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260 Cards in this Set

  • Front
  • Back
An important factor in the decline of the U.S. textile industry over the past 100 or so years is
a. foreign competitors that could produce quality textile goods at low cost.
With which of the Ten Principles of Economics is the study of international trade most closely connected?
b. Trade can make everyone better off
A logical starting point from which the study of international trade begins is
d. the principle of comparative advantage.
A tax on an imported good is called a
b. tariff
The price of a good that prevails in a world market is called the
d. world price
6. The price of cotton that prevails in international markets is called the
d. world price of cotton
If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,
b. the country will be an importer of the good
If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,
a. the country will be an exporter of the good.
For any country, if the world price of computers is higher than the domestic price of computers without trade, that country should
a. export computers, since that country has a comparative advantage in computers
If the world price of textiles is higher than Vietnam’s domestic price of textiles without trade, then Vietnam
b. has a comparative advantage in textiles.
Assume, for Canada, that the domestic price of steel without international trade is higher than the world price of
steel. This suggests that, in the production of steel,
c. other countries have a comparative advantage over Canada and Canada will import steel.
Assume, for the U.S., that the domestic price of beef without international trade is lower than the world price of beef. This suggests that, in the production of beef
a. the U.S. has a comparative advantage over other countries and the U.S. will export beef.
Suppose the United States exports cars to France and imports cheese from Switzerland. This situation suggests that
b. the United States has a comparative advantage relative to France in producing cars, and Switzerland has a
comparative advantage relative to the United States in producing cheese
Trade among nations is ultimately based on
c. comparative advantage
A country has a comparative advantage in a product if the world price is
b. higher than that country’s domestic price without trade
Suppose Haiti has a comparative advantage over other countries in producing sugar, but other countries have an absolute advantage over Haiti in producing sugar. If trade in sugar is allowed, Haiti
b. will export sugar
When, in our analysis of the gains and losses of international trade, we assume that a country is small, we are in effect assuming that the country
c. cannot affect world prices by trading with other countries.
When, in our analysis of the gains and losses from international trade, we assume that a particular country is small, we are
d. making an assumption that is not necessary to analyze the gains and losses from international trade
In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that
d. Moldova is a price taker
When a country allows trade and becomes an exporter of a good,
a. domestic producers gain and domestic consumers lose
When a country allows trade and becomes an importer of a good,
c. domestic producers become worse off, and domestic consumers become better off.
When a country allows trade and becomes an importer of a good
b. the gains of the winners exceed the losses of the losers.
When the nation of Econoland allows trade and becomes an exporter of televisions,
residents of Econoland who produce televisions become better off; residents of Econoland who buy televisions
become worse off; and the economic well-being of Econoland rises.
When the nation of Duxembourg allows trade and becomes an importer of software,
a. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy
software become better off; and the economic well-being of Duxembourg rises.
When a nation first begins to trade with other countries and the nation becomes an exporter of corn
a. this is an indication that the world price of corn exceeds the nation’s domestic price of corn in the absence of
trade.
b. this is an indication that the nation has a comparative advantage in producing corn.
c. the nation’s consumers of corn become worse off and the nation’s producers of corn become better off
(ALL CORRECT)
When a nation first begins to trade with other countries and the nation becomes an importer of soybeans
c. the nation’s producers of soybeans become worse off and the nation’s consumers of soybeans become better
off.
Trade raises the economic well-being of a nation in the sense that
a. the gains of the winners exceed the losses of the losers
When a country allows trade and becomes an exporter of a good,
a. the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good
When a country allows trade and becomes an importer of steel
d. the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel.
When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?
c. The losses of domestic consumers of the good exceed the gains of domestic producers of the good.
When a country allows trade and becomes an importer of bottled water, which of the following is not a consequence?
b. The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water
When a country allows trade and becomes an exporter of a good
d. consumer surplus decreases and producer surplus increases.
