Question 1

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 $60 and international trade is allowed. Then Boxland's consumers demand

Accepted Answer

A)   110 tons of cardboard and Boxland's producers supply 120 tons of cardboard.
B)   96 tons of cardboard and Boxland's producers supply 96 tons of cardboard.
C)   96 tons of cardboard and Boxland's producers supply 115 tons of cardboard.
D)   80 tons of cardboard and Boxland's producers supply 120 tons of cardboard.E) A) and D)
F) A) and C)

Question 2

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. The price corresponding to the horizontal dotted line on the graph represents the price of cars

Accepted Answer

A)   after trade is allowed.
B)   before trade is allowed.
C)   that maximizes total surplus when trade is allowed.
D)   that minimizes the well-being of domestic car producers when trade is allowed.E) C) and D)
F) None of the above

Question 3

The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of wine imported, and increase the quantity of wine produced domestically.

Accepted Answer

A) True 
 B)False

Question 4

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, and suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how much is the deadweight loss caused by the tariff?

Accepted Answer

The deadwe...

Question 5

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of pistachios decreases to equal the world price of pistachios, then

Accepted Answer

A)   that country becomes an exporter of pistachios.
B)   that country has a comparative advantage in producing pistachios.
C)   at the world price, the quantity of pistachios demanded in that country exceeds the quantity of pistachios supplied in that country.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 6

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Accepted Answer

A) True 
 B)False

Question 7

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Accepted Answer

A)   gain $100 of producer surplus.
B)   gain $150 of producer surplus.
C)   gain $200 of producer surplus.
D)   gain $300 of producer surplus.E) A) and B)
F) A) and D)

Question 8

When, in our analysis of the gains and losses from international trade, we assume that a particular country is small, we are

Accepted Answer

A)   assuming the domestic price before trade will continue to prevail once that country is opened up to trade with other countries.
B)   assuming there is no demand for that country's domestically­produced goods by other countries.
C)   assuming international trade can benefit producers, but not consumers, in that country.
D)   making an assumption that is not necessary to analyze the gains and losses from international trade.E) A) and D)
F) A) and B)

Question 9

Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Accepted Answer

A)   consumer surplus increases for consumers of coats in Iceland.
B)   producer surplus increases for producers of coats in Iceland.
C)   total surplus remains unchanged in the coat market in Iceland.
D)   it is reasonable to infer that other countries have a comparative advantage over Iceland in coat production.E) A) and B)
F) None of the above

Question 10

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. 
-Refer to Figure 9-27. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric...

Question 11

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 D)

Question 12

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

Question 13

Countries that restrict foreign trade are likely to

Accepted Answer

A)   forgo the additional surplus that trade allows, but will probably enjoy economies of scale.
B)   forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change.
C)   forgo the additional surplus that trade allows, but will have a lower rate of unemployment.
D)   have more firms with domestic market power.E) A) and B)
F) B) and C)

Question 14

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Accepted Answer

A) True 
 B)False

Question 15

According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Accepted Answer

A) True 
 B)False

Question 16

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. This country

Accepted Answer

A)   has a comparative advantage in calculators.
B)   should export calculators.
C)   is a price taker in the world economy.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 17

Most economists support the infant-industry argument because it is so easy to implement in practice.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. 
-Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

A)   P1 and Q2.
B)   P1 and Q1.
C)   P0 and Q0.
D)   P0 and Q1.E) C) and D)
F) None of the above

Question 20

Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the world price of televisions to the price of televisions in Teeveeland, we can determine whether

Accepted Answer

A)   consumer surplus exceeds producer surplus in Teeveeland.
B)   Teeveeland has an absolute advantage in producing televisions.
C)   Teeveeland has a comparative advantage in producing televisions.
D)   All of the above are correct.E) A) and C)
F) B) and D)

Exam 9: Application: International Trade

According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Correct Answer
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Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Correct Answer
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The equilibrium pric...
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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. The price corresponding to the horizontal dotted line on the graph represents the price of cars

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
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Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Correct Answer
verified

Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the world price of televisions to the price of televisions in Teeveeland, we can determine whether

Correct Answer
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Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Correct Answer
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The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Correct Answer
verified

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. This country

Correct Answer
verified

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Correct Answer
verified

Correct Answer
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Countries that restrict foreign trade are likely to

Correct Answer
verified

Correct Answer
verified
The deadwe...
View Answer

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Correct Answer
verified

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of pistachios decreases to equal the world price of pistachios, then

Correct Answer
verified

The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of wine imported, and increase the quantity of wine produced domestically.

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

When, in our analysis of the gains and losses from international trade, we assume that a particular country is small, we are

Correct Answer
verified

Most economists support the infant-industry argument because it is so easy to implement in practice.

Correct Answer
verified

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

Correct Answer
verified

Exam 9: Application: International Trade

According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Correct AnswerverifiedShow Answer

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. With no trade allowed, what are the equilibrium price and equilibrium quantity in this market?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

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. The price corresponding to the horizontal dotted line on the graph represents the price of cars

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

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Correct AnswerverifiedShow Answer

Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the world price of televisions to the price of televisions in Teeveeland, we can determine whether

Correct AnswerverifiedShow Answer

Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Correct AnswerverifiedShow Answer

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Correct AnswerverifiedShow Answer

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. This country

Correct AnswerverifiedShow Answer

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Countries that restrict foreign trade are likely to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe deadwe...View AnswerShow Answer

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Correct AnswerverifiedShow Answer

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of pistachios decreases to equal the world price of pistachios, then

Correct AnswerverifiedShow Answer

The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of wine imported, and increase the quantity of wine produced domestically.

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

When, in our analysis of the gains and losses from international trade, we assume that a particular country is small, we are

Correct AnswerverifiedShow Answer

Most economists support the infant-industry argument because it is so easy to implement in practice.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The equilibrium pric...
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The deadwe...
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