestic price of sugar will be greater than the world price of sugar.
B)  the domestic price of sugar will be lower than the world price of sugar.
C)  the domestic price of sugar will equal the world price of sugar.
D)  The world price of sugar does not matter; the domestic price of sugar prevails.E) A) and B)
F) A) and C)

Question 17

Figure 9-6. The figure applies to the nation of Wales and the good is cheese.
 
-Refer to Figure 9-6.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 B)

Question 18

Figure 9-10
 
-Refer to Figure 9-10.Producer surplus in this market after trade is

Accepted Answer

A)  C.
B)  C + B.
C)  A + B + D.
D)  B + C + D.E) A) and B)
F) All of the above

Question 19

Figure 9-10
 
-Refer to Figure 9-10.The change in total surplus in this market because of trade is

Accepted Answer

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

Question 20

Figure 9-5
 
-Refer to Figure 9-5.The amount of deadweight loss caused by the tariff equals

Accepted Answer

A)  $100.
B)  $200.
C)  $400.
D)  $500.E) A) and B)
F) A) and C)

Exam 9: Application: International Trade

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

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Figure 9-1 -Refer to Figure 9-1.If this country chooses to trade,the price of baskets in this country will be

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Figure 9-6. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-6.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

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Figure 9-5 -Refer to Figure 9-5.The amount of deadweight loss caused by the tariff equals

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Figure 9-4 -Refer to Figure 9-4.The increase in total surplus resulting from trade is

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Figure 9-12 -Refer to Figure 9-12.The price and domestic quantity demanded after trade are

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Figure 9-10 -Refer to Figure 9-10.Producer surplus in this market after trade is

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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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Figure 9-6. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-6.Which of the following is a valid equation for Welsh consumer surplus with trade?

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How does an import quota differ from an equivalent tariff?

Correct AnswerverifiedBoth the import quota and the tariff rai...View AnswerShow Answer

A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

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Figure 9-15. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-15.The tariff

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Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

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

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Figure 9-10 -Refer to Figure 9-10.Consumer surplus in this market before trade is

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Figure 9-1 -Refer to Figure 9-1.As a result of trade,total surplus increases by

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A major difference between tariffs and import quotas is that

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Figure 9-2. The domestic country is China. -Refer to Figure 9-2.The increase in total surplus in China when trade becomes allowed is

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Figure 9-10 -Refer to Figure 9-10.The change in total surplus in this market because of trade is

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The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

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Both the import quota and the tariff rai...
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