When a country allows trade and becomes an importer of a good,
c. consumer surplus increases and producer surplus decreases
Which of the following statements is true?
d. Free trade benefits a country both when it exports and when it imports
When a country allows international trade and becomes an exporter of a good,
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.
(ALL CORRECT)
Suppose Scotland goes from being an isolated country to being an exporter of wool. As a result
b. producer surplus of Scottish producers of wool increases
When a country allows international trade and becomes an importer of a good,
c. the gains of the winners exceed the losses of the losers
Assume, for France, that the domestic price of tea without international trade is higher than the world price of tea.
This suggests that
a. other countries have a comparative advantage over France in producing tea
Suppose a country begins to allow international trade in steel. Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?
a. The sum of consumer surplus and producer surplus for domestic traders of steel increases
After a country goes from disallowing trade in sugar with other countries to allowing trade in sugar with other
countries,
c. the domestic price of sugar will equal the world price of sugar.
Within a country, the domestic price of a product will equal the world price if
b. the country allows free trade.
For any country that allows free trade,
d. the domestic price is equal to the world price
The world price of a simple electronic calculator is $5.00. Before Singapore allowed trade in calculators, the price of a calculator there was $4.00. Once Singapore began allowing trade in calculators with other countries,Singapore
began
c. exporting calculators and the price of a calculator in Singapore increased to $5.00.
The world price of a pound of T-bone steak is $9.00. Before Guatemala allowed trade in beef, the price of a pound of T-bone steak there was $12.00. Once Guatemala began allowing trade in beef with other countries, Guatemala
began
d. importing T-bone steak and the price per pound in Guatemala decreased to $9.00.
Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of beans increases to equal the world price of beans, then
a. that country becomes an exporter of beans.
b. that country has a comparative advantage in producing beans.
c. at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that
country.
(ALL CORRECT)
Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of pistachios decreases to equal the world price of pistachios, then
a. that country becomes an importer of pistachios
Refer to Figure 9-1. Without trade, consumer surplus is
b. $245
Refer to Figure 9-1. Without trade, producer surplus is
a. $210.
Refer to Figure 9-1. With free trade, this country will
d. export 65 baskets
Refer to Figure 9-1. If this country chooses to trade, the price of baskets in this country will be
a. $10 and 40 baskets will be sold domestically.
Refer to Figure 9-1. With free trade, consumer surplus is
b. $80
Refer to Figure 9-1. With free trade, producer surplus is
d. $472.50
Refer to Figure 9-1. As a result of trade, total surplus increases by
b. $97.50
Refer to Figure 9-1. This country
a. has a comparative advantage in baskets.
b. should export baskets.
c. is a price taker in the world economy.
(ALL CORRECT)
Refer to Figure 9-1. The world price for baskets represents
a. the demand for baskets from the rest of the world.
Refer to Figure 9-1. At the world price and with free trade,
b. the basket market is in equilibrium.
Refer to Figure 9-2. With no international trade
a. the equilibrium price is $12 and the equilibrium quantity is 300
Refer to Figure 9-2. If China were to abandon a no-trade policy in favor of a free-trade policy,
c. total surplus in the Chinese economy would increase.
Refer to Figure 9-2. With trade, China will
d. export 250 pencil sharpeners
Refer to Figure 9-2. With trade, producer surplus in China is
d. $2,700
Refer to Figure 9-2. Relative to a no-trade situation, which of the following comes with trade?
b. Consumer surplus decreases by $1,000 and producer surplus increases by $1,500.
Refer to Figure 9-2. The increase in total surplus in China when trade becomes allowed is
b. $500
Refer to Figure 9-3. With trade, Jamaica
b. imports 250 calculators.
Refer to Figure 9-3. Consumer surplus in Jamaica without trade is
c. $2,250.
Refer to Figure 9-3. The change in total surplus in Jamaica because of trade is
a. $625, and this is an increase in total surplus
Refer to Figure 9-3. Which of the following statements is accurate?
b. Producer surplus with trade is $375.
Refer to Scenario 9-1. If trade in tomatoes is allowed, the United States
b. will become an exporter of tomatoes.
