Question 1

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) All of the above
F) B) and D)

Question 2

Figure 9-17 
-Refer to Figure 9-17. Without trade, consumer surplus is

Accepted Answer

A)  $400 and producer surplus is $200.
B)  $400 and producer surplus is $800.
C)  $1,600 and producer surplus is $200.
D)  $1,600 and producer surplus is $800.E) B) and C)
F) C) and D)

Question 3

A tax on an imported good is called a

Accepted Answer

A)  quota.
B)  tariff.
C)  supply tax.
D)  trade tax.E) A) and D)
F) B) and C)

Question 4

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Accepted Answer

A)  The domestic price of the good increases.
B)  Consumer surplus of domestic consumers increases.
C)  Producer surplus of domestic producers increases.
D)  A deadweight loss is experienced by the domestic country.E) B) and D)
F) None of the above

Question 5

Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Accepted Answer

A)  know whether Costa Rica imports or exports pharmaceuticals.
B)  compare the world price of pharmaceuticals to the price of pharmaceuticals that would prevail in Costa Rica if trade with the rest of the world were not allowed.
C)  compare the quantity of pharmaceuticals consumed in Costa Rica with the quantity of pharmaceuticals that would be consumed in Costa Rica if trade with the rest of the world were not allowed.
D)  All of the above are correct.E) B) and C)
F) C) and D)

Question 6

Figure 9-17 
-Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer surplus

Accepted Answer

A)  decreases by $576 and producer surplus does not change.
B)  decreases by $576 and producer surplus increases by $192.
C)  decreases by $792 and producer surplus does not change.
D)  decreases by $792 and producer surplus increases by $192.E) A) and D)
F) None of the above

Question 7

Figure 9-20
The figure illustrates the market for rice in Vietnam. 
-Refer to Figure 9-20. With trade, Vietnamese rice producers will produce

Accepted Answer

A)  2,000 units of rice and their producer surplus will be 4,000.
B)  2,000 units of rice and their producer surplus will be 7,500.
C)  3,000 units of rice and their producer surplus will be 7,500.
D)  3,000 units of rice and their producer surplus will be 9,000.E) None of the above
F) A) and C)

Question 8

The nation of Isolani forbids international trade. In Isolani, you can exchange 1 car for 5 motorcycles. In other countries, you can exchange 1 car for 4 motorcycles. These facts indicate that

Accepted Answer

A)  other countries have an absolute advantage, relative to Isolani, in producing cars.
B)  Isolani has a comparative advantage, relative to other countries, in producing cars.
C)  if Isolani were to allow trade, it would import motorcycles.
D)  the world price of motorcycles exceeds the price of motorcycles in Isolani.E) None of the above
F) C) and D)

Question 9

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

Question 10

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

Question 11

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 B)
F) B) and C)

Question 12

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

Accepted Answer

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

Question 13

The rules established under the General Agreement on Tariffs and Trade (GATT) are enforced by an international body called the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 14

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Accepted Answer

A)  export copper, since that country has a comparative advantage in copper.
B)  import copper, since that country has a comparative advantage in copper.
C)  neither export nor import copper, since that country cannot gain from trade.
D)  neither export nor import copper, since that country already produces copper at a low cost compared to other countries.E) A) and B)
F) A) and C)

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

Accepted Answer

The countr...

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

Question 17

Which of the following is not a commonly-advanced argument for trade restrictions?

Accepted Answer

A)  the jobs argument
B)  the national-security argument
C)  the infant-industry argument
D)  the efficiency argumentE) None of the above
F) A) and B)

Question 18

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) None of the above
F) All of the above

Question 19

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) All of the above
F) None of the above

Question 20

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. When the country for which the figure is drawn allows international trade in cars,

Accepted Answer

A)  consumer surplus increases by the area B.
B)  producer surplus decreases by the area B + D.
C)  total surplus increases by the area D.
D)  All of the above are correct.E) All of the above
F) None of the above

Exam 9: Application: International Trade

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. When the country for which the figure is drawn allows international trade in cars,

Correct Answer
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A tax on an imported good is called a

Correct Answer
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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

Which of the following is not a commonly-advanced argument for trade restrictions?

Correct Answer
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Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. With trade, Vietnamese rice producers will produce

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

Correct Answer
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The rules established under the General Agreement on Tariffs and Trade (GATT) are enforced by an international body called the World Trade Organization (WTO).

Correct Answer
verified

The nation of Isolani forbids international trade. In Isolani, you can exchange 1 car for 5 motorcycles. In other countries, you can exchange 1 car for 4 motorcycles. These facts indicate that

Correct Answer
verified

Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Correct Answer
verified

The rules established under GATT are enforced by the

Correct Answer
verified

Figure 9-17 -Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer surplus

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Correct Answer
verified

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Correct Answer
verified

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

Correct Answer
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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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The countr...
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Figure 9-17 -Refer to Figure 9-17. Without trade, consumer surplus is

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

Correct Answer
verified

Exam 9: Application: International Trade

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. When the country for which the figure is drawn allows international trade in cars,

Correct AnswerverifiedShow Answer

A tax on an imported good is called a

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

Which of the following is not a commonly-advanced argument for trade restrictions?

Correct AnswerverifiedShow Answer

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. With trade, Vietnamese rice producers will produce

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The rules established under the General Agreement on Tariffs and Trade (GATT) are enforced by an international body called the World Trade Organization (WTO).

Correct AnswerverifiedShow Answer

The nation of Isolani forbids international trade. In Isolani, you can exchange 1 car for 5 motorcycles. In other countries, you can exchange 1 car for 4 motorcycles. These facts indicate that

Correct AnswerverifiedShow Answer

Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Correct AnswerverifiedShow Answer

The rules established under GATT are enforced by the

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer surplus

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

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

Correct AnswerverifiedShow Answer

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

Correct AnswerverifiedShow Answer

Import quotas and tariffs produce similar results. Which of the following is not one of those results?

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedThe countr...View AnswerShow Answer

Figure 9-17 -Refer to Figure 9-17. Without trade, consumer surplus is

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

Correct AnswerverifiedShow Answer

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