Question 1

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

Accepted Answer

A)   better off no matter how Honduras responds.
B)   better off if Honduras gives in, and will be no worse off if it doesn't.
C)   worse off if Honduras doesn't give in to the threat.
D)   worse off no matter how Honduras responds.E) B) and C)
F) A) and D)

Question 2

Figure 9-15 
-Refer to Figure 9-15. With the tariff, the domestic 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) C) and D)
F) A) and D)

Question 3

Free trade allows firms to realize economies of scale, resulting in higher costs of production.

Accepted Answer

A) True 
 B)False

Question 4

The greater the elasticities of supply and demand, the smaller are the gains from trade.

Accepted Answer

A) True 
 B)False

Question 5

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

Accepted Answer

A)   Consumer surplus decreases by $100; producer surplus increases by $100; and government revenue from the tariff amounts to $50.
B)   Consumer surplus decreases by $200; producer surplus increases by $100; and government revenue from the tariff amounts to $50.
C)   Consumer surplus increases by $100; producer surplus decreases by $200; and government revenue from the tariff amounts to $50.
D)   Consumer surplus decreases by $50; producer surplus increases by $200; and government revenue from the tariff amounts to $150.E) A) and C)
F) A) and B)

Question 6

The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia are now better off.

Accepted Answer

A) True 
 B)False

Question 7

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, the country for which the figure is drawn will

Accepted Answer

A)   export 30 units of textiles.
B)   export 50 units of textiles.
C)   import 30 units of textiles.
D)   import 50 units of textiles.E) None of the above
F) A) and B)

Question 8

President Bush imposed temporary tariffs on imported steel in 2002. The reasons for this trade restriction is most consistent with the

Accepted Answer

A)   national-security argument.
B)   infant-industry argument.
C)   unfair competition argument.
D)   protection-as-a-bargaining chip-argument.E) All of the above
F) A) and C)

Question 9

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Accepted Answer

A) True 
 B)False

Question 10

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

Accepted Answer

A)   $15 and 80 calculators will be sold domestically.
B)   $15 and 130 calculators will be sold domestically.
C)   $20 and 80 calculators will be sold domestically.
D)   $20 and 130 calculators will be sold domestically.E) All of the above
F) A) and B)

Question 11

Figure 9-10. The figure applies to Mexico and the good is rifles. 
-Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

Accepted Answer

A)   the number of rifles bought and sold in Mexico.
B)   the number of rifles produced in Mexico.
C)   the number of rifles exported by Mexico.
D)   the number of rifles imported by Mexico.E) A) and B)
F) All of the above

Question 12

The history of the textile industry raises important questions for economic policy.

Accepted Answer

A) True 
 B)False

Question 13

Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Accepted Answer

A)   Guatemala has a comparative advantage over other countries in the production of coffee, and Guatemala will export coffee.
B)   Guatemala has a comparative advantage over other countries in the production of coffee, and Guatemala will import coffee.
C)   other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will export coffee.
D)   other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will import coffee.E) C) and D)
F) A) and D)

Question 14

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. With trade, producer surplus is

Accepted Answer

A)   $500.
B)   $1,000.
C)   $1,500.
D)   $2,000.E) None of the above
F) All of the above

Question 15

Scenario 9-3
Suppose domestic demand and domestic supply in a market are given by the following equations: 
-Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country allows free trade, by how much do consumer surplus, producer surplus, and producer surplus change?

Accepted Answer

With trade, consumer surplus i...

Question 16

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A)   protectionism based on the national-security argument.
B)   protectionism based on the infant-industry argument.
C)   protectionism based on the unfair-competition argument.
D)   keeping world markets relatively open.E) All of the above
F) C) and D)

Question 17

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. Relative to the free-trade outcome, the imposition of the tariff

Accepted Answer

A)   decreases imports of the good by 300 units and increases domestic production of the good by 300 units.
B)   decreases imports of the good by 300 units and increases domestic production of the good by 600 units.
C)   decreases imports of the good by 600 units and increases domestic production of the good by 300 units.
D)   decreases imports of the good by 600 units and increases domestic production of the good by 600 units.E) All of the above
F) A) and B)

Question 18

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. 
-Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?