Refer to Scenario 9-1. If trade in tomatoes is allowed, the price of tomatoes in the United States
a. will increase, and this will cause consumer surplus to decrease
Refer to Scenario 9-1. If trade in tomatoes is allowed, the price of tomatoes in the United States
b. will be equal to the world price
Refer to Scenario 9-1. If trade in tomatoes is allowed, U.S. producers of tomatoes
a. will be better off
Refer to Scenario 9-1. If trade in tomatoes is allowed, the
d. total well-being of the United States is enhanced relative to the no-trade situation.
Refer to Figure 9-4. The horizontal line at the world price of wagons represents the
b. supply of wagons from the rest of the world.
Refer to Figure 9-4. With trade, this country
d. imports 50 wagons
Refer to Figure 9-4. Without trade, consumer surplus amounts to
c. $367.50
Refer to Figure 9-4. Without trade, producer surplus amounts to
b. $245
Refer to Figure 9-4. Without trade, total surplus amounts to
d. $612.50.
Refer to Figure 9-4. With trade, the price of wagons in this country is
d. $5, with 40 wagons being produced in this country and another 50 wagons being imported.
Refer to Figure 9-4. With trade, consumer surplus is
d. $607.50.
Refer to Figure 9-4. With trade, producer surplus is
a. $80.
Refer to Figure 9-4. With trade, total surplus is
d. $687.50
A tariff on a product makes
a. domestic sellers better off and domestic buyers worse off
A tariff on a product
b. increases the domestic quantity supplied.
A tariff on a product
b. increases the domestic quantity supplied.
If the United States imposes a tariff on automobiles, then
a. total surplus in the American automobile market decreases.
b. producer surplus in the American automobile market increases.
c. U.S. imports of foreign automobiles decrease
(ALL CORRECT)
A tariff is a tax placed on
d. an imported good and it raises the domestic price of the good above the world price.
A tariff
c. raises the domestic price of the imported good above the world price.
When a country moves away from a free trade position and imposes a tariff on imports, this causes
a. a decrease in total surplus in the market.
If the demand curve and the supply curve for a good are straight lines, then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by
c. the combined areas of two different triangles.
Suppose Mexico imposes a tariff on lumber. For the tariff to have any effect, it must be the case that
c. the world price without the tariff is less than the price of lumber without trade
Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark
imposes a $5 tariff on chips. As a result
c. Danish consumers of chips lose and Danish producers of chips gain
Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark
imposes a $5 tariff on chips. Which of the following outcomes is possible?
a. More Danish-produced chips are sold in Denmark
Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark
imposes a $5 tariff on chips. Which of the following outcomes is possible?
b. The price of chips in Denmark increases to $17; the quantity of Danish-produced chips increases; and the
quantity of chips imported by Denmark decreases.
Turkey is an importer of goose-down pillows. The world price of these pillows is $50. Turkey imposes a $7 tariff
on pillows. Turkey is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in
Turkey
b. increases to $57 and the quantity of goose-down pillows purchased in Turkey decreases.
Turkey is an importer of goose-down pillows. The world price of these pillows is $50. Turkey imposes a $7 tariff
on pillows. Turkey is a price-taker in the pillow market. As a result of the tariff
b. Turkish consumers of pillows become worse off and Turkish producers of pillows become better off.
A quota is
b. a limit on the quantity of imports
Both tariffs and import quotas
c. decrease the quantity of imports and raise the domestic price of the good.
A major difference between tariffs and import quotas is that
c. tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to
import.
Tariffs and quotas are different in the sense that
b. tariffs raise revenue for the government, while quotas do not raise revenue for the government.
Import quotas and tariffs produce similar results. Which of the following is not one of those results?
b. Consumer surplus of domestic consumers increases
Import quotas and tariffs produce some common results. Which of the following is not one of those common
results?
d. Revenue is raised for the domestic government.
An import quota
c. reduces the welfare of domestic consumers.
