Question 1

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?

Accepted Answer

A)   The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas increase consumer surplus for the United States, reduce producer surplus for the United States, and harm foreign sugar producers.
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.
C)   The quotas are probably the result of lobbying from foreign producers of sugar. The quotas reduce producer surplus for the United States, increase consumer surplus for the United States, and benefit foreign sugar producers.
D)   U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them.E) A) and D)
F) B) and D)

Question 2

Figure 9-15 
-Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Accepted Answer

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

Question 3

What is the fundamental basis for trade among nations?

Accepted Answer

A)   shortages or surpluses in nations that do not trade
B)   misguided economic policies
C)   absolute advantage
D)   comparative advantageE) A) and D)
F) A) and C)

Question 4

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?

Accepted Answer

A)   More Danish-produced chips are sold in Denmark.
B)   More foreign-produced chips are sold in Denmark.
C)   Danish consumers of chips become better off.
D)   Total surplus in the Danish chip market increases.E) None of the above
F) A) and C)

Question 5

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

Accepted Answer

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

Question 6

Figure 9-17 
-Refer to Figure 9-17. When comparing no trade to free trade, the gains from trade amount to

Accepted Answer

A)   $400.
B)   $600.
C)   $750.
D)   $1,000.E) A) and C)
F) B) and C)

Question 7

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

Accepted Answer

A) True 
 B)False

Question 8

When a country that imports a particular good imposes a tariff on that 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.E) A) and B)
F) A) and C)

Question 9

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. 
-Refer to Figure 9-22. With free trade, consumer surplus is

Accepted Answer

A)   $48,000 and producer surplus is $48,000.
B)   $18,000 and producer surplus is $12,000.
C)   $108,000 and producer surplus is $12,000.
D)   $18,000 and producer surplus is $48,000.E) All of the above
F) A) and C)

Question 10

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. 
-Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, consumer surplus is

Accepted Answer

A)   $75,000 and producer surplus is $27,000.
B)   $63,000 and producer surplus is $12,000.
C)   $75,000 and producer surplus is $12,000.
D)   $63,000 and producer surplus is $27,000.E) None of the above
F) C) and D)

Question 11

A quota is

Accepted Answer

A)   a tax placed on imports.
B)   a limit on the quantity of imports.
C)   a tax on exports to other countries.
D)   an excess of exports over imports.E) A) and B)
F) B) and D)

Question 12

When the nation of Worldova allows trade and becomes an exporter of silk,

Accepted Answer

A)   residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova rises.
B)   residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova falls.
C)   residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises.
D)   residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova falls.E) C) and D)
F) A) and D)

Question 13

Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Accepted Answer

A)   consumer surplus increases for consumers of coats in Iceland.
B)   producer surplus increases for producers of coats in Iceland.
C)   total surplus remains unchanged in the coat market in Iceland.
D)   it is reasonable to infer that other countries have a comparative advantage over Iceland in coat production.E) B) and C)
F) A) and B)

Question 14

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) A) and D)
F) A) and C)

Question 15

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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Accepted Answer

With trade, consumer surplus i...

Question 16

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. 
-Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

Accepted Answer

A)   P1 and Q2.
B)   P1 and Q1.
C)   P0 and Q0.
D)   P0 and Q1.E) All of the above
F) B) and C)

Question 17

Figure 9-17 
-Refer to Figure 9-17. Without trade, total surplus is

Accepted Answer

A)   $600.
B)   $1,200.
C)   $1,800.
D)   $2,250.E) None of the above
F) All of the above

Question 18

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

Accepted Answer

A)   Spain imports olive oil.
B)   the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed.
C)   consumer surplus in Spain would exceed producer surplus in Spain if trade with other countries were not allowed.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 19

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, what will be the domestic price in this market?

Accepted Answer

With trade and a tar...

Question 20

Scenario 9-3
Suppose domestic demand and domestic supply in a market are given by the following equations: 
-Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country allows free trade, how much are consumer surplus, producer surplus, and producer surplus with trade?

Accepted Answer

With trade, consumer...

Exam 9: Application: International Trade

Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Correct Answer
verified

When a country that imports a particular good imposes a tariff on that good,

Correct Answer
verified

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

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?

Correct Answer
verified

Correct Answer
verified
With trade, consumer...
View Answer

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?

Correct Answer
verified

A quota is

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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Correct Answer
verified
With trade, consumer surplus i...
View Answer

When the nation of Worldova allows trade and becomes an exporter of silk,

Correct Answer
verified

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

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. -Refer to Figure 9-22. With free trade, consumer surplus is

Correct Answer
verified

What is the fundamental basis for trade among nations?

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. -Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, consumer surplus is

Correct Answer
verified

Figure 9-17 -Refer to Figure 9-17. Without trade, total surplus is

Correct Answer
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Figure 9-15 -Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Correct Answer
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Figure 9-11 -Refer to Figure 9-11. Consumer surplus in this market after trade is

Correct Answer
verified

Figure 9-17 -Refer to Figure 9-17. When comparing no trade to free trade, the gains from trade amount to

Correct Answer
verified

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?

Correct Answer
verified

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

Correct Answer
verified

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

Correct Answer
verified

Exam 9: Application: International Trade

Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,

Correct AnswerverifiedShow Answer

When a country that imports a particular good imposes a tariff on that good,

Correct AnswerverifiedShow Answer

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

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?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWith trade, consumer...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

A quota is

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, by how much do consumer surplus, producer surplus, and total surplus change with trade?

Correct AnswerverifiedWith trade, consumer surplus i...View AnswerShow Answer

When the nation of Worldova allows trade and becomes an exporter of silk,

Correct AnswerverifiedShow Answer

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

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. -Refer to Figure 9-22. With free trade, consumer surplus is

Correct AnswerverifiedShow Answer

What is the fundamental basis for trade among nations?

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. -Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, consumer surplus is

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. Without trade, total surplus is

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15. Producer surplus with trade and without a tariff is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. When comparing no trade to free trade, the gains from trade amount to

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

Correct AnswerverifiedShow Answer

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

Correct AnswerverifiedShow Answer

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With trade and a tar...
View Answer

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With trade, consumer...
View Answer

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With trade, consumer surplus i...
View Answer

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