Question 1

The General Agreement on Tariffs and Trade GATT)  was initiated in response to

Accepted Answer

A)   in increase in exports of low-priced goods from developing countries to developed countries.
B)   the replacement of manufacturing jobs with service jobs in developed countries.
C)   economic dislocations caused by the North American Free Trade Agreement NAFT
A)   in the 1990s.
D)   high tariffs imposed during the Great Depression of the 1930s.E) All of the above
F) None of the above

Question 2

Figure 9-24
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. 
-Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The deadweight loss caused by the tariff is

Accepted Answer

A)   $25.
B)   $50.
C)   $75.
D)   $100.E) A) and B)
F) All of the above

Question 3

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 D)
F) None of the above

Question 4

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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A)   domestic producers of cardboard become better off and domestic consumers of cardboard become better off.
B)   domestic producers of cardboard become better off and domestic consumers of cardboard become worse off.
C)   domestic producers of cardboard become worse off and domestic consumers of cardboard become better off.
D)   domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.E) C) and D)
F) A) and D)

Question 5

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular 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) A) and B)
F) B) and D)

Question 6

If the world price of coffee is lower than Colombia's domestic price of coffee without trade, then Colombia

Accepted Answer

A)   should import coffee.
B)   has a comparative advantage in coffee.
C)   should produce just enough coffee to satisfy domestic demand.
D)   should produce no coffee domestically.E) A) and B)
F) None of the above

Question 7

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.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   $3,240.
B)   $6,480.
C)   $6,760.
D)   $13,520.E) A) and B)
F) A) and C)

Question 9

Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is
$52 per bushel. The U.S. is a price-taker in the market for peaches.
-Refer to Scenario 9-1. If trade in peaches is allowed, the

Accepted Answer

A)   price paid by American consumers of peaches is unchanged relative to the no-trade situation.
B)   total well-being of American producers of peaches is diminished relative to the no-trade situation.
C)   total well-being of American consumers of peaches is enhanced relative to the no-trade situation.
D)   total well-being of the United States is enhanced relative to the no-trade situation.E) A) and B)
F) B) and C)

Question 10

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 11

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 $60. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A)   domestic producers of cardboard become better off and domestic consumers of cardboard become better off.
B)   domestic producers of cardboard become better off and domestic consumers of cardboard become worse off.
C)   domestic producers of cardboard become worse off and domestic consumers of cardboard become better off.
D)   domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.E) A) and D)
F) A) and C)

Question 12

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Accepted Answer

A)   benefit the United States as a whole, because they generate revenue for the government. In addition, because the goods are priced below cost, the taxes do not harm domestic consumers.
B)   benefit the United States as a whole, because they generate revenue for the government and increase producer surplus.
C)   harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue.
D)   harm the United States as a whole, because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue.E) A) and B)
F) A) and D)

Question 13

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, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

With trade...

Question 14

When a country allows trade and becomes an importer of a good,

Accepted Answer

A)   both domestic producers and domestic consumers become better off.
B)   domestic producers become better off, and domestic consumers become worse off.
C)   domestic producers become worse off, and domestic consumers become better off.
D)   both domestic producers and domestic consumers become worse off.E) B) and C)
F) A) and D)

Question 15

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. Before the tariff is imposed, this country

Accepted Answer

A)   imports 200 roses.
B)   imports 400 roses.
C)   exports 200 roses.
D)   exports 400 roses.E) A) and C)
F) C) and D)

Question 16

Which of the following statements is true?

Accepted Answer

A)   Free trade benefits a country when it exports but harms it when it imports.
B)   "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports.
C)   Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses.
D)   Free trade benefits a country both when it exports and when it imports.E) A) and B)
F) A) and C)

Question 17

Figure 9-1
The figure illustrates the market for coffee in Guatemala. 
-Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

Accepted Answer

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

Question 18

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

Accepted Answer

A)   export 22 units of coffee.
B)   export 10 units of coffee.
C)   import 30 units of coffee.
D)   import 12 units of coffee.E) A) and D)
F) B) and D)

Question 19

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)   Japan has a comparative advantage over other countries and Japan will import automobiles.
B)   Japan has a comparative advantage over other countries and Japan will export automobiles.
C)   other countries have a comparative advantage over Japan and Japan will import automobiles.
D)   other countries have a comparative advantage over Japan and Japan will export automobiles.E) None of the above
F) All of the above

Exam 9: Application: International Trade

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 Answer
verified

Which of the following statements is true?

Correct Answer
verified

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Correct Answer
verified

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.

Correct Answer
verified

The General Agreement on Tariffs and Trade GATT) was initiated in response to

Correct Answer
verified

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the

Correct Answer
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Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. With trade, Guatemala will

Correct Answer
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Correct Answer
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Correct Answer
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With trade...
View Answer

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

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

Correct Answer
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Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The deadweight loss caused by the tariff is

Correct Answer
verified

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

Correct Answer
verified

When a country allows trade and becomes an importer of a good,

Correct Answer
verified

If the world price of coffee is lower than Colombia's domestic price of coffee without trade, then Colombia

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
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Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. Before the tariff is imposed, this country

Correct Answer
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Correct Answer
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Exam 9: Application: International Trade

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

Which of the following statements is true?

Correct AnswerverifiedShow Answer

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The General Agreement on Tariffs and Trade GATT) was initiated in response to

Correct AnswerverifiedShow Answer

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWith trade...View AnswerShow Answer

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The deadweight loss caused by the tariff is

Correct AnswerverifiedShow Answer

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

Correct AnswerverifiedShow Answer

When a country allows trade and becomes an importer of a good,

Correct AnswerverifiedShow Answer

If the world price of coffee is lower than Colombia's domestic price of coffee without trade, then Colombia

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. Before the tariff is imposed, this country

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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With trade...
View Answer

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