Question 1

Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
 
-Refer to Figure 9-7.With trade,the Welsh price of cheese and the Welsh quantity of cheese demanded are

Accepted Answer

A)   P1 and Q2.
B)   P1 and Q1.
C)   P0 and Q0.
D)   P3 and Q1.E) A) and B)
F) A) and C)

Question 2

Suppose Ecuador imposes a tariff on imported bananas.If the increase in producer surplus is $50 million,the reduction in consumer surplus is $150 million,and the deadweight loss of the tariff is $30 million,then the tariff generates $130 million in revenue for the government.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)   Canada has a comparative advantage over other countries and Canada will export wheat.
B)   Canada has a comparative advantage over other countries and Canada will import wheat.
C)   other countries have a comparative advantage over Canada and Canada will export wheat.
D)   other countries have a comparative advantage over Canada and Canada will import wheat.E) All of the above
F) A) and B)

Question 4

Within a country,the domestic price of a product will equal the world price if

Accepted Answer

A)   trade restrictions are imposed on the product.
B)   the country allows free trade.
C)   the country chooses to import, but not export, the product.
D)   the country chooses to export, but not import, the product.E) None of the above
F) C) and D)

Question 5

For Country A,the world price of textiles exceeds the domestic equilibrium price of textiles.As a result,international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

Accepted Answer

A) True 
 B)False

Question 6

Figure 9-17
 
-Refer to Figure 9-17.With free 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) None of the above
F) C) and D)

Question 7

Figure 9-12
 
-Refer to Figure 9-12.Consumer surplus before trade is

Accepted Answer

A)   $3,600.
B)   $4,200.
C)   $5,400.
D)   $6,000.E) All of the above
F) C) and D)

Question 8

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

Question 9

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil.
 
-Refer to Figure 9-14.The country for which the figure is drawn

Accepted Answer

A)   has a comparative advantage relative to other countries in the production of crude oil and it will export crude oil.
B)   has a comparative advantage relative to other countries in the production of crude oil and it will import crude oil.
C)   has a comparative disadvantage relative to other countries in the production of crude oil and it will export crude oil.
D)   has a comparative disadvantage relative to other countries in the production of crude oil and it will import crude oil.E) None of the above
F) A) and C)

Question 10

A tariff is a

Accepted Answer

A)   limit on how much of a good can be exported.
B)   limit on how much of a good can be imported.
C)   tax on an exported good.
D)   tax on an imported good.E) A) and B)
F) B) and D)

Question 11

Assume,for the U.S.,that the domestic price of tea without international trade is higher than the world price of tea.This suggests that

Accepted Answer

A)   other countries have a comparative advantage over the U.S. in producing tea.
B)   the U.S. has an absolute advantage over other countries in producing tea.
C)   the U.S. will export tea if international trade is allowed.
D)   American tea buyers will become worse off if international trade is allowed.E) None of the above
F) A) and B)

Question 12

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 price of peaches in the United States

Accepted Answer

A)   will be greater than the world price.
B)   will be equal to the world price.
C)   will be less than the world price.
D)   could be greater than, equal to, or less than the world price; this cannot be determined.E) C) and D)
F) B) and D)

Question 13

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

A)   producer surplus increases and total surplus increases in the market for that good.
B)   producer surplus increases and total surplus decreases in the market for that good.
C)   producer surplus decreases and total surplus increases in the market for that good.
D)   producer surplus decreases and total surplus decreases in the market for that good.E) C) and D)
F) All of the above

Question 14

Figure 9-3. The domestic country is China.
 
-Refer to Figure 9-3.If China were to abandon a no-trade policy in favor of a free-trade policy,

Accepted Answer

A)   Chinese producers of pencil sharpeners would become worse off.
B)   Chinese consumers of pencil sharpeners would become better off.
C)   total surplus in the Chinese economy would increase.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 15

In analyzing international trade,we often focus on a country whose economy is small relative to the rest of the world.We do so

Accepted Answer

A)   because it is impossible to analyze the gains and losses from international trade without making this assumption.
B)   because then we can assume that world prices of goods are unaffected by that country's participation in international trade.
C)   in order to rule out the possibility of tariffs or quotas.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 16

GATT is an example of a successful unilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 17

Patterns of trade among nations are primarily determined by

Accepted Answer

A)   cultural considerations.
B)   political considerations.
C)   comparative advantage.
D)   differences in the income elasticity of demand among nations.E) A) and B)
F) B) and C)

Question 18

Figure 9-15
 
-Refer to Figure 9-15.The amount of government revenue created by the tariff is

Accepted Answer

A)   B.
B)   E.
C)   D + F.
D)   B + D + E + F.E) None of the above
F) All of the above

Question 19

When a country allows international trade and becomes an exporter of a good,

Accepted Answer

A)   domestic producers of the good become better off.
B)   domestic consumers of the good become worse off.
C)   the gains of the winners exceed the losses of the losers.
D)   All of the above are correct.E) None of the above
F) B) and D)

Question 20

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam

Accepted Answer

A)   should import textiles.
B)   has a comparative advantage in textiles.
C)   should produce just enough textiles to meet its domestic demand.
D)   should refrain altogether from producing textiles.E) A) and B)
F) A) and C)

Exam 9: Application: International Trade.

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 price of peaches in the United States

Correct AnswerverifiedShow Answer

Figure 9-3. The domestic country is China. -Refer to Figure 9-3.If China were to abandon a no-trade policy in favor of a free-trade policy,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In analyzing international trade,we often focus on a country whose economy is small relative to the rest of the world.We do so

Correct AnswerverifiedShow Answer

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Within a country,the domestic price of a product will equal the world price if

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17.With free trade,consumer surplus is

Correct AnswerverifiedShow Answer

Figure 9-12 -Refer to Figure 9-12.Consumer surplus before trade is

Correct AnswerverifiedShow Answer

A tariff is a

Correct AnswerverifiedShow Answer

Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14.The country for which the figure is drawn

Correct AnswerverifiedShow Answer

Assume,for the U.S.,that the domestic price of tea without international trade is higher than the world price of tea.This suggests that

Correct AnswerverifiedShow Answer

For Country A,the world price of textiles exceeds the domestic equilibrium price of textiles.As a result,international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

Correct AnswerverifiedShow Answer

Suppose Ecuador imposes a tariff on imported bananas.If the increase in producer surplus is $50 million,the reduction in consumer surplus is $150 million,and the deadweight loss of the tariff is $30 million,then the tariff generates $130 million in revenue for the government.

Correct AnswerverifiedShow Answer

GATT is an example of a successful unilateral approach to achieving free trade.

Correct AnswerverifiedShow Answer

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Correct AnswerverifiedShow Answer

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.With trade,the Welsh price of cheese and the Welsh quantity of cheese demanded are

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15.The amount of government revenue created by the tariff is

Correct AnswerverifiedShow Answer

When a country allows international trade and becomes an exporter of a good,

Correct AnswerverifiedShow Answer

Patterns of trade among nations are primarily determined by

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified