Question 1

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

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) None of the above
F) B) and C)

Question 2

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

Accepted Answer

A)   domestic producers of the good become better off.
B)   domestic consumers of the good become better off.
C)   the gains of the winners fall short of the losses of the losers.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 3

The infant-industry argument

Accepted Answer

A)   is based on the belief that protecting industries when they are young will pay off later.
B)   is based on the belief that protecting industries producing goods and services for infants is necessary if a country is to have healthy children.
C)   has the support of most economists.
D)   is an argument that is advanced by advocates of free trade.E) All of the above
F) C) and D)

Question 4

Figure 9-13 
-Refer to Figure 9-13.With trade,the country

Accepted Answer

A)   exports 200 units of the good.
B)   exports 400 units of the good.
C)   imports 400 units of the good.
D)   imports 600 units of the good.E) A) and C)
F) A) and B)

Question 5

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 D)
F) B) and D)

Question 6

Figure 9-17 
-Refer to Figure 9-17.When the country moves from free trade to trade and a tariff,consumer surplus

Accepted Answer

A)   decreases by $576 and producer surplus does not change.
B)   decreases by $576 and producer surplus increases by $192.
C)   decreases by $792 and producer surplus does not change.
D)   decreases by $792 and producer surplus increases by $192.E) B) and C)
F) A) and B)

Question 7

Figure 9-1
The figure illustrates the market for wool in Scotland. 
-Refer to Figure 9-1.Relative to the no-trade situation,trade with the rest of the world results in

Accepted Answer

A)   Scotland consumers paying a higher price for wool.
B)   a decrease in producer surplus in Scotland.
C)   a decrease in total surplus in Scotland.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 8

Japan imposes a $300 per ton tariff on imported steel,raising the price charged in Japan to $1,000.Using only this information,which of the following statements is correct?

Accepted Answer

A)   The world price for steel is $300.
B)   The world price for steel is $700.
C)   The world price for steel is $1,000.
D)   The world price for steel is $1,300.E) A) and D)
F) A) and B)

Question 9

Figure 9-12 
-Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are

Accepted Answer

A)   600 and 400.
B)   800 and 400.
C)   400 and 600.
D)   400 and 800.E) B) and C)
F) C) and D)

Question 10

A tariff on a product makes

Accepted Answer

A)   domestic sellers better off and domestic buyers worse off.
B)   domestic sellers worse off and domestic buyers worse off.
C)   domestic sellers better off and domestic buyers better off.
D)   domestic sellers worse off and domestic buyers better off.E) A) and B)
F) B) and D)

Question 11

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) A) and C)
F) B) and C)

Question 12

Figure 9-2 
-Refer to Figure 9-2.The world price for baskets represents

Accepted Answer

A)   the demand for baskets from the rest of the world.
B)   the supply of baskets from the rest of the world.
C)   the level of inefficiency in the domestic market caused by trade.
D)   the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.E) All of the above
F) A) and B)

Question 13

Figure 9-2
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 9-2.Suppose the government imposes a tariff of $20 per unit.The amount of revenue collected by the government from the tariff is

Accepted Answer

A)   $6,000.
B)   $9,000.
C)   $12,000.
D)   $15,000.E) A) and B)
F) A) and C)

Question 14

A tariff on a product

Accepted Answer

A)   enhances the economic well-being of the domestic economy.
B)   increases the domestic quantity supplied.
C)   increases the domestic quantity demanded.
D)   results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus.E) A) and B)
F) A) and C)

Question 15

When a country that imported 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) All of the above
F) B) and C)

Question 16

Suppose the United States exports cars to Canada and imports bananas from Mexico.This situation suggests

Accepted Answer

A)   the United States has a comparative advantage relative to Canada in producing cars,and Mexico has a comparative advantage relative to the United States in producing bananas.
B)   the United States has a comparative advantage relative to Canada in producing bananas,and Mexico has a comparative advantage relative to the United States in producing cars.
C)   the United States has an absolute advantage relative to Canada in producing cars,and Mexico has an absolute advantage relative to the United States in producing bananas.
D)   the United States has an absolute advantage relative to Mexico in producing bananas,and Canada has an absolute advantage relative to the United States in producing cars.E) A) and B)
F) B) and D)

