Question 1

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 the jobs argument, the national security argument, the infant industry argument, the unfair competition argument, and the protection-as-a-bargaining-chip argument. These arguments and counter-arguments are outlined in section 9-3 of the text. Most economists would dismiss the jobs argument, the infant industry argument, and the unfair competition argument on strictly economic grounds. The bargaining-chip argument carries high risks of economic harm if the threat doesn't work. The national-security argument balances economic loss from trade restriction against the benefit of long-term national survival, and is probably the argument that economists would most likely buy if it were clear that the industry being protected was clearly crucial to national security.

Question 2

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. 0) (P1 - P0) . B) Consumer surplus with trade = (1/2) (Q0) (P3 - P0) . C) Consumer surplus with trade = (1/2) (Q1) (P3 - P1) . D) None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus with trade?

Accepted Answer

A)  Consumer surplus with trade = (1/2) (Q0) (P1 - P0) .
B)  Consumer surplus with trade = (1/2) (Q0) (P3 - P0) .
C)  Consumer surplus with trade = (1/2) (Q1) (P3 - P1) .
D)  None of the above is correct.E) B) and C)
F) All of the above

Question 3

Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. 
-Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how many units will be imported?

Accepted Answer

With trade and a tar...

Question 4

When a country takes a multilateral approach to free trade, it

Accepted Answer

A)  removes trade restrictions on its own.
B)  reduces its trade restrictions while other countries do the same.
C)  does not remove trade restrictions no matter what other countries do.
D)  is willing to trade with multiple countries at once.E) A) and D)
F) B) and C)

Question 5

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. 
-When a country allows trade and becomes an importer of jet skis,

Accepted Answer

A)  domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country rises.
B)  domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country falls.
C)  domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country rises.
D)  domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country falls.E) A) and C)
F) B) and C)

Question 6

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

Accepted Answer

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

Question 7

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Accepted Answer

A)  foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding.
B)  foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs.
C)  the critics are correct, so countries must protect their industries with tariffs or quotas.
D)  foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.E) A) and B)
F) All of the above

Question 8

Trade among nations is ultimately based on

Accepted Answer

A)  absolute advantage.
B)  strategic advantage.
C)  comparative advantage.
D)  technical advantage.E) None of the above
F) All of the above

Question 9

Figure 9-25
The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. 
-Refer to Figure 9-25. With free trade and a $5 per unit tariff, the country

Accepted Answer

A)  exports 20 units of the good.
B)  imports 20 units of the good.
C)  exports 40 units of the good.
D)  imports 40 units of the good.E) A) and B)
F) B) and D)

Question 10

​There are only increases in total surplus when a country exports a good, since more units of the country's output of that good are produced.

Accepted Answer

A) True 
 B)False

Question 11

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an

Accepted Answer

A)  importer of fish and the price of fish in Germany will be $6.00.
B)  importer of fish and the price of fish in Germany will be $8.00.
C)  exporter of fish and the price of fish in Germany will be $6.00.
D)  exporter of fish and the price of fish in Germany will be $8.00.E) A) and B)
F) B) and C)

Question 12

An import quota

Accepted Answer

A)  is preferable to a tariff since an import quota does not create a deadweight loss.
B)  is a tax on imported goods.
C)  reduces the welfare of domestic consumers.
D)  reduces the welfare of domestic producers.E) All of the above
F) A) and B)

Question 13

Figure 9-17 
-Refer to Figure 9-17. With free trade, the country imports

Accepted Answer

A)  16 units of the good.
B)  24 units of the good.
C)  60 units of the good.
D)  64 units of the good.E) None of the above
F) B) and C)

Question 14

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. With trade, consumer surplus is

Accepted Answer

A)  $3,240.
B)  $6,480.
C)  $6,760.
D)  $13,520.E) C) and D)
F) B) and D)

Question 15

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, then it will be an exporter of peaches if and only if the world price of peaches is

Accepted Answer

A)  above $2.
B)  below $4.
C)  above $4.
D)  below $7.E) All of the above
F) None of the above

Question 16

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. If this country allows free trade in tricycles,

Accepted Answer

A)  consumers will gain more than producers will lose.
B)  producers will gain more than consumers will lose.
C)  producers and consumers will both gain equally.
D)  producers and consumers will both lose equally.E) A) and B)
F) A) and C)

Question 17

Figure 9-23
The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. 
-Refer to Figure 9-23. Producer surplus with free trade is

Accepted Answer

A)  $200.
B)  $450.
C)  $630.
D)  $1,080E) B) and D)
F) B) and C)

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

The North American Free Trade Agreement

Accepted Answer

A)  is an example of the unilateral approach to free trade.
B)  eliminated tariffs on imports to North America from the rest of the world.
C)  reduced trade restrictions among Canada, Mexico and the United States.
D)  All of the above are correct.E) A) and B)
F) A) and C) C

Question 20

Economists view free trade as a way to raise living standards both at home and abroad.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

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.

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus with trade?

Correct Answer
verified

Correct Answer
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With trade and a tar...
View Answer

When a country takes a multilateral approach to free trade, it

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. -When a country allows trade and becomes an importer of jet skis,

Correct Answer
verified

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

Correct Answer
verified
C

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Correct Answer
verified

Trade among nations is ultimately based on

Correct Answer
verified

Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. With free trade and a $5 per unit tariff, the country

Correct Answer
verified

There are only increases in total surplus when a country exports a good, since more units of the country's output of that good are produced.

Correct Answer
verified

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an

Correct Answer
verified

An import quota

Correct Answer
verified

Figure 9-17 -Refer to Figure 9-17. With free trade, the country imports

Correct Answer
verified

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, consumer surplus is

Correct Answer
verified

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, then it will be an exporter of peaches if and only if the world price of peaches is

Correct Answer
verified

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. If this country allows free trade in tricycles,

Correct Answer
verified

Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. Producer surplus with free trade is

Correct Answer
verified

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
verified

The North American Free Trade Agreement

Correct Answer
verified
C

Economists view free trade as a way to raise living standards both at home and abroad.

Correct Answer
verified

Exam 9: Application: International Trade

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.

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus with trade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWith trade and a tar...View AnswerShow Answer

When a country takes a multilateral approach to free trade, it

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. -When a country allows trade and becomes an importer of jet skis,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Correct AnswerverifiedShow Answer

Trade among nations is ultimately based on

Correct AnswerverifiedShow Answer

Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. With free trade and a $5 per unit tariff, the country

Correct AnswerverifiedShow Answer

​There are only increases in total surplus when a country exports a good, since more units of the country's output of that good are produced.

Correct AnswerverifiedShow Answer

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an

Correct AnswerverifiedShow Answer

An import quota

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. With free trade, the country imports

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, consumer surplus is

Correct AnswerverifiedShow Answer

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, then it will be an exporter of peaches if and only if the world price of peaches is

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. If this country allows free trade in tricycles,

Correct AnswerverifiedShow Answer

Figure 9-23 The following diagram shows the domestic demand and domestic supply for a market. Assume that the world price in this market is $120 per unit. -Refer to Figure 9-23. Producer surplus with free trade is

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

The North American Free Trade Agreement

Correct AnswerverifiedC

Economists view free trade as a way to raise living standards both at home and abroad.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified
With trade and a tar...
View Answer

Correct Answer
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Correct Answer
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C

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There are only increases in total surplus when a country exports a good, since more units of the country's output of that good are produced.

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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Correct Answer
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Correct Answer
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C

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