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 incense, exporting steel, and neither importing nor exporting rugs. We can conclude
that Aquilonia’s new free-trade policy has
d. decreased consumer surplus in the steel market and increased total surplus in the incense market.
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 incense, exporting steel, and neither importing nor exporting rugs. We can conclude
that producer surplus in Aquilonia is now
a. higher in the steel market, lower in the incense market, and unchanged in the rug market
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 incense, exporting steel, and neither importing nor exporting rugs. Which groups in
Aquilonia are better off as a result of the new free-trade policy?
d. producers of steel and consumers of incense
The United States has imposed taxes on some imported goods that have been sold here by foreign countries at
below their cost of production. These taxes
c. harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in
producer surplus and government revenue.
At the end of 2004, the United States
b. vastly expanded its openness to imports of textiles from China
At the end of 2004, the United States government changed its policies pertaining to imports of textiles from China,
with the result that
b. American consumers of textiles experienced a gain in surplus, while American producers of textiles
experienced a loss of surplus.
Which of the following arguments for trade restrictions is often advanced?
d. Trade restrictions are sometimes necessary for national security
Several arguments for restricting trade have been advanced. Those arguments do not include
c. the no-deadweight-loss argument
Countries usually impose restrictions on trade with other countries in order to protect
c. domestic producers
Which of the following is not a commonly-advanced argument for trade restrictions?
d. the efficiency argument
Workers displaced by trade eventually find jobs in
c. the industries in which the country has a comparative advantage
The infant-industry argument
a. is based on the belief that protecting industries when they are young will pay off later
Which of the following is the most accurate statement?
b. Protection is not necessary for an industry to grow
Which of the following individuals asserted in 2004 that the movement of some types of jobs from the United
States to overseas was “probably a plus for the economy in the long run?”
c. presidential economic advisor N. Gregory Mankiw
According to columnist George F. Will
c. German labor laws give the United States a comparative advantage in producing automobiles.
If the Japanese steel industry subsidizes the steel that it sells to the United States, the
c. harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel.
If the United States threatens to impose a tariff on German cars if Germany does not remove agricultural subsidies,
the United States will be
c. worse off if Germany doesn't give in to the threat.
When a country takes a multilateral approach to free trade, it
b. reduces its trade restrictions while other countries do the same.
When a country takes a unilateral approach to free trade, it
a. removes trade restrictions on its own.
Which of the following assertions is not correct about the multilateral approach to free trade?
c. The multilateral approach is simpler than the unilateral approach
Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?
c. A multilateral approach requires the agreement of two or more nations.
Since World War II, GATT has been responsible for reducing the average tariff among member countries from
about
a. 40 percent to about 5 percen
The rules established under GATT are enforced by the
c. World Trade Organization
The North American Free Trade Agreement
c. reduced trade restrictions among Canada, Mexico and the United States.
What percent of total world trade is accounted for by countries that belong to the World Trade Organization?
d. 97 percent
At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which
of the following statements is most likely true?
b. The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer
surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers
Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to German wheat farmers. As a
result of the French subsidy, sales of French wheat to Germany
a. may prompt German farmers to invoke the unfair-competition argument.
b. increase the consumer surplus of German buyers of wheat.
c. increase the total surplus of the German people.
(ALL CORRECT)
Senator Blowhard represents a state in which many textile firms are located. He wants to impose tariffs on all
imported textiles. Which of the following is the least likely consequence of such tariffs?
c. Domestic textile sellers will have a higher rate of technological advance
Countries that restrict foreign trade are likely to
d. have more firms with domestic market power
Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that
pay wages below the U.S. minimum wage. Prohibiting such goods is likely to
c. increase poverty in poor countries and benefit U.S. firms which compete with these imports.
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
a. foreign competition may cause unemployment in import-competing industries, but the effect is temporary
because other industries, especially exporting industries, will be expanding.
Trade decisions are based on the principle of absolute advantage
False
The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from
participating in a market.
True
According to the principle of comparative advantage, all countries can benefit from trading with one another
because trade allows each country to specialize in doing what it does best.
