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Figure 9-11 Figure 9-11 -Refer to Figure 9-11. Producer surplus in this market after trade is A) C. B) C + B. C) A + B + D. D) B + C + D. -Refer to Figure 9-11. Producer surplus in this market after trade is


A) C.
B) C + B.
C) A + B + D.
D) B + C + D.

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

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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.

A) True
B) False

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The small-economy assumption is necessary to analyze the gains and losses from international trade.

A) True
B) False

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When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,


A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade.
B) this is an indication that the nation has a comparative advantage in producing soybeans.
C) the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off.
D) All of the above are correct.

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

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Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland. Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland. -Refer to Figure 9-18. If Isoland allows international trade and if the world price of peaches is $3, then A) Isoland has a comparative advantage, relative to other countries, in producing peaches. B) Isoland will export peaches. C) producer surplus with trade exceeds producer surplus without trade. D) consumer surplus with trade exceeds consumer surplus without trade. -Refer to Figure 9-18. If Isoland allows international trade and if the world price of peaches is $3, then


A) Isoland has a comparative advantage, relative to other countries, in producing peaches.
B) Isoland will export peaches.
C) producer surplus with trade exceeds producer surplus without trade.
D) consumer surplus with trade exceeds consumer surplus without trade.

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

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Figure 9-5 The figure illustrates the market for tricycles in a country. Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, total surplus is A) $3,240. B) $6,480. C) $7,760. D) $15,520. -Refer to Figure 9-5. With trade, total surplus is


A) $3,240.
B) $6,480.
C) $7,760.
D) $15,520.

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

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Figure 9-5 The figure illustrates the market for tricycles in a country. Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, producer surplus is A) $500. B) $1,000. C) $1,500. D) $2,000. -Refer to Figure 9-5. With trade, producer surplus is


A) $500.
B) $1,000.
C) $1,500.
D) $2,000.

E) All of the above
F) A) and C)

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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


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

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Which of the following tools and concepts is useful in the analysis of international trade?


A) total surplus
B) domestic supply
C) equilibrium price
D) All of the above are correct.

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

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William and Jamal live in the country of Dumexia. When Dumexia legalized international trade in bananas, the price of bananas in Dumexia increased. As a result, William became better off and Jamal became worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.

A) True
B) False

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Figure 9-15 Figure 9-15 -Refer to Figure 9-15. With the tariff, the quantity of saddles imported is A) Q3 - Q1. B) Q3 - Q2. C) Q4 - Q1. D) Q4 - Q2. -Refer to Figure 9-15. With the tariff, the quantity of saddles imported is


A) Q3 - Q1.
B) Q3 - Q2.
C) Q4 - Q1.
D) Q4 - Q2.

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

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Since World War II, GATT has been responsible for reducing the average tariff among member countries from about


A) 40 percent to about 5 percent.
B) 40 percent to about 20 percent.
C) 80 percent to about 20 percent.
D) 20 percent to about 10 percent.

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

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Figure 9-15 Figure 9-15 -Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that amounts to A) B. B) E. C) D + F. D) B + D + E + F. -Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that amounts to


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

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

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Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. 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. When the country for which the figure is drawn allows international trade in cars, A) consumer surplus increases by the area B. B) producer surplus decreases by the area B + D. C) total surplus increases by the area D. D) All of the above are correct. -Refer to Figure 9-8. When the country for which the figure is drawn allows international trade in cars,


A) consumer surplus increases by the area B.
B) producer surplus decreases by the area B + D.
C) total surplus increases by the area D.
D) All of the above are correct.

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

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When a government imposes a tariff on a product, the domestic price will equal the world price.

A) True
B) False

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Figure 9-3. The domestic country is China. Figure 9-3. The domestic country is China. -Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes with trade? A) Consumer surplus increases by $1,800 and producer surplus increases by $1,600. B) Consumer surplus decreases by $1,000 and producer surplus increases by $1,500. C) Consumer surplus decreases by $1,000 and producer surplus increases by $1,750. D) Total surplus increases by $400. -Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes with trade?