Question 17

A major difference between tariffs and import quotas is that

Accepted Answer

A)   tariffs create deadweight losses,but import quotas do not.
B)   tariffs help domestic consumers,and import quotas help domestic producers.
C)   tariffs raise revenue for the government,but import quotas create surplus for those who get the licenses to import.
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 18

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

Accepted Answer

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

Question 19

If the Korean steel industry subsidizes the steel that it sells to the United States,the

Accepted Answer

A)   United States should protect its domestic steel industry from this unfair competition.
B)   harm done to U.S.steel producers from this unfair competition exceeds the gain to U.S.consumers of cheap Korean steel.
C)   harm done to U.S.steel producers is less than the benefit that accrues to U.S.consumers of steel.
D)   United States should subsidize the products it sells to Korea.E) None of the above
F) B) and C)

Question 20

Domestic producers of a good become worse off,and domestic consumers of a good become better off,when a country begins allowing international trade in that good and

Accepted Answer

A)   the country becomes an importer of the good as a result.
B)   the world price exceeds the domestic price of the good that prevailed before international trade was allowed.
C)   the country in question has a comparative advantage,relative to other countries,in producing the good.
D)   total surplus does not change as a result.E) A) and C)
F) A) and B)

Exam 9: Application: International Trade

Japan imposes a $300 per ton tariff on imported steel,raising the price charged in Japan to $1,000.Using only this information,which of the following statements is correct?

Correct Answer
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Figure 9-13 -Refer to Figure 9-13.With trade,the country

Correct Answer
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A tariff on a product

Correct Answer
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If the Korean steel industry subsidizes the steel that it sells to the United States,the

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

Correct Answer
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Figure 9-15 -Refer to Figure 9-15.Consumer surplus with the tariff is

Correct Answer
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Figure 9-2 -Refer to Figure 9-2.The world price for baskets represents

Correct Answer
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Domestic producers of a good become worse off,and domestic consumers of a good become better off,when a country begins allowing international trade in that good and

Correct Answer
verified

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1.Relative to the no-trade situation,trade with the rest of the world results in

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Figure 9-17 -Refer to Figure 9-17.When the country moves from free trade to trade and a tariff,consumer surplus

Correct Answer
verified

A tariff on a product makes

Correct Answer
verified

Suppose the United States exports cars to Canada and imports bananas from Mexico.This situation suggests

Correct Answer
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The infant-industry argument

Correct Answer
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Correct Answer
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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

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

Correct Answer
verified

Figure 9-12 -Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are

Correct Answer
verified

A major difference between tariffs and import quotas is that

Correct Answer
verified

Exam 9: Application: International Trade

Japan imposes a $300 per ton tariff on imported steel,raising the price charged in Japan to $1,000.Using only this information,which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 9-13 -Refer to Figure 9-13.With trade,the country

Correct AnswerverifiedShow Answer

A tariff on a product

Correct AnswerverifiedShow Answer

If the Korean steel industry subsidizes the steel that it sells to the United States,the

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

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

Correct AnswerverifiedShow Answer

Figure 9-2 -Refer to Figure 9-2.The world price for baskets represents

Correct AnswerverifiedShow Answer

Domestic producers of a good become worse off,and domestic consumers of a good become better off,when a country begins allowing international trade in that good and

Correct AnswerverifiedShow Answer

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1.Relative to the no-trade situation,trade with the rest of the world results in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17.When the country moves from free trade to trade and a tariff,consumer surplus

Correct AnswerverifiedShow Answer

A tariff on a product makes

Correct AnswerverifiedShow Answer

Suppose the United States exports cars to Canada and imports bananas from Mexico.This situation suggests

Correct AnswerverifiedShow Answer

The infant-industry argument

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

Figure 9-12 -Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are

Correct AnswerverifiedShow Answer

A major difference between tariffs and import quotas is that

Correct AnswerverifiedShow Answer

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