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 B)
F) A) and D)

Question 2

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. 
-Refer to Figure 9-27. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Accepted Answer

With trade...

Question 4

For any country that allows free trade,

Accepted Answer

A)   domestic quantity demanded is equal to domestic quantity supplied at the world price.
B)   domestic quantity demanded is greater than domestic quantity supplied at the world price.
C)   both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported.
D)   the domestic price is equal to the world price.E) A) and D)
F) A) and B)

Question 5

Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. 
-Refer to Figure 9-27. Suppose the country imposes a $5 per unit tariff. If the country allows trade with a tariff, how much are consumer surplus, producer surplus, tariff revenue, and total surplus?

Accepted Answer

With trade and a tariff, consu...

Question 6

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) A) and D)
F) None of the above

Question 7

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. With trade and a tariff, total surplus is

Accepted Answer

A)   $1,700.
B)   $1,800.
C)   $1,900.
D)   $2,000.E) None of the above
F) A) and B)

Question 8

Most economists view the United States' experience with trade as

Accepted Answer

A)   one from which no firm conclusions about the virtues of free trade can be reached, due to the relatively short history of international trade in the U.S.
B)   one from which no firm conclusions about the virtues of free trade can be reached, due to the lack of trade within the U.S. throughout most of the early history of the U.S.
C)   an ongoing experiment that confirms the virtues of free trade.
D)   an ongoing experiment that calls into serious question the notion that free trade enhances the economic well- being of a nation.E) B) and D)
F) B) and C)

Question 9

Assume, for England, that the domestic price of wine without international trade is higher than the world price of wine. This suggests that, in the production of wine,

Accepted Answer

A)   England has a comparative advantage over other countries and England will export wine.
B)   England has a comparative advantage over other countries and England will import wine.
C)   other countries have a comparative advantage over England and England will export wine.
D)   other countries have a comparative advantage over England and England will import wine.E) None of the above
F) B) and C)

Question 10

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 incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new free­trade policy has

Accepted Answer

A)   increased consumer surplus and producer surplus in the incense market.
B)   increased consumer surplus in the steel market and left producer surplus in the rug market unchanged.
C)   decreased consumer surplus in both the steel and rug markets.
D)   decreased consumer surplus in the steel market and increased total surplus in the incense market.E) B) and D)
F) A) and D)

Question 11

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, what are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric...

Question 12

The rules established under GATT are enforced by the

Accepted Answer

A)   governments of the nations that are involved in GATT.
B)   North American Free Trade Association.
C)   World Trade Organization.
D)   European Union.E) None of the above
F) B) and C)

Question 13

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. 
-Refer to Figure 9-8. When the country for which the figure is drawn allows international trade in cars,

Accepted Answer

A)   consumer surplus increases by the area B.
B)   producer surplus decreases by the area B + D.
C)   total surplus increases by the area D.
D)   All of the above are correct.E) A) and B)
F) None of the above

Exam 9: Application: International Trade

Most economists view the United States' experience with trade as

Correct Answer
verified

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Correct Answer
verified

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 incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new freetrade policy has

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, what are the equilibrium price and equilibrium quantity in this market?

Correct Answer
verified
The equilibrium pric...
View Answer

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

Correct Answer
verified

The rules established under GATT are enforced by the

Correct Answer
verified

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8. When the country for which the figure is drawn allows international trade in cars,

Correct Answer
verified

Correct Answer
verified
With trade and a tariff, consu...
View Answer

For any country that allows free trade,

Correct Answer
verified

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

Correct Answer
verified

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Correct Answer
verified
With trade...
View Answer

Assume, for England, that the domestic price of wine without international trade is higher than the world price of wine. This suggests that, in the production of wine,

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. Suppose the government imposes a tariff of $5 per unit. With trade and a tariff, total surplus is

Correct Answer
verified

Exam 9: Application: International Trade

Most economists view the United States' experience with trade as

Correct AnswerverifiedShow Answer

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

Correct AnswerverifiedShow Answer

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 incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new free­trade policy has

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, what are the equilibrium price and equilibrium quantity in this market?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The rules established under GATT are enforced by the

Correct AnswerverifiedShow Answer

Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8. When the country for which the figure is drawn allows international trade in cars,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWith trade and a tariff, consu...View AnswerShow Answer

For any country that allows free trade,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-27 The following diagram shows the domestic demand and supply curves in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-27. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Correct AnswerverifiedWith trade...View AnswerShow Answer

Assume, for England, that the domestic price of wine without international trade is higher than the world price of wine. This suggests that, in the production of wine,

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. With trade and a tariff, total surplus is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

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 incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new freetrade policy has

Correct Answer
verified

Correct Answer
verified
The equilibrium pric...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
With trade and a tariff, consu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
With trade...
View Answer

Correct Answer
verified

Correct Answer
verified