True
Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors
True
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.
False
If a country’s domestic price of a good is lower than the world price, then that country has a comparative advantage
in producing that good.
True
Without free trade, the domestic price of a good must be equal to the world price of a good.
False
If Argentina exports oranges to the rest of the world, Argentina's producers of oranges are worse off, and
Argentina's consumers of oranges are better off, as a result of trade.
False
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.
False
If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher
producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus
in Belgium increases because of the exports of chocolate.
True
In principle, trade can make everyone better off, since the gains to the winners exceed the losses to the losers
True
Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the Ivory Coast
imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price of wheat in Ivory Coast will
increase, but by less than $1.
False
If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the
tariff.
True
When a government imposes a tariff on a product, the domestic price will equal the world price.
False
A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade
False
Deadweight loss measures the decrease in total surplus that results from a tariff or quota
True
If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the
government will gain tariff revenue, and domestic consumers will gain consumer surplus.
False
Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the
increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight
loss of the tariff is $300 million.
False
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.
True
Import quotas and tariffs both cause the quantity of imports to fall
True
Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.
True
Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of
foreign competition.
False
Free trade causes job losses in industries in which a country does not have a comparative advantage, but it also
causes job gains in industries in which the country has a comparative advantage.
True
Most economists support the infant-industry argument because it is so easy to implement in practice.
False
If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,
the Swedish economy would be worse off.
False
GATT is an example of a successful unilateral approach to achieving free trade.
False
A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral
approach, because the multilateral approach can reduce trade restrictions abroad as well as at home.
True
What is the equilibrium price of CDs before trade?
$12
What is the equilibrium quantity of CDs before trade?
50
What is the price of CDs after trade is allowed?
d. $15
What is the quantity of CDs exported after trade is allowed?
d. 30
What is the amount of consumer surplus before trade?
e. $250
What is the amount of consumer surplus after trade?
f. $122.50
What is the amount of producer surplus before trade?
g. $250
What is the amount of producer surplus after trade?
h. $422.50
What is the amount of total surplus before trade?
i. $500
What is the amount of total surplus after trade?
j. $545
What is the change in total surplus because of trade?
k. $45
What is the equilibrium price of hammers before trade?
a. $14
What is the equilibrium quantity of hammers before trade?
b. 90
What is the price of hammers after trade is allowed?
c. $10
What is the quantity of hammers imported after trade is allowed?
d. 85
What is the amount of consumer surplus before trade?
e. $360
What is the amount of consumer surplus after trade?
f. $810
What is the amount of producer surplus before trade?
g. $405
What is the amount of producer surplus after trade?
h. $125
What is the amount of total surplus before trade?
i. $765
What is the amount of total surplus after trade?
j. $935
What is the change in total surplus because of trade?
k. $170
What is the domestic price and quantity demanded of hammers after the tariff is imposed?
$6,084
What is the quantity of hammers imported before the tariff?
66
What is the quantity of hammers imported after the tariff?
44
What would be the amount of consumer surplus before the tariff
$384
What would be the amount of consumer surplus after the tariff?
$294
What would be the amount of producer surplus before the tariff?
$45
What would be the amount of producer surplus after the tariff
$80
What would be the amount of government revenue because of the tariff?
$44
What would be the total amount of deadweight loss due to the tariff?
$11
How does an import quota differ from an equivalent tariff?
Both the import quota and the tariff raise the domestic price of the good, reduce the welfare of domestic consumers,
increase the welfare of domestic producers, and cause deadweight losses. The only difference for the economy is that the tariff raises revenue for the government, while the import quota creates surplus for license holders.
Characterize the two different approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?
A unilateral approach is when a country removes its trade restrictions on its own. A multilateral approach is when a
country removes its trade restrictions while other countries do the same. A multilateral approach has two advantages.
The first is that it has the potential to result in freer trade because it can reduce trade restrictions abroad as well as at
home. If international negotiations fail, however, the result could be more restricted trade than under a unilateral approach. Also, the multilateral approach may have a political advantage and can sometimes win political support when a unilateral reduction cannot
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.
