Question 1

List four benefits of international trade.

Accepted Answer

Increased variety of goods; lo...

Question 2

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

Accepted Answer

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

Question 3

For any country that allows free trade,

Accepted Answer

A)   domestic quantity demanded is equal to domestic quantity supplied at the world price.
B)   domestic quantity demanded is greater than domestic quantity supplied at the world price.
C)   both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported.
D)   the domestic price is equal to the world price.E) A) and C)
F) None of the above

Question 4

If the United Kingdom imports tea cups from other countries, then U.K. producers of tea cups are better off, and U.K. consumers of tea cups are worse off, as a result of trade.

Accepted Answer

A) True 
 B)False

Question 5

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Without trade, total surplus amounts to

Accepted Answer

A)   $810.
B)   $1,620.
C)   $3,240.
D)   $6,480.E) None of the above
F) A) and B)

Question 6

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

Accepted Answer

A)   Ireland has a comparative advantage relative to the United States in producing pineapples, and China has a comparative advantage relative to Ireland in producing beer.
B)   Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantage relative to Ireland in producing pineapples.
C)   Ireland has an absolute advantage relative to the United States in producing pineapples, and China has an absolute advantage relative to Ireland in producing beer.
D)   Ireland has an absolute advantage relative to China in producing beer, and the United States has an absolute advantage relative to Ireland in producing pineapples.E) B) and C)
F) C) and D)

Question 7

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

Accepted Answer

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

Question 8

A major difference between tariffs and import quotas is that

Accepted Answer

A)   tariffs create deadweight losses, but import quotas do not.
B)   tariffs help domestic consumers, and import quotas help domestic producers.
C)   tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 9

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Accepted Answer

A)   both consumer surplus and producer surplus increase.
B)   consumer surplus increases and producer surplus decreases.
C)   consumer surplus decreases and producer surplus increases.
D)   both consumer surplus and producer surplus decrease.E) None of the above
F) A) and D)

Question 10

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

Accepted Answer

A)   $600.
B)   $1,200.
C)   $1,800.
D)   $2,400.E) None of the above
F) A) and B)

Question 11

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

Accepted Answer

A)   importing televisions and the price of a television in Paraguay decreased to $300.
B)   importing televisions and the price of a television in Paraguay remained at $350.
C)   exporting televisions and the price of a television in Paraguay decreased to $300.
D)   exporting televisions and the price of a television in Paraguay remained at $350.E) B) and C)
F) None of the above

Question 12

What are the arguments in favor of trade restrictions, and what are the counterarguments? According to most economists, do any of these arguments really justify trade restrictions? Explain.

Accepted Answer

Arguments mentioned in the text include ...

Question 13

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

Accepted Answer

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

Question 14

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

Accepted Answer

A)   domestic producers become better off, and domestic consumers become worse off.
B)   domestic producers become worse off, and domestic consumers become better off.
C)   domestic producers become better off, but the effect on the well-being of domestic consumers is ambiguous.
D)   domestic consumers become worse off, but the effect on the well-being of domestic producers is ambiguous.E) B) and C)
F) A) and D)

Question 15

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

Accepted Answer

A)   $6,400.
B)   $9,600.
C)   $12,800.
D)   $14,400.E) A) and B)
F) C) and D)

Question 16

Figure 9-17 
-Refer to Figure 9-17. With trade and a tariff, consumer surplus is

Accepted Answer

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 B)
F) A) and C)

Question 17

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 18

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

Question 19

When a country allows trade and becomes an importer of a good,

Accepted Answer

A)   everyone in the country benefits.
B)   the gains of the winners exceed the losses of the losers.
C)   the losses of the losers exceed the gains of the winners.
D)   everyone in the country loses.E) A) and B)
F) B) and D)

Question 20

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. As a result of trade, total surplus increases by

Accepted Answer

A)   $50.
B)   $100.
C)   $250.
D)   $500.E) All of the above
F) A) and D)

Exam 9: Application: International Trade

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

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If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

Correct AnswerverifiedShow Answer

What are the arguments in favor of trade restrictions, and what are the counterarguments? According to most economists, do any of these arguments really justify trade restrictions? Explain.

Correct AnswerverifiedArguments mentioned in the text include ...View AnswerShow Answer

When a country allows trade and becomes an importer of a good,

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

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

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Without trade, total surplus amounts to

Correct AnswerverifiedShow Answer

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

Correct AnswerverifiedShow Answer

A major difference between tariffs and import quotas is that

Correct AnswerverifiedShow Answer

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For any country that allows free trade,

Correct AnswerverifiedShow Answer

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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Figure 9-17 -Refer to Figure 9-17. With trade and a tariff, consumer surplus is

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

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

Correct AnswerverifiedShow Answer

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 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. As a result of trade, total surplus increases by

Correct AnswerverifiedShow Answer

If the United Kingdom imports tea cups from other countries, then U.K. producers of tea cups are better off, and U.K. consumers of tea cups are worse off, as a result of trade.

Correct AnswerverifiedShow Answer

List four benefits of international trade.

Correct AnswerverifiedIncreased variety of goods; lo...View AnswerShow Answer

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Arguments mentioned in the text include ...
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Increased variety of goods; lo...
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