Question 1

A possible outcome of the multilateral approach to free trade is that such an approach can

Accepted Answer

A)   win political support when a unilateral approach cannot.
B)   result in more restricted trade than under a unilateral approach, when international negotiations fail.
C)   result in drastic reductions in tariffs for many countries.
D)   All of the above are correct.E) A) and D)
F) B) and D)

Question 2

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

Accepted Answer

A)   Spain imports olive oil.
B)   the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed.
C)   consumer surplus in Spain would exceed producer surplus in Spain if trade with other countries were not allowed.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 3

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Accepted Answer

A)   People face tradeoffs.
B)   Trade can make everyone better off.
C)   Governments can sometimes improve market outcomes.
D)   Prices rise when the government prints too much money.E) A) and B)
F) A) and C)

Question 4

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) All of the above
F) B) and D)

Question 5

Several arguments for restricting trade have been advanced. Those arguments do not include

Accepted Answer

A)   the jobs argument.
B)   the protection-as-a-bargaining-chip argument.
C)   the no-deadweight-loss argument.
D)   the infant-industry argument.E) A) and B)
F) None of the above

Question 6

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. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $5, then the policy change results in

Accepted Answer

A)   a decrease in consumer surplus.
B)   an increase in producer surplus.
C)   an increase in total surplus.
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 7

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

Accepted Answer

A)   if it works consumer surplus will decline.
B)   if it works producer surplus falls.
C)   if it fails the country faces a choice between two bad options.
D)   if it fails total surplus will increase.E) None of the above
F) A) and B)

Question 8

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

Question 9

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 10

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Accepted Answer

A) True 
 B)False

Question 11

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

Accepted Answer

A) True 
 B)False

Question 12

An important factor in the decline of the U.S. textile industry over the past 100 or so years is

Accepted Answer

A)   foreign competitors that can produce quality textile goods at low cost.
B)   lower prices of goods that are substitutes for clothing.
C)   a decrease in Americans' demand for clothing, due to increased incomes and the fact that clothing is an inferior good.
D)   the fact that the minimum wage in the U.S. has failed to keep pace with the cost of living.E) A) and B)
F) A) and C)

Question 13

When a country allows trade and becomes an importer 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 consumers become better off, but the effect on the well-being of domestic producers is ambiguous.
D)   domestic producers become worse off, but the effect on the well-being of domestic consumers is ambiguous.E) B) and D)
F) A) and B)

Question 14

Figure 9-20
The figure illustrates the market for rice in Vietnam. 
-Refer to Figure 9-20. From the figure it is apparent that

Accepted Answer

A)   Vietnam will experience a shortage of rice if trade is not allowed.
B)   Vietnam will experience a surplus of rice if trade is not allowed.
C)   Vietnam has a comparative advantage in producing rice, relative to the rest of the world.
D)   foreign countries have a comparative advantage in producing rice, relative to Vietnam.E) B) and C)
F) A) and C)

Question 15

Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-22. With free trade, total surplus is

Accepted Answer

A)   $30,000.
B)   $66,000.
C)   $96,000.
D)   $120,000.E) All of the above
F) B) and C)

Question 16

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 $45. Then Boxland's gains from international trade in cardboard amount to

Accepted Answer

A)   $88.75.
B)   $102.50.
C)   $122.50.
D)   $135.00.E) A) and B)
F) A) and C)

Question 17

Characterize the two different approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?

Accepted Answer

A unilateral approach is when a country ...

Question 18

Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market. 
-Refer to Figure 9-28. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

Accepted Answer

Consumer surplus is ...

Question 19

A tax on an imported good is called a

Accepted Answer

A)   quota.
B)   tariff.
C)   supply tax.
D)   trade tax.E) B) and D)
F) None of the above

Question 20

The General Agreement on Tariffs and Trade (GATT)  was initiated in response to

Accepted Answer

A)   in increase in exports of low-priced goods from developing countries to developed countries.
B)   the replacement of manufacturing jobs with service jobs in developed countries.
C)   economic dislocations caused by the North American Free Trade Agreement (NAFT
A)   in the 1990s.
D)   high tariffs imposed during the Great Depression of the 1930s.E) B) and D)
F) B) and C)

Exam 9: Application: International Trade

Characterize the two different approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?

Correct Answer
verified
A unilateral approach is when a country ...
View Answer

Correct Answer
verified

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Correct Answer
verified

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Correct Answer
verified

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

Correct Answer
verified

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

Correct Answer
verified

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

Correct Answer
verified

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

Correct Answer
verified

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

Correct Answer
verified

Several arguments for restricting trade have been advanced. Those arguments do not include

Correct Answer
verified

A possible outcome of the multilateral approach to free trade is that such an approach can

Correct Answer
verified

Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

Correct Answer
verified
Consumer surplus is ...
View Answer

An important factor in the decline of the U.S. textile industry over the past 100 or so years is

Correct Answer
verified

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

Correct Answer
verified

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 Answer
verified
Arguments mentioned in the text include ...
View Answer

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. From the figure it is apparent that

Correct Answer
verified

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. With free trade, total surplus is

Correct Answer
verified

A tax on an imported good is called a

Correct Answer
verified

Correct Answer
verified

Countries that restrict foreign trade are likely to

Correct Answer
verified

Exam 9: Application: International Trade

Characterize the two different approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?

Correct AnswerverifiedA unilateral approach is when a country ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

Correct AnswerverifiedShow Answer

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Correct AnswerverifiedShow Answer

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

Correct AnswerverifiedShow Answer

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Several arguments for restricting trade have been advanced. Those arguments do not include

Correct AnswerverifiedShow Answer

A possible outcome of the multilateral approach to free trade is that such an approach can

Correct AnswerverifiedShow Answer

Figure 9-28 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-28. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

Correct AnswerverifiedConsumer surplus is ...View AnswerShow Answer

An important factor in the decline of the U.S. textile industry over the past 100 or so years is

Correct AnswerverifiedShow Answer

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know 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

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. From the figure it is apparent that

Correct AnswerverifiedShow Answer

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. -Refer to Figure 9-22. With free trade, total surplus is

Correct AnswerverifiedShow Answer

A tax on an imported good is called a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Countries that restrict foreign trade are likely to

Correct AnswerverifiedShow Answer

Correct Answer
verified
A unilateral approach is when a country ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Consumer surplus is ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
verified
Arguments mentioned in the text include ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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