Question 1

Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. 
-Refer to Figure 9-8.The country for which the figure is drawn

Accepted Answer

A)   has a comparative advantage relative to other countries in the production of cars and it will export cars.
B)   has a comparative advantage relative to other countries in the production of cars and it will import cars.
C)   has a comparative disadvantage relative to other countries in the production of cars and it will export cars.
D)   has a comparative disadvantage relative to other countries in the production of cars and it will import cars.E) B) and C)
F) A) and D)

Question 2

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

Accepted Answer

A)   the U.S.has a comparative advantage over other countries and the U.S.will export beef.
B)   the U.S.has a comparative advantage over other countries and the U.S.will import beef.
C)   other countries have a comparative advantage over the U.S.and the U.S.will export beef.
D)   other countries have a comparative advantage over the U.S.and the U.S.will import beef.E) A) and B)
F) A) and C)

Question 3

The imposition of a tariff on imported wine will increase the domestic price of wine,decrease the quantity of wine imported,and increase the quantity of wine produced domestically.

Accepted Answer

A) True 
 B)False

Question 4

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of beans increases to equal the world price of beans,then

Accepted Answer

A)   that country becomes an exporter of beans.
B)   that country has a comparative advantage in producing beans.
C)   at the world price,the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country.
D)   All of the above are correct.E) A) and D)
F) All of the above

Question 5

Figure 9-15 1 and Q1. B)  P1 and Q4. C)  P2 and Q2. D)  P2 and Q3." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-15.With trade and without a tariff,the price and domestic quantity demanded are

Accepted Answer

A)   P1 and Q1.
B)   P1 and Q4.
C)   P2 and Q2.
D)   P2 and Q3.E) A) and B)
F) A) and C)

Question 6

Figure 9-12 
-Refer to Figure 9-12.Producer surplus after trade is

Accepted Answer

A)   $4,800.
B)   $5,600.
C)   $6,400.
D)   $7,000.E) B) and D)
F) All of the above

Question 7

Figure 9-13 
-Refer to Figure 9-13.With trade,producer surplus is

Accepted Answer

A)   $900.
B)   $1,100.
C)   $1,500.
D)   $2,000.E) A) and B)
F) A) and C)

Question 8

Suppose the United States exports cars to France and imports cheese from Switzerland.This situation suggests that

Accepted Answer

A)   the United States has a comparative advantage relative to Switzerland in producing cheese,and France has a comparative advantage relative to the United States in producing cars.
B)   the United States has a comparative advantage relative to France in producing cars,and Switzerland has a comparative advantage relative to the United States in producing cheese.
C)   the United States has an absolute advantage relative to Switzerland in producing cheese,and France has an absolute advantage relative to the United States in producing cars.
D)   the United States has an absolute advantage relative to France in producing cars,and Switzerland has an absolute advantage relative to the United States in producing cheese.E) B) and C)
F) All of the above

Question 9

When a country that imports a particular good imposes a tariff 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 D)
F) C) and D)

Question 10

Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,then,other things equal,the price of wheat in Ivory Coast will increase,but by less than $1.

Accepted Answer

A) True 
 B)False

Question 11

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 C)
F) A) and D)

Question 12

When the nation of Isoland opens up its steel market to international trade,that change

Accepted Answer

A)   creates winners and losers,regardless of whether Isoland ends up exporting or importing steel.
B)   results in a decrease in total surplus,regardless of whether Isoland ends up exporting or importing steel.
C)   creates winners,but no losers,if Isoland ends up exporting steel.
D)   creates losers,but no winners,if Isoland ends up importing steel.E) C) and D)
F) A) and B)

Question 13

The rules established under GATT are enforced by the

Accepted Answer

A)   governments of the nations that are involved in GATT.
B)   North American Free Trade Association.
C)   World Trade Organization.
D)   European Union.E) A) and B)
F) A) and D)

Question 14

Figure 9-17 
-Refer to Figure 9-17.The imposition of the tariff

Accepted Answer

A)   decreases imports of the good by 4 units and increases domestic production of the good by 2 units.
B)   decreases imports of the good by 4 units and increases domestic production of the good by 4 units.
C)   decreases imports of the good by 6 units and increases domestic production of the good by 2 units.
D)   decreases imports of the good by 6 units and increases domestic production of the good by 6 units.E) None of the above
F) B) and D)

Question 15

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 B)
F) C) and D)

Question 16

If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price,

Accepted Answer

A)   the country will be an exporter of the good.
B)   the country will be an importer of the good.
C)   the country will be neither an exporter nor an importer of the good.
D)   Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither.E) A) and B)
F) None of the above

Question 17

Figure 9-2 
-Refer to Figure 9-2.Without trade,producer surplus is

Accepted Answer

A)   $210.
B)   $245.
C)   $455.
D)   $490.E) A) and B)
F) A) and C)

Question 18

Figure 9-19.On the diagram below,Q represents the quantity of textiles and P represents the price of textiles. 
-Refer to Figure 9-19.With free trade,consumer surplus in the textile market amounts to

Accepted Answer

A)   $210.
B)   $320.
C)   $405.
D)   $910.E) None of the above
F) B) and C)

Question 19

Several arguments for restricting trade have been advanced.Those arguments do not include

Accepted Answer

A)   the jobs argument.
B)   the protection-as-a-bargaining-chip argument.
C)   the no-deadweight-loss argument.
D)   the infant-industry argument.E) A) and D)
F) B) and C)

Question 20

The nation of Zelzar 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 incense,exporting steel,and neither importing nor exporting rugs.We can conclude that Zelzar's new free-trade policy has

Accepted Answer

A)   increased consumer surplus and producer surplus in the incense market.
B)   increased consumer surplus in the steel market and left producer surplus in the rug market unchanged.
C)   decreased consumer surplus in both the steel and rug markets.
D)   decreased consumer surplus in the steel market and increased total surplus in the incense market.E) A) and C)
F) B) and C)

Exam 9: Application: International Trade

Figure 9-19.On the diagram below,Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19.With free trade,consumer surplus in the textile market amounts to

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Figure 9-17 -Refer to Figure 9-17.The imposition of the tariff

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Figure 9-12 -Refer to Figure 9-12.Producer surplus after trade is

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If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price,

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Several arguments for restricting trade have been advanced.Those arguments do not include

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Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8.The country for which the figure is drawn

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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,

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The nation of Zelzar 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 incense,exporting steel,and neither importing nor exporting rugs.We can conclude that Zelzar's new free-trade policy has

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Figure 9-2 -Refer to Figure 9-2.Without trade,producer surplus is

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Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,then,other things equal,the price of wheat in Ivory Coast will increase,but by less than $1.

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Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of beans increases to equal the world price of beans,then

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When a country that imports a particular good imposes a tariff on that good,

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

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When the nation of Isoland opens up its steel market to international trade,that change

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Figure 9-13 -Refer to Figure 9-13.With trade,producer surplus is

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Figure 9-15 -Refer to Figure 9-15.With trade and without a tariff,the price and domestic quantity demanded are

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Suppose the United States exports cars to France and imports cheese from Switzerland.This situation suggests that

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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

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The rules established under GATT are enforced by the

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The imposition of a tariff on imported wine will increase the domestic price of wine,decrease the quantity of wine imported,and increase the quantity of wine produced domestically.

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