Question 1

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

Accepted Answer

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

Question 2

Figure 9-4. The domestic country is Nicaragua. 
-Refer to Figure 9-4. Which of the following statements is accurate?

Accepted Answer

A)  Consumer surplus with trade is $3,200.
B)  Producer surplus with trade is $375.
C)  The gains from trade amount to $800.
D)  The gains from trade are represented on the graph by the area bounded by the points (0, $12) , (300, $12) , (300, $7)  and (0, $7) .E) B) and D)
F) All of the above

Question 3

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

A)  consumer surplus increases and total surplus increases in the market for that good.
B)  consumer surplus increases and total surplus decreases in the market for that good.
C)  consumer surplus decreases and total surplus increases in the market for that good.
D)  consumer surplus decreases and total surplus decreases in the market for that good.E) C) and D)
F) A) and D)

Question 4

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Accepted Answer

A)  54 percent
B)  72 percent
C)  89 percent
D)  97 percentE) B) and D)
F) C) and D)

Question 5

In recent years, which countries have taken a unilateral approach to the removal of trade restrictions?

Accepted Answer

A)  China and North Korea
B)  Chile and South Korea
C)  Russia and Japan
D)  the United States and MexicoE) All of the above
F) A) and D)

Question 6

Figure 9-15 2 - Q1. B) Q3 - Q2. C) Q4 - Q3. D) Q4 - Q3 + Q2 - Q1." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Accepted Answer

A)  Q2 - Q1.
B)  Q3 - Q2.
C)  Q4 - Q3.
D)  Q4 - Q3 + Q2 - Q1.E) B) and D)
F) B) and C)

Question 7

​Figure 9-26
The diagram below illustrates the market for baseballs in the U.S. 
-Refer to Figure 9-26.​ The figure shows that

Accepted Answer

A)  ​there will be a surplus of baseballs if the U.S. opens the market for baseballs to international trade.
B)  ​there will be a shortage of baseballs after the U.S. market for baseballs opens up to international trade.
C)  ​the U.S. has a comparative advantage in the production of baseballs.
D)  ​other countries have an absolute advantage in the production of baseballs.E) C) and D)
F) None of the above

Question 8

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. The imposition of a tariff on roses

Accepted Answer

A)  increases the number of roses imported by 100.
B)  increases the number of roses imported by 200.
C)  decreases the number of roses imported by 200.
D)  decreases the number of roses imported by 400.E) A) and D)
F) B) and C)

Question 9

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

Accepted Answer

A)  Incomes of domestic citizens increase, and tricycles are a normal good.
B)  Within this country, the price of a substitute for tricycles decreases.
C)  Within this country, the price of a complement to tricycles decreases.
D)  Wages increase for domestic workers who produce tricycles.E) C) and D)
F) A) and D)

Question 10

NAFTA is an example of a multilateral approach to achieving free trade.

Accepted Answer

A) True 
 B)False

Question 11

When the nation of Isoland opens up its steel market to international trade, that change

Accepted Answer

A)  creates winners and losers, regardless of whether Isoland ends up exporting or importing steel.
B)  results in a decrease in total surplus, regardless of whether Isoland ends up exporting or importing steel.
C)  creates winners, but no losers, if Isoland ends up exporting steel.
D)  creates losers, but no winners, if Isoland ends up importing steel.E) None of the above
F) B) and C)

Question 12

Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?

Accepted Answer

A)  Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices.
B)  Domestic furniture producers will gain producer surplus.
C)  Domestic furniture producers will have a higher rate of technological advance.
D)  Domestic furniture producers will have more market power.E) B) and D)
F) All of the above

Question 13

Figure 9-11 
-Refer to Figure 9-11. Producer surplus in this market after trade is

Accepted Answer

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

Question 14

Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Accepted Answer

A)  know whether Costa Rica imports or exports pharmaceuticals.
B)  compare the world price of pharmaceuticals to the price of pharmaceuticals that would prevail in Costa Rica if trade with the rest of the world were not allowed.
C)  compare the quantity of pharmaceuticals consumed in Costa Rica with the quantity of pharmaceuticals that would be consumed in Costa Rica if trade with the rest of the world were not allowed.
D)  All of the above are correct.E) A) and D)
F) None of the above

Question 15

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. Suppose the government imposes a tariff of $5 per unit. The deadweight loss caused by the tariff is

Accepted Answer

A)  $25.
B)  $50.
C)  $75.
D)  $100.E) None of the above
F) C) and D)

Question 16

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Accepted Answer

A)  there is no evidence that any worker ever lost his or her job because of free trade.
B)  unemployment of labor is not a serious problem relative to other economic problems.
C)  the gains from trade are based on comparative advantage.
D)  the gains from trade are based on absolute advantage.E) None of the above
F) A) and C)

Question 17

When the nation of Mooseland first permitted trade with other nations, domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million. We can conclude that

Accepted Answer

A)  Mooseland became an exporter of sugar.
B)  the overall economic well-being of participants in the sugar market in Mooseland fell because of trade.
C)  consumer surplus in Mooseland increased by $7 million.
D)  the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.E) A) and C)
F) None of the above

Question 18

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade, thus reducing the gains from trade.

Accepted Answer

A) True 
 B)False

Question 19

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. With trade and without a tariff,

Accepted Answer

A)  the domestic price is equal to the world price.
B)  roses are sold at $4 in this market.
C)  there is a shortage of 400 roses in this market.
D)  this country imports 200 roses.E) B) and C)
F) A) and D)

Question 20

​Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade,

Accepted Answer

A)  ​U.S. citizens benefit from lower software prices, increasing consumer surplus in the market.
B)  ​U.S. software producers are harmed, since the price that these producers receive will decline as the price falls to the world price.
C)  ​total surplus in this market will remain unchanged, as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers.
D)  ​U.S. producers benefit from higher software prices, increasing producer surplus in the market.E) A) and B)
F) C) and D)

Exam 9: Application: International Trade

In recent years, which countries have taken a unilateral approach to the removal of trade restrictions?

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Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. Which of the following statements is accurate?

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Figure 9-15 -Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

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​Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to Figure 9-26.​ The figure shows that

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Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The imposition of a tariff on roses

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Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?

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Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. With trade and without a tariff,

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NAFTA is an example of a multilateral approach to achieving free trade.

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When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Correct AnswerverifiedShow Answer

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade, thus reducing the gains from trade.

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Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

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Figure 9-11 -Refer to Figure 9-11. Producer surplus in this market after trade is

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​Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade,

Correct AnswerverifiedShow Answer

When the nation of Mooseland first permitted trade with other nations, domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million. We can conclude that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

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About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

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When the nation of Isoland opens up its steel market to international trade, that change

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Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

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. Suppose the government imposes a tariff of $5 per unit. The deadweight loss caused by the tariff is

Correct AnswerverifiedShow Answer

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Figure 9-26 The diagram below illustrates the market for baseballs in the U.S. -Refer to Figure 9-26. The figure shows that

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Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade,

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