Question 1

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

Accepted Answer

A)   How does international trade affect consumer well-being?
B)   Who gains and who loses from free trade among countries?
C)   How do the gains from trade compare to the losses?
D)   Which argument for restricting free trade is politically feasible?

Question 2

Figure 9-15
 
-Refer to Figure 9-15.Producer surplus with the tariff is

Accepted Answer

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

Question 3

Figure 9-2
 
-Refer to Figure 9-2.As a result of trade,total surplus increases by

Accepted Answer

A)   $80.
B)   $97.50.
C)   $162.50.
D)   $495.50.

Question 4

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good,

Accepted Answer

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

Question 5

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A)   protectionism based on the national-security argument.
B)   protectionism based on the infant-industry argument.
C)   protectionism based on the unfair-competition argument.
D)   keeping world markets relatively open.

Question 6

Figure 9-3. The domestic country is China.
 
-Refer to Figure 9-3.The increase in total surplus in China when trade is allowed is

Accepted Answer

A)   $400.
B)   $500.
C)   $600.
D)   $750.

Question 7

The nation of Cranolia used to prohibit international trade,but now trade is allowed,and Cranolia is exporting furniture.Relative to the previous no-trade situation,buyers of furniture in Cranolia are now better off.

Accepted Answer

A) True 
 B)False

Question 8

Trade among nations is ultimately based on

Accepted Answer

A)   absolute advantage.
B)   strategic advantage.
C)   comparative advantage.
D)   technical advantage.

Question 9

Figure 9-6
 
-Refer to Figure 9-6.With trade and without a tariff,

Accepted Answer

A)   the domestic price is equal to the world price.
B)   carnations are sold at $8 in this market.
C)   there is a shortage of 400 carnations in this market.
D)   this country imports 200 carnations.

Question 10

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Accepted Answer

A)   the domestic price of coffee will be greater than the world price of coffee.
B)   the domestic price of coffee will be lower than the world price of coffee.
C)   the domestic price of coffee will equal the world price of coffee.
D)   The world price of coffee does not matter; the domestic price of coffee prevails.

Question 11

If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.

Accepted Answer

A) True 
 B)False

Question 12

Figure 9-13
 
-Refer to Figure 9-13.With trade,producer surplus is

Accepted Answer

A)   $900.
B)   $1,100.
C)   $1,500.
D)   $2,000.

Question 13

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing rice,exporting steel,and neither importing nor exporting TVs.We can conclude that producer surplus in Aquilonia is now

Accepted Answer

A)   higher in the steel market, lower in the rice market, and unchanged in the TV market.
B)   higher in the rice and steel markets, and unchanged in the TV market.
C)   lower in the rice and TV markets, and higher in the steel market.
D)   lower in the rice and steel markets, and the same in the TV market.

Question 14

A tariff on a product

Accepted Answer

A)   is a direct quantitative restriction on the amount of a good that can be imported.
B)   increases the domestic quantity supplied.
C)   increases domestic consumer surplus.
D)   All of the above are correct.

Question 15

Figure 9-5
 
-Refer to Figure 9-5.With trade,the price of wagons in this country is

Accepted Answer

A)   $8, with 70 wagons produced in this country, 20 of which are exported.
B)   $8, with 90 wagons produced in this country, 50 of which are exported.
C)   $5, with 40 wagons produced in this country and another 30 wagons imported.
D)   $5, with 40 wagons produced in this country and another 50 wagons imported.

Question 16

Suppose Iran imposes a tariff on lumber.For the tariff to have any effect,it must be the case that

Accepted Answer

A)   Iran is an exporter of lumber.
B)   the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the tariff.
C)   the world price without the tariff is less than the price of lumber without trade.
D)   the world price without the tariff is greater than the price of lumber without trade.

Question 17

Figure 9-15
 
-Refer to Figure 9-15.With trade and without a tariff,the price and domestic quantity demanded are

Accepted Answer

A)   P1 and Q1.
B)   P1 and Q4.
C)   P2 and Q2.
D)   P2 and Q3.

Question 18

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good,

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.

Question 19

Figure 9-5
 
-Refer to Figure 9-5.Bearing in mind that this country is "small," what would happen if there were a decrease in the price of horses within this country,given that wagons and horses are complements?

Accepted Answer

A)   The quantity of wagons that this country imports would increase.
B)   The quantity of wagons that this country imports would decrease, but the country would still be an importer of wagons.
C)   This country would switch from being an importer of wagons to an exporter of wagons.
D)   The domestic price without trade would move closer to the world price.

Question 20

Which of the following statements is true?

Accepted Answer

A)   Free trade benefits a country when it exports but harms it when it imports.
B)   "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports.
C)   Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses.
D)   Free trade benefits a country both when it exports and when it imports.

Exam 9: Application: International Trade.

Figure 9-5 -Refer to Figure 9-5.With trade,the price of wagons in this country is

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Figure 9-5 -Refer to Figure 9-5.Bearing in mind that this country is "small," what would happen if there were a decrease in the price of horses within this country,given that wagons and horses are complements?

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Figure 9-3. The domestic country is China. -Refer to Figure 9-3.The increase in total surplus in China when trade is allowed is

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Which of the following is not an important question for economic policy raised by the experience of the textile industry?

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Figure 9-15 -Refer to Figure 9-15.Producer surplus with the tariff is

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If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.

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A tariff on a product

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Which of the following statements is true?

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When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good,

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Figure 9-6 -Refer to Figure 9-6.With trade and without a tariff,

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Trade among nations is ultimately based on

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Figure 9-15 -Refer to Figure 9-15.With trade and without a tariff,the price and domestic quantity demanded are

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In a December 2007 New York Times column Paul Krugman argued in favor of

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The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing rice,exporting steel,and neither importing nor exporting TVs.We can conclude that producer surplus in Aquilonia is now

Correct AnswerverifiedShow Answer

The nation of Cranolia used to prohibit international trade,but now trade is allowed,and Cranolia is exporting furniture.Relative to the previous no-trade situation,buyers of furniture in Cranolia are now better off.

Correct AnswerverifiedShow Answer

Suppose Iran imposes a tariff on lumber.For the tariff to have any effect,it must be the case that

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After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

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Figure 9-2 -Refer to Figure 9-2.As a result of trade,total surplus increases by

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Figure 9-13 -Refer to Figure 9-13.With trade,producer surplus is

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When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good,

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