Accepted Answer

A)   Producer surplus with trade = 1/2) P0Q0.
B)   Producer surplus with trade = 1/2) P1Q1.
C)   Producer surplus with trade = 1/2) P1Q2.
D)   None of the above is correct.E) None of the above
F) All of the above

Question 19

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. With free trade, the country imports

Accepted Answer

A)   300 units of the good.
B)   600 units of the good.
C)   900 units of the good.
D)   1,200 units of the good.E) None of the above
F) A) and C)

Question 20

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland.
 
-Refer to Figure 9-18. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $5, then the policy change results in a

Accepted Answer

A)   $25 decrease in consumer surplus.
B)   $20 increase in consumer surplus.
C)   $25 decrease in producer surplus.
D)   $20 increase in producer surplus.E) None of the above
F) A) and D)

Exam 9: Application: International Trade

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

Correct Answer
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The greater the elasticities of supply and demand, the smaller are the gains from trade.

Correct Answer
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Correct Answer
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Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, producer surplus is

Correct Answer
verified

In a December 2007 New York Times column Paul Krugman argued in favor of

Correct Answer
verified

The history of the textile industry raises important questions for economic policy.

Correct Answer
verified

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, the country for which the figure is drawn will

Correct Answer
verified

Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Correct Answer
verified

Free trade allows firms to realize economies of scale, resulting in higher costs of production.

Correct Answer
verified

President Bush imposed temporary tariffs on imported steel in 2002. The reasons for this trade restriction is most consistent with the

Correct Answer
verified

Correct Answer
verified

Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: -Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country allows free trade, by how much do consumer surplus, producer surplus, and producer surplus change?

Correct Answer
verified
With trade, consumer surplus i...
View Answer

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

Correct Answer
verified

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?

Correct Answer
verified

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. With free trade, the country imports

Correct Answer
verified

The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia are now better off.

Correct Answer
verified

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

Correct Answer
verified

Figure 9-15 -Refer to Figure 9-15. With the tariff, the domestic price and domestic quantity demanded are

Correct Answer
verified

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Correct Answer
verified

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

Correct Answer
verified

Exam 9: Application: International Trade

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will be

Correct AnswerverifiedShow Answer

The greater the elasticities of supply and demand, the smaller are the gains from trade.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, producer surplus is

Correct AnswerverifiedShow Answer

In a December 2007 New York Times column Paul Krugman argued in favor of

Correct AnswerverifiedShow Answer

The history of the textile industry raises important questions for economic policy.

Correct AnswerverifiedShow Answer

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, the country for which the figure is drawn will

Correct AnswerverifiedShow Answer

Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Correct AnswerverifiedShow Answer

Free trade allows firms to realize economies of scale, resulting in higher costs of production.

Correct AnswerverifiedShow Answer

President Bush imposed temporary tariffs on imported steel in 2002. The reasons for this trade restriction is most consistent with the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: -Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country allows free trade, by how much do consumer surplus, producer surplus, and producer surplus change?

Correct AnswerverifiedWith trade, consumer surplus i...View AnswerShow Answer

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

Correct AnswerverifiedShow Answer

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?

Correct AnswerverifiedShow Answer

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. With free trade, the country imports

Correct AnswerverifiedShow Answer

The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia are now better off.

Correct AnswerverifiedShow Answer

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15. With the tariff, the domestic price and domestic quantity demanded are

Correct AnswerverifiedShow Answer

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Correct AnswerverifiedShow Answer

Suppose a certain country imposes a tariff on a good. Which of the following results of the tariff is possible?

Correct AnswerverifiedShow Answer

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With trade, consumer surplus i...
View Answer

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