Question 1

William and Jamal live in the country of Dumexia.As a result of Dumexia's legalization of international trade in bananas,William becomes better off and Jamal becomes worse off.It follows that William is a seller,and Jamal is a buyer,of bananas.

Accepted Answer

A) True 
 B)False

Question 2

Figure 9-2
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 9-2.With free trade,total surplus is

Accepted Answer

A)   $30,000.
B)   $66,000.
C)   $96,000.
D)   $120,000.E) None of the above
F) B) and D)

Question 3

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

Accepted Answer

A)   A + B.
B)   A + B + C.
C)   B + C + D.
D)   A + B + C + D.E) All of the above
F) A) and B)

Question 4

Economists view the fact that Florida grows oranges,Texas pumps oil,and California makes wine as

Accepted Answer

A)   confirmation of the virtues of free trade.
B)   confirmation of the infant-industry argument.
C)   confirmation that free trade agreements are not necessary.
D)   confirmation that specialization in absolute advantage works.E) None of the above
F) All of the above

Question 5

The two basic approaches that a country can take as a means to achieve free trade are the

Accepted Answer

A)   unilateral approach and the multilateral approach.
B)   short-run approach and the long-run approach.
C)   continental approach and the global approach.
D)   industry approach and the security approach.E) B) and C)
F) All of the above

Question 6

Figure 9-6 
-Refer to Figure 9-6.The imposition of a tariff on carnations

Accepted Answer

A)   increases the number of carnations imported by 100.
B)   increases the number of carnations imported by 200.
C)   decreases the number of carnations imported by 200.
D)   decreases the number of carnations imported by 400.E) A) and C)
F) A) and D)

Question 7

A country has a comparative advantage in a product if the world price is

Accepted Answer

A)   lower than that country's domestic price without trade.
B)   higher than that country's domestic price without trade.
C)   equal to that country's domestic price without trade.
D)   not subject to manipulation by organizations that govern international trade.E) B) and D)
F) All of the above

Question 8

Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed.If the world price of oranges is $10 per bushel and if Nash allows free trade,will Nash be an importer or an exporter of oranges?

Accepted Answer

Nash will ...

Question 9

Figure 9-15 
-Refer to Figure 9-15.Producer surplus with the tariff is

Accepted Answer

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

Question 10

When a country allows trade and becomes an exporter of a good,which of the following is not a consequence?

Accepted Answer

A)   The price paid by domestic consumers of the good increases.
B)   The price received by domestic producers of the good increases.
C)   The losses of domestic consumers of the good exceed the gains of domestic producers of the good.
D)   The gains of domestic producers of the good exceed the losses of domestic consumers of the good.E) C) and D)
F) All of the above

Question 11

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 D)
F) None of the above

Question 12

If the world price of sugar is lower than Brazil's domestic price of sugar without trade,then Brazil

Accepted Answer

A)   should import sugar.
B)   has a comparative advantage in sugar.
C)   should produce just enough sugar to satisfy domestic demand.
D)   should produce no sugar domestically.E) A) and D)
F) B) and D)

Question 13

If the world price of a good is greater than the domestic price in a country that can engage in international trade,then that country becomes an importer of that good.

Accepted Answer

A) True 
 B)False

Question 14

A logical starting point from which the study of international trade begins is

Accepted Answer

A)   the recognition that not all markets are competitive.
B)   the recognition that government intervention in markets sometimes enhances the economic welfare of the society.
C)   the principle of absolute advantage.
D)   the principle of comparative advantage.E) All of the above
F) A) and D)

Question 15

"Trade raises the economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods,but it is not correct for a nation that imports manufactured goods.

Accepted Answer

A) True 
 B)False

Question 16

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Accepted Answer

A)   the domestic price of coffee will be greater than the world price of coffee.
B)   the domestic price of coffee will be lower than the world price of coffee.
C)   the domestic price of coffee will equal the world price of coffee.
D)   The world price of coffee does not matter;the domestic price of coffee prevails.E) A) and B)
F) All of the above

Question 19

Figure 9-6 
-Refer to Figure 9-6.The amount of deadweight loss caused by the tariff equals

Accepted Answer

A)   $100.
B)   $200.
C)   $400.
D)   $500.E) B) and C)
F) A) and B)

Question 20

Figure 9-17 
-Refer to Figure 9-17.Relative to the free-trade outcome,the imposition of the tariff

Accepted Answer

A)   decreases imports of the good by 16 units and increases domestic production of the good by 8 units.
B)   decreases imports of the good by 16 units and increases domestic production of the good by 16 units.
C)   decreases imports of the good by 24 units and increases domestic production of the good by 8 units.
D)   decreases imports of the good by 24 units and increases domestic production of the good by 24 units.E) B) and C)
F) A) and C)

Exam 9: Application: International Trade

Figure 9-2 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 9-2.With free trade,total surplus is

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

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If the world price of sugar is lower than Brazil's domestic price of sugar without trade,then Brazil

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If the world price of a good is greater than the domestic price in a country that can engage in international trade,then that country becomes an importer of that good.

Correct AnswerverifiedShow Answer

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

Correct AnswerverifiedShow Answer

Economists view the fact that Florida grows oranges,Texas pumps oil,and California makes wine as

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William and Jamal live in the country of Dumexia.As a result of Dumexia's legalization of international trade in bananas,William becomes better off and Jamal becomes worse off.It follows that William is a seller,and Jamal is a buyer,of bananas.

Correct AnswerverifiedShow Answer

Figure 9-6 -Refer to Figure 9-6.The imposition of a tariff on carnations

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After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

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Figure 9-17 -Refer to Figure 9-17.Relative to the free-trade outcome,the imposition of the tariff

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When a country allows trade and becomes an exporter of a good,which of the following is not a consequence?

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"Trade raises the economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers." This statement is correct for a nation that exports manufactured goods,but it is not correct for a nation that imports manufactured goods.

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A logical starting point from which the study of international trade begins is

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A country has a comparative advantage in a product if the world price is

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Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed.If the world price of oranges is $10 per bushel and if Nash allows free trade,will Nash be an importer or an exporter of oranges?

Correct AnswerverifiedNash will ...View AnswerShow Answer

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

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Figure 9-15 -Refer to Figure 9-15.Producer surplus with the tariff is

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Figure 9-6 -Refer to Figure 9-6.The amount of deadweight loss caused by the tariff equals

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

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The two basic approaches that a country can take as a means to achieve free trade are the

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Nash will ...
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