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Suppose Japan exports cars to Russia and imports wine from France. This situation suggests


A) Japan has a comparative advantage relative to France in producing wine, and Russia has a comparative advantage to Japan in producing cars.
B) Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine.
C) Japan has an absolute advantage relative to Russia in producing cars, and France has an absolute advantage relative to Japan in producing wine.
D) Japan has an absolute advantage relative to France in producing wine, and Russia has an absolute advantage relative to Japan in producing cars.

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

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A country has a comparative advantage in a product if the world price is _____ than that country's domestic price without trade.

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Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?


A) The price of paper in Republica decreased as a result of the policy change.
B) Republica began exporting paper as a result of the policy change.
C) The domestic demand curve for paper shifted to the right as a result of the policy change.
D) The domestic quantity of paper demanded increased as a result of the policy change.

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

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​Imposing a tariff on the import of a good is preferable to a quota because a tariff produces revenue for the government, while a quota never produces any revenue for a government.

A) True
B) False

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Domestic producers of a good become worse off, and domestic consumers of a good become better off, when a country begins allowing international trade in that good and


A) the country becomes an importer of the good as a result.
B) the world price exceeds the domestic price of the good that prevailed before international trade was allowed.
C) the country in question has a comparative advantage, relative to other countries, in producing the good.
D) total surplus does not change as a result.

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

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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) 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) A) and C)

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


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

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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, U.S. producers of peaches


A) will be better off.
B) will be worse off.
C) will be unaffected.
D) will experience a decrease in their collective producer surplus.

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

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Without free trade, the domestic price of a good must be equal to the world price of a good.

A) True
B) False

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When a country allows trade and becomes an importer of jet skis,


A) domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country rises.
B) domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country falls.
C) domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country rises.
D) domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country falls.

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

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A tariff on a product makes


A) domestic sellers better off and domestic buyers worse off.
B) domestic sellers worse off and domestic buyers worse off.
C) domestic sellers better off and domestic buyers better off.
D) domestic sellers worse off and domestic buyers better off.

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

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​Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. ​Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to figure 9-26. After opening the U.S. baseball market to international trade, total surplus is A) ​$4800. B) ​$5400. C) ​$6000. D) ​$1200 -Refer to figure 9-26. After opening the U.S. baseball market to international trade, total surplus is


A) ​$4800.
B) ​$5400.
C) ​$6000.
D) ​$1200

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

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

A) True
B) False

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Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: -Refer to Scenario 9-3. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market? -Refer to Scenario 9-3. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

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Without trade, consu...

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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. represents the domestic quantity of cardboard demanded, in tons, and 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 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. represents the domestic quantity of cardboard supplied, in tons, and 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. 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) All of the above
F) None of the above

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Figure 9-17 Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, consumer surplus is A) $808 and producer surplus is $200. B) $808 and producer surplus is $392. C) $1,024 and producer surplus is $200. D) $1,024 and producer surplus is $392. -Refer to Figure 9-17. With trade and a tariff, consumer surplus is


A) $808 and producer surplus is $200.
B) $808 and producer surplus is $392.
C) $1,024 and producer surplus is $200.
D) $1,024 and producer surplus is $392.

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

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Suppose in the country of Jumanji that the price of coffee with no trade allowed is below the world price of coffee. If Jumanji allows free trade, will Jumanji be an importer or an exporter of coffee?

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Jumanji wi...

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Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. With free trade, the domestic price and domestic quantity demanded are A) $90 and 5. B) $90 and 10. C) $120 and 5. D) $120 and 18. -Refer to Figure 9-23. With free trade, the domestic price and domestic quantity demanded are


A) $90 and 5.
B) $90 and 10.
C) $120 and 5.
D) $120 and 18.

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

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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


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

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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. From the figure it is apparent that A) Guatemala will experience a shortage of coffee if trade is not allowed. B) Guatemala will experience a surplus of coffee if trade is not allowed. C) Guatemala has a comparative advantage in producing coffee, relative to the rest of the world. D) foreign countries have a comparative advantage in producing coffee, relative to Guatemala. -Refer to Figure 9-1. From the figure it is apparent that


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

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

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