Question 1

NAFTA is an example of a multilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 2

Figure 9-15
 
-Refer to Figure 9-15.With the tariff,the domestic price and domestic quantity demanded are

Accepted Answer

A)   P1 and Q1.
B)   P1 and Q4.
C)   P2 and Q2.
D)   P2 and Q3.E) All of the above
F) A) and D)

Question 3

Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles.
 
-Refer to Figure 9-19.With free trade,consumer surplus in the textile market amounts to

Accepted Answer

A)   $210.
B)   $320.
C)   $405.
D)   $910.E) C) and D)
F) None of the above

Question 4

The world price of a ton of steel is $1,000.Before Russia allowed trade in steel,the price of a ton of steel there was $650.Once Russia allowed trade in steel with other countries,Russia began

Accepted Answer

A)   exporting steel and the price per ton in Russia remained at $650.
B)   exporting steel and the price per ton in Russia increased to $1,000.
C)   importing steel and the price per ton in Russia remained at $650.
D)   importing steel and the price per ton in Russia increased to $1,000.E) B) and C)
F) All of the above

Question 5

Trade enhances the economic well-being of a nation in the sense that

Accepted Answer

A)   both domestic producers and domestic consumers of a good become better off with trade, regardless of whether the nation imports or exports the good in question.
B)   the gains of domestic producers of a good exceed the losses of domestic consumers of a good, regardless of whether the nation imports or exports the good in question.
C)   trade results in an increase in total surplus.
D)   trade puts downward pressure on the prices of all goods.E) A) and B)
F) None of the above

Question 6

Free trade causes job losses in industries in which a country does not have a comparative advantage,but it also causes job gains in industries in which the country has a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 7

Figure 9-13
 
-Refer to Figure 9-13.With trade,domestic production and domestic consumption,respectively,are

Accepted Answer

A)   600 and 600.
B)   600 and 300.
C)   300 and 900.
D)   600 and 900.E) B) and C)
F) A) and C)

Question 8

A common argument in favor of restricting international trade in good x is based on the premise that

Accepted Answer

A)   international trade reduces total surplus in countries that export good x.
B)   international trade reduces total surplus in countries that import good x.
C)   international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another.
D)   trade restrictions can be useful when one country bargains with its trading partners.E) A) and B)
F) A) and C)

Question 9

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

Question 10

Figure 9-5
 
-Refer to Figure 9-5.Total surplus with trade exceeds total surplus without trade by

Accepted Answer

A)   $60.
B)   $75.
C)   $135.
D)   $210.E) B) and C)
F) A) and B)

Question 11

Figure 9-3. The domestic country is China.
 
-Refer to Figure 9-3.With trade,producer surplus in China is

Accepted Answer

A)   $800.
B)   $1,200.
C)   $1,800.
D)   $2,700.E) C) and D)
F) A) and D)

Question 12

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

Accepted Answer

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

Question 13

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price.
 
-Refer to Figure 9-16.The tariff

Accepted Answer

A)   decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases total surplus by the area D + F.
B)   increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F.
C)   creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F.
D)   increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.E) A) and D)
F) A) and C)

Question 14

When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Accepted Answer

A) True 
 B)False

Question 15

What is the fundamental basis for trade among nations?

Accepted Answer

A)   shortages or surpluses in nations that do not trade
B)   misguided economic policies
C)   absolute advantage
D)   comparative advantageE) None of the above
F) C) and D)

Question 16

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.In the country for which the figure is drawn,total surplus with international trade in cars

Accepted Answer

A)   is represented by the area A + B + C.
B)   is represented by the area A + B + D.
C)   is smaller than producer surplus without international trade in cars.
D)   is larger than total surplus without international trade in cars.E) All of the above
F) C) and D)

Question 17

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

Accepted Answer

A)   Total surplus in the domestic country falls.
B)   Producer surplus in the domestic country increases.
C)   The domestic country experiences a deadweight loss.
D)   Revenue is raised for the domestic government.E) C) and D)
F) None of the above

Question 18

Figure 9-12
 
-Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are

Accepted Answer

A)   600 and 400.
B)   800 and 400.
C)   400 and 600.
D)   400 and 800.E) C) and D)
F) All of the above

Question 19

Figure 9-20
The figure illustrates the market for rice in Vietnam.
 
-Refer to Figure 9-20.Vietnam's gains from trade in rice amount to

Accepted Answer

A)   750.
B)   1,000.
C)   1,250.
D)   1,500.E) None of the above
F) All of the above

Question 20

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

Accepted Answer

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)   other countries have a comparative advantage, relative to the country in question, in producing the good.
D)   total surplus does not change as a result.E) C) and D)
F) All of the above

Exam 9: Application: International Trade.

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20.Vietnam's gains from trade in rice amount to

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Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16.The tariff

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Figure 9-13 -Refer to Figure 9-13.With trade,domestic production and domestic consumption,respectively,are

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Figure 9-12 -Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are

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A common argument in favor of restricting international trade in good x is based on the premise that

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When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

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What is the fundamental basis for trade among nations?

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

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Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19.With free trade,consumer surplus in the textile market amounts to

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Trade enhances the economic well-being of a nation in the sense that

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

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NAFTA is an example of a multilateral approach to achieving free trade.

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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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Free trade causes job losses in industries in which a country does not have a comparative advantage,but it also causes job gains in industries in which the country has a comparative advantage.

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The world price of a ton of steel is $1,000.Before Russia allowed trade in steel,the price of a ton of steel there was $650.Once Russia allowed trade in steel with other countries,Russia began

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Figure 9-3. The domestic country is China. -Refer to Figure 9-3.With trade,producer surplus in China is

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Figure 9-5 -Refer to Figure 9-5.Total surplus with trade exceeds total surplus without trade by

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

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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.In the country for which the figure is drawn,total surplus with international trade in cars

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Figure 9-15 -Refer to Figure 9-15.With the tariff,the domestic price and domestic quantity demanded are

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