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.
Refer to Figure 9-4. Total surplus with trade exceeds total surplus without trade by
b. $75
Refer to Figure 9-4. The increase in total surplus resulting from trade is
c. $75, since consumer surplus increases by $240 and producer surplus falls by $165.
Refer to Figure 9-4. If this country allows free trade in wagons,
a. consumers will gain and producers will lose
Refer to Figure 9-4. If this country allows free trade in wagons,
a. consumers will gain more than producers will lose
Refer to Figure 9-4. 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 wagons to an exporter of wagons?
b. Within this country, the price of a substitute for wagons decreases
Refer to Figure 9-4. Bearing in mind that this country is “small,” what would happen if there were a decrease in
the price of wagon wheels within this country, given that wagons and wagon wheels are complements?
a. The quantity of wagons that this country imports would increase.
Refer to Figure 9-5. Without trade, the equilibrium price of carnations is
a. $8 and the equilibrium quantity is 300
Refer to Figure 9-5. With trade and without a tariff
a. the domestic price is equal to the world price.
Refer to Figure 9-5. Before the tariff is imposed, this country
b. imports 400 carnations
Refer to Figure 9-5. The size of the tariff on carnations is
d. $2 per dozen
Refer to Figure 9-5. The imposition of a tariff on carnations
c. decreases the number of carnations imported by 200
Refer to Figure 9-5. The amount of revenue collected by the government from the tariff is
b. $400.
Refer to Figure 9-5. When a tariff is imposed in the market, domestic producers
c. gain by $300
Refer to Figure 9-5. The amount of deadweight loss caused by the tariff equals
b. $200.
Refer to Figure 9-5. When the tariff is imposed, domestic consumers
b. lose by $900
The before-trade price of fish in Greece is $3.00 per pound. The world price of fish is $5.00 per pound. Greece is a
price-taker in the fish market. If Greece allows trade in fish, then Greece will become an
d. exporter of fish and the price of fish in Greece will be $5.00
The before-trade price of fish in Greece is $3.00 per pound. The world price of fish is $5.00 per pound. Greece is a
price-taker in the fish market. If Greece begins to allow trade in fish, its consumers of fish will become
b. worse off, its producers of fish will become better off, and on balance the citizens of Greece will become better
off.
Refer to Figure 9-6. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are
c. P0 and Q
Refer to Figure 9-6. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are
b. P1 and Q
Refer to Figure 9-6. With trade, Wales
exports Q2 - Q1 units of cheese.
Refer to Figure 9-6. Which of the following is a valid equation for Welsh consumer surplus with trade?
c. Consumer surplus with trade = (1/2)(Q1)(P3 - P1)
Refer to Figure 9-6. Which of the following is a valid equation for Welsh producer surplus with trade?
a. Producer surplus with trade = (1/2)P0Q0.
b. Producer surplus with trade = (1/2)P1Q1.
c. Producer surplus with trade = (1/2)P1Q2
(NONE CORRECT)
Refer to Figure 9-6. Which of the following is a valid equation for the gains from trade?
a. Gains from trade = (1/2)(P1 - P0)(Q2 - Q1)
Refer to Figure 9-7. The price corresponding to the horizontal dotted line on the graph represents the price of cars
b. before trade is allowed
Refer to Figure 9-7. The country for which the figure is drawn
d. has a comparative disadvantage relative to other countries in the production of cars and it will import cars.
Refer to Figure 9-7. When the country for which the figure is drawn allows international trade in cars
c. total surplus increases by the area D.
Refer to Figure 9-7. In the country for which the figure is drawn, total surplus with international trade in cars
d. is larger than total surplus without international trade in cars
Refer to Figure 9-8. Consumer surplus in this market before trade is
b. A + B
Refer to Figure 9-8. Consumer surplus in this market after trade is
a. A
Refer to Figure 9-8. Producer surplus in this market before trade is
d. C.