A) Consumer surplus increases by $1,800 and producer surplus increases by $1,600.
B) Consumer surplus decreases by $1,000 and producer surplus increases by $1,500.
C) Consumer surplus decreases by $1,000 and producer surplus increases by $1,750.
D) Total surplus increases by $400.

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

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Figure 9-10. The figure applies to Mexico and the good is rifles. Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points A) (0, P<sub>0</sub>) , (Q<sub>0</sub>, P<sub>0</sub>) , (Q<sub>2</sub>, P<sub>1</sub>) , and (0, P<sub>1</sub>) . B) (0, P<sub>1</sub>) , (0, P<sub>2</sub>) , (Q<sub>0</sub>, P<sub>0</sub>) , and (Q<sub>1</sub>, P<sub>1</sub>) . C) (Q<sub>0</sub>, P<sub>0</sub>) , (Q<sub>2</sub>, P<sub>1</sub>) , and (Q<sub>1</sub>, P<sub>1</sub>) . D) (0, P<sub>0</sub>) , (0, P<sub>2</sub>) , and (Q<sub>0</sub>, P<sub>0</sub>) . -Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points


A) (0, P0) , (Q0, P0) , (Q2, P1) , and (0, P1) .
B) (0, P1) , (0, P2) , (Q0, P0) , and (Q1, P1) .
C) (Q0, P0) , (Q2, P1) , and (Q1, P1) .
D) (0, P0) , (0, P2) , and (Q0, P0) .

E) None of the above
F) All of the above

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Figure 9-5 The figure illustrates the market for tricycles in a country. Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, the price of tricycles in this country is A) $11, with 200 tricycles produced in this country and another 320 tricycles imported. B) $11, with 360 tricycles produced in this country and another 160 tricycles imported. C) $19, with 200 tricycles produced in this country and another 160 tricycles imported. D) $19, with 360 tricycles produced in this country and another 320 tricycles imported. -Refer to Figure 9-5. With trade, the price of tricycles in this country is


A) $11, with 200 tricycles produced in this country and another 320 tricycles imported.
B) $11, with 360 tricycles produced in this country and another 160 tricycles imported.
C) $19, with 200 tricycles produced in this country and another 160 tricycles imported.
D) $19, with 360 tricycles produced in this country and another 320 tricycles imported.

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

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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 $60. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus, increases producer surplus, and decreases total surplus. B) It decreases consumer surplus, increases producer surplus, and increases total surplus. C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus. D) It increases 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 $60. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus, increases producer surplus, and decreases total surplus. B) It decreases consumer surplus, increases producer surplus, and increases total surplus. C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus. D) It increases consumer surplus, increases producer surplus, and increases total surplus. 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. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus, increases producer surplus, and decreases total surplus. B) It decreases consumer surplus, increases producer surplus, and increases total surplus. C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus. D) It increases consumer surplus, increases producer surplus, and increases total surplus. 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 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. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus, increases producer surplus, and decreases total surplus. B) It decreases consumer surplus, increases producer surplus, and increases total surplus. C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus. D) It increases 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 $60. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus, increases producer surplus, and decreases total surplus. B) It decreases consumer surplus, increases producer surplus, and increases total surplus. C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus. D) It increases consumer surplus, increases producer surplus, and increases total surplus. 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. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? A) It decreases consumer surplus, increases producer surplus, and decreases total surplus. B) It decreases consumer surplus, increases producer surplus, and increases total surplus. C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus. D) It increases consumer surplus, increases producer surplus, and increases total surplus. 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. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland?


A) It decreases consumer surplus, increases producer surplus, and decreases total surplus.
B) It decreases consumer surplus, increases producer surplus, and increases total surplus.
C) It decreases consumer surplus, decreases producer surplus, and decreases total surplus.
D) It increases consumer surplus, increases producer surplus, and increases total surplus.

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

Correct Answer

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Which of the following is not a commonly-advanced argument for trade restrictions?


A) the jobs argument
B) the national-security argument
C) the infant-industry argument
D) the efficiency argument

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

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