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Scenario 9-2 -For a small country called Boxland, the equation of the domestic demand curve for cardboard is Scenario 9-2 -For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. -For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It increases consumer surplus, decreases producer surplus, and increases total surplus. B) It increases consumer surplus, increases producer surplus, and increases total surplus. C) It increases consumer surplus, decreases producer surplus, and decreases total surplus. D) It decreases consumer surplus, increases producer surplus, and increases total surplus. where Scenario 9-2 -For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. -For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It increases consumer surplus, decreases producer surplus, and increases total surplus. B) It increases consumer surplus, increases producer surplus, and increases total surplus. C) It increases consumer surplus, decreases producer surplus, and decreases total surplus. D) It decreases consumer surplus, increases producer surplus, and increases total surplus. Scenario 9-2 -For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. -For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It increases consumer surplus, decreases producer surplus, and increases total surplus. B) It increases consumer surplus, increases producer surplus, and increases total surplus. C) It increases consumer surplus, decreases producer surplus, and decreases total surplus. D) It decreases consumer surplus, increases producer surplus, and increases total surplus. represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. -For Boxland, the equation of the domestic supply curve for cardboard is Scenario 9-2 -For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. -For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It increases consumer surplus, decreases producer surplus, and increases total surplus. B) It increases consumer surplus, increases producer surplus, and increases total surplus. C) It increases consumer surplus, decreases producer surplus, and decreases total surplus. D) It decreases consumer surplus, increases producer surplus, and increases total surplus. where Scenario 9-2 -For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. -For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It increases consumer surplus, decreases producer surplus, and increases total surplus. B) It increases consumer surplus, increases producer surplus, and increases total surplus. C) It increases consumer surplus, decreases producer surplus, and decreases total surplus. D) It decreases consumer surplus, increases producer surplus, and increases total surplus. Scenario 9-2 -For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. -For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It increases consumer surplus, decreases producer surplus, and increases total surplus. B) It increases consumer surplus, increases producer surplus, and increases total surplus. C) It increases consumer surplus, decreases producer surplus, and decreases total surplus. D) It decreases consumer surplus, increases producer surplus, and increases total surplus. represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland?


A) It increases consumer surplus, decreases producer surplus, and increases total surplus.
B) It increases consumer surplus, increases producer surplus, and increases total surplus.
C) It increases consumer surplus, decreases producer surplus, and decreases total surplus.
D) It decreases consumer surplus, increases producer surplus, and increases total surplus.

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

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Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade? -Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?

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With trade, consumer surplus f...

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Figure 9-17 Figure 9-17 -Refer to Figure 9-17. With free trade, total surplus is A) $600. B) $1,200. C) $1,800. D) $2,400. -Refer to Figure 9-17. With free trade, total surplus is


A) $600.
B) $1,200.
C) $1,800.
D) $2,400.

E) None of the above
F) B) and C)

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Figure 9-20 The figure illustrates the market for rice in Vietnam. Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. From the figure it is apparent that A) Vietnam will experience a shortage of rice if trade is not allowed. B) Vietnam will experience a surplus of rice if trade is not allowed. C) Vietnam has a comparative advantage in producing rice, relative to the rest of the world. D) foreign countries have a comparative advantage in producing rice, relative to Vietnam. -Refer to Figure 9-20. From the figure it is apparent that


A) Vietnam will experience a shortage of rice if trade is not allowed.
B) Vietnam will experience a surplus of rice if trade is not allowed.
C) Vietnam has a comparative advantage in producing rice, relative to the rest of the world.
D) foreign countries have a comparative advantage in producing rice, relative to Vietnam.

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

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Figure 9-2 The figure illustrates the market for calculators in a country. Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. With free trade, this country will A) import 50 calculators. B) import 100 calculators. C) export 50 calculators. D) export 100 calculators. -Refer to Figure 9-2. With free trade, this country will


A) import 50 calculators.
B) import 100 calculators.
C) export 50 calculators.
D) export 100 calculators.

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

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When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,


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

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When a country moves away from a free trade position and imposes a tariff on imports, it causes


A) a decrease in total surplus in the market.
B) a decrease in producer surplus in the market.
C) an increase in consumer surplus in the market.
D) a decrease in revenue to the government.

E) A) and D)
F) A) and C)

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A tariff is a tax placed on


A) an exported good and it lowers the domestic price of the good below the world price.
B) an exported good and it ensures that the domestic price of the good stays the same as the world price.
C) an imported good and it lowers the domestic price of the good below the world price.
D) an imported good and it raises the domestic price of the good above the world price.

E) All of the above
F) A) and B)

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Figure 9-1 The figure illustrates the market for coffee in Guatemala. Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade in coffee is allowed, producer surplus in Guatemala A) increases by the area B + D. B) increases by the area B + D + G. C) decreases by the area C + F. D) decreases by the area G. -Refer to Figure 9-1. When trade in coffee is allowed, producer surplus in Guatemala


A) increases by the area B + D.
B) increases by the area B + D + G.
C) decreases by the area C + F.
D) decreases by the area G.

E) B) and C)
F) A) and B)

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Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. 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, will the country import or export this good, and how many units will be imported/exported? -Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

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The countr...

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Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. 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 much is total surplus? -Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how much is total surplus?

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With trade...

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Figure 9-29 The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. Figure 9-29 The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. -Refer to Figure 9-29. If the country allows free trade, how many units will domestic consumers demand and how many units will domestic producers supply? -Refer to Figure 9-29. If the country allows free trade, how many units will domestic consumers demand and how many units will domestic producers supply?

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With trade, domestic...

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Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

A) True
B) False

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Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. 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 much is consumer surplus? -Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free trade, how much is consumer surplus?

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With trade...

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Trade decisions are based on the principle of absolute advantage.

A) True
B) False

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If Argentina exports oranges to the rest of the world, Argentina's producers of oranges are worse off, and Argentina's consumers of oranges are better off, as a result of trade.

A) True
B) False

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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


A) an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus.
B) an import quota has no effect on producer surplus, while a tariff decreases producer surplus.
C) a tariff raises total surplus, while an import quota does not.
D) a tariff raises revenue for that country's government, while an import quota does not.

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

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"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the


A) national-security argument.
B) infant-industry argument.
C) unfair-competition argument.
D) jobs argument.

E) B) and C)
F) All of the above

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When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,


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) A) and C)

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How does an import quota differ from an equivalent tariff?

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Both the import quota and the tariff rai...

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