Question 1

Figure 9-11 
-Refer to Figure 9-11. Producer surplus plus consumer surplus in this market before trade is

Accepted Answer

A)  A + B.
B)  A + B + C.
C)  A + B + C + D.
D)  B + C + D.E) A) and B)
F) None of the above

Question 2

The price of sugar that prevails in international markets is called the

Accepted Answer

A)  export price of sugar.
B)  import price of sugar.
C)  comparative-advantage price of sugar.
D)  world price of sugar.E) A) and B)
F) A) and C)

Question 3

The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

Accepted Answer

A)  exporting steel and the price per ton in Russia remained at $650.
B)  exporting steel and the price per ton in Russia increased to $1,000.
C)  importing steel and the price per ton in Russia remained at $650.
D)  importing steel and the price per ton in Russia increased to $1,000.E) B) and C)
F) B) and D)

Question 4

Figure 9-2 
-Refer to Figure 9-2. As a result of trade, total surplus increases by

Accepted Answer

A)  $80.
B)  $97.50.
C)  $162.50.
D)  $495.50.E) None of the above
F) A) and C)

Question 5

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

Accepted Answer

A)  consumer surplus increases and total surplus increases in the market for that good.
B)  consumer surplus increases and total surplus decreases in the market for that good.
C)  consumer surplus decreases and total surplus increases in the market for that good.
D)  consumer surplus decreases and total surplus decreases in the market for that good.E) All of the above
F) A) and D)

Question 6

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel, then the domestic price of steel will increase as a result.

Accepted Answer

A) True 
 B)False

Question 7

A tax on an imported good is called a

Accepted Answer

A)  quota.
B)  tariff.
C)  supply tax.
D)  trade tax.E) A) and B)
F) A) and C)

Question 8

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither importing nor exporting TVs. We can conclude that producer surplus in Aquilonia is now

Accepted Answer

A)  higher in the steel market, lower in the rice market, and unchanged in the TV market.
B)  higher in the rice and steel markets, and unchanged in the TV market.
C)  lower in the rice and TV markets, and higher in the steel market.
D)  lower in the rice and steel markets, and the same in the TV market.E) All of the above
F) None of the above

Question 9

Figure 9-11 
-Refer to Figure 9-11. Consumer surplus in this market before trade is

Accepted Answer

A)  A.
B)  B + C.
C)  A + B + D.
D)  C.E) A) and B)
F) A) and C)

Question 10

Figure 9-17 
-Refer to Figure 9-17. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)  $32.
B)  $288.
C)  $368.
D)  $720.E) None of the above
F) A) and D)

Question 11

Figure 9-1
The figure illustrates the market for wool in Scotland. 
-Refer to Figure 9-1. With trade, Scotland will

Accepted Answer

A)  export 11 units of wool.
B)  export 5 units of wool.
C)  import 15 units of wool.
D)  import 6 units of wool.E) A) and B)
F) C) and D)

Question 12

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 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 D)
F) All of the above

Question 13

Figure 9-3. The domestic country is China. 
-Refer to Figure 9-3. With trade, producer surplus in China is

Accepted Answer

A)  $800.
B)  $1,200.
C)  $1,800.
D)  $2,700.E) A) and B)
F) All of the above

Question 14

Tariffs and quotas are different in the sense that

Accepted Answer

A)  tariffs cause deadweight losses, while quotas do not cause deadweight losses.
B)  tariffs raise revenue for the government, while quotas do not raise revenue for the government.
C)  tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers.
D)  tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of domestic producers.E) A) and B)
F) A) and C)

Question 15

Characterize the two different approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?

Accepted Answer

A unilateral approach is when a country ...

Question 16

When a country takes a unilateral 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) A) and D)
F) All of the above

Question 17

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

Accepted Answer

A)  The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers.
B)  The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers.
C)  The quotas are probably the result of lobbying from foreign producers of sugar. The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers.
D)  U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them.E) None of the above
F) B) and D)

Question 18

Figure 9-20
The figure illustrates the market for rice in Vietnam. 
-Refer to Figure 9-20. Given that Vietnam is a small country, it is apparent from the figure that

Accepted Answer

A)  Vietnam will export rice if trade is allowed.
B)  Vietnam will import rice if trade is allowed.
C)  Vietnam has nothing to gain either by importing or exporting rice.
D)  the world price will fall if Vietnam begins to allow its citizens to trade with other countries.E) None of the above
F) A) and D)

Question 19

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

Accepted Answer

A) True 
 B)False

Question 20

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

Accepted Answer

A)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases.
B)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases.
C)  The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases.
D)  The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile does not change.E) A) and B)
F) A) and C)

Exam 9: Application: International Trade

Characterize the two different approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?

Correct AnswerverifiedA unilateral approach is when a country ...View AnswerShow Answer

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With trade, producer surplus in China is

Correct AnswerverifiedShow Answer

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

Correct AnswerverifiedShow Answer

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither importing nor exporting TVs. We can conclude that producer surplus in Aquilonia is now

Correct AnswerverifiedShow Answer

If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.

Correct AnswerverifiedShow Answer

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel, then the domestic price of steel will increase as a result.

Correct AnswerverifiedShow Answer

Figure 9-2 -Refer to Figure 9-2. As a result of trade, total surplus increases by

Correct AnswerverifiedShow Answer

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1. With trade, Scotland will

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. The amount of revenue collected by the government from the tariff is

Correct AnswerverifiedShow Answer

Figure 9-11 -Refer to Figure 9-11. Consumer surplus in this market before trade is

Correct AnswerverifiedShow Answer

Tariffs and quotas are different in the sense that

Correct AnswerverifiedShow Answer

Figure 9-11 -Refer to Figure 9-11. Producer surplus plus consumer surplus in this market before trade is

Correct AnswerverifiedShow Answer

A tax on an imported good is called a

Correct AnswerverifiedShow Answer

The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

Correct AnswerverifiedShow Answer

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 tariff

Correct AnswerverifiedShow Answer

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The price of sugar that prevails in international markets is called the

Correct AnswerverifiedShow Answer

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. Given that Vietnam is a small country, it is apparent from the figure that

Correct AnswerverifiedShow Answer

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A unilateral approach is when a country ...
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