Refer to Figure 9-8. Producer surplus in this market after trade is
c. B + C + D.
Refer to Figure 9-8. Total surplus in this market before trade is
b. A + B + C
Refer to Figure 9-8. Total surplus in this market after trade is
c. A + B + C + D.
Refer to Figure 9-8. The change in total surplus in this market because of trade is
b. D, and this area represents a gain in total surplus because of trade
Refer to Figure 9-9. The price and quantity of air conditioners in Kenya before trade is
a. P0 and Q0
Refer to Figure 9-9. With trade, the equilibrium price of air conditioners and the equilibrium quantity of air
conditioners demanded in Kenya are
b. P1 and Q2
Refer to Figure 9-9. When trade takes place, the quantity Q2 - Q1 is
d. the number of air conditioners imported by Kenya
Refer to Figure 9-9. Kenya’s gains from trade are represented by the area that is bounded by the points
c. (Q0, P0), (Q2, P1), and (Q1, P1).
Refer to Figure 9-9. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents
a. Kenya’s gains from trade.
b. the amount by which Kenya’s gain in consumer surplus exceeds its loss in producer surplus due to trade.
c. Kenya’s gain in total surplus due to trade
(ALL CORRECT)
Refer to Figure 9-9. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents
a. Kenya’s gains from trade
Refer to Figure 9-10. Consumer surplus in this market before trade is
a. A.
Refer to Figure 9-10. Consumer surplus in this market after trade is
c. A + B + D.
Refer to Figure 9-10. Producer surplus in this market before trade is
b. B + C.
Refer to Figure 9-10. Producer surplus in this market after trade is
C
Refer to Figure 9-10. Producer surplus plus consumer surplus in this market before trade is
b. A + B + C
Refer to Figure 9-10. Producer surplus plus consumer surplus in this market after trade is
d. A + B + C + D
Refer to Figure 9-10. The change in total surplus in this market because of trade is
d. D, and this area represents a gain in total surplus.
Refer to Figure 9-11. Equilibrium price and equilibrium quantity without trade are
d. $14 and 600.
Refer to Figure 9-11. With trade, the domestic price and domestic quantity demanded are
a. $18 and 400.
Refer to Figure 9-11. With trade, domestic production and domestic consumption, respectively, are
b. 800 and 400
Refer to Figure 9-11. Consumer surplus before trade is
d. $3,600
Refer to Figure 9-11. Producer surplus before trade is
a. $3,600
Refer to Figure 9-11. Producer surplus after trade is
c. $6,400
Refer to Figure 9-11. With trade allowed, this country
b. exports 400 units of the good
Refer to Figure 9-12. The price and domestic quantity demanded after trade are
b. $8 and 900
Refer to Figure 9-12. With trade, domestic production and domestic consumption, respectively, are
c. 300 and 900
Refer to Figure 9-12. Consumer surplus before trade is
d. $3,600
Refer to Figure 9-12. Consumer surplus after trade is
d. $8,100.
Refer to Figure 9-12. Producer surplus before trade is
a. $3,600
Refer to Figure 9-12. With trade, producer surplus is
a. $900.
Refer to Figure 9-12. With trade, the country
d. imports 600 units of the good
Refer to Figure 9-13. As a result of international trade in computers being allowed, which of the following
statements is correct for the country for which the figure is drawn?
a. Consumer surplus for domestic computer consumers decreases.
Refer to Figure 9-13. When the country for which the figure is drawn allows international trade in computers
b. producer surplus changes from the area C to the area B + C + D.
Refer to Figure 9-13. The country for which the figure is drawn
a. has a comparative advantage relative to other countries in the production of computers and it will export
computers.
Refer to Figure 9-13. A result of this country allowing international trade in computers is as follows:
a. The well-being of domestic computer producers is now higher in that they now sell more computers at a higher
price per computer
A tariff on a product makes
a. domestic sellers better off and domestic buyers worse off
A tariff on a product
b. increases the domestic quantity supplied.