Question 1

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

Accepted Answer

A)  that country becomes an importer of pistachios.
B)  that country has a comparative advantage in producing pistachios.
C)  at the world price, the quantity of pistachios supplied in that country exceeds the quantity of pistachios demanded in that country.
D)  All of the above are correct.E) A) and B)
F) C) and D) A

Question 2

A tariff is a tax placed on

Accepted Answer

A)  an exported good and it lowers the domestic price of the good below the world price.
B)  an exported good and it ensures that the domestic price of the good stays the same as the world price.
C)  an imported good and it lowers the domestic price of the good below the world price.
D)  an imported good and it raises the domestic price of the good above the world price.E) A) and D)
F) All of the above D

Question 3

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)  The price of chips in Denmark increases to $19; the quantity of Danish-produced chips increases; and the quantity of chips imported by Denmark decreases.
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.
C)  The price of chips in Denmark increases to $17; the quantity of Danish-produced chips increases; and the quantity of chips imported by Denmark increases.
D)  The price of chips in Denmark increases to $15; the quantity of Danish-produced chips increases; and the quantity of chips imported by Denmark decreases.E) A) and D)
F) A) and C)

Question 4

When a nation first begins to trade with other countries and the nation becomes an exporter of corn,

Accepted Answer

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.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 5

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.

Accepted Answer

A) True 
 B)False

Question 6

Figure 9-5
 
-Refer to Figure 9-5.When a tariff is imposed in the market,domestic producers

Accepted Answer

A)  gain by $100.
B)  gain by $200.
C)  gain by $300.
D)  lose by $100.E) A) and B)
F) A) and C)

Question 7

Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners.
 
-Refer to Figure 9-9.When trade takes place,the quantity Q₂ - Q₁ is

Accepted Answer

A)  the number of air conditioners bought and sold in Kenya.
B)  the number of air conditioners produced in Kenya.
C)  the number of air conditioners exported by Kenya.
D)  the number of air conditioners imported by Kenya.E) B) and C)
F) A) and D)

Question 8

Figure 9-3. The domestic country is Jamaica.
 
-Refer to Figure 9-3.Consumer surplus in Jamaica without trade is

Accepted Answer

A)  $375.
B)  $2,000.
C)  $2,250.
D)  $8,700.E) A) and C)
F) None of the above

Question 9

Figure 9-5
 
-Refer to Figure 9-5.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.E) A) and C)
F) A) and B)

Question 10

Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners.
 
-Refer to Figure 9-9.The area bounded by the points (Q₀,P₀) ,(Q₂,P₁) ,and (Q₁,P₁) represents

Accepted Answer

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.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 11

Using the graph,assume that the government imposes a $1 tariff on hammers.Answer the following questions given this information.
  
a.What is the domestic price and quantity demanded of hammers after the tariff is imposed?
b.What is the quantity of hammers imported before the tariff?
c.What is the quantity of hammers imported after the tariff?
d.What would be the amount of consumer surplus before the tariff?
e.What would be the amount of consumer surplus after the tariff?
f.What would be the amount of producer surplus before the tariff?
g.What would be the amount of producer surplus after the tariff?
h.What would be the amount of government revenue because of the tariff?
i.What would be the total amount of deadweight loss due to the tariff?

Accepted Answer

a. $6,84
b. 66
c. 44
d. $384
e. $294
f. $45
g. $80
h. $44
i. $11

Question 12

Figure 9-1
 
-Refer to Figure 9-1.Without trade,consumer surplus is

Accepted Answer

A)  $210.
B)  $245.
C)  $455.
D)  $490.E) B) and C)
F) B) and D)

Question 13

Figure 9-11
 
-Refer to Figure 9-11.Producer surplus before trade is

Accepted Answer

A)  $3,600.
B)  $4,400.
C)  $5,200.
D)  $6,600.E) A) and D)
F) A) and B)

Question 14

Without free trade,the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 15

Figure 9-1
 
-Refer to Figure 9-1.With free trade,consumer surplus is

Accepted Answer

A)  $45.
B)  $80.
C)  $210.
D)  $245.E) None of the above
F) A) and B)

Question 16

Tariffs and quotas are different in the sense that

Accepted Answer

A)  tariffs cause deadweight losses, while quotas do not cause deadweight losses.
B)  tariffs raise revenue for the government, while quotas do not raise revenue for the government.
C)  tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers.
D)  tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of domestic producers.E) None of the above
F) B) and C)

Question 17

Figure 9-1
 
-Refer to Figure 9-1.At the world price and with free trade,

Accepted Answer

A)  the domestic quantity of baskets demanded is greater than the domestic quantity of baskets supplied.
B)  the basket market is in equilibrium.
C)  the domestic demand for baskets is perfectly inelastic.
D)  both domestic producers of baskets and domestic consumers of baskets are better off than they were without free trade.E) C) and D)
F) A) and B)

Question 18

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

Accepted Answer

A)  600 and 600.
B)  600 and 300.
C)  300 and 900.
D)  600 and 900.E) A) and B)
F) B) and C)

Question 19

Several arguments for restricting trade have been advanced.Those arguments do not include

Accepted Answer

A)  the jobs argument.
B)  the protection-as-a-bargaining-chip argument.
C)  the no-deadweight-loss argument.
D)  the infant-industry argument.E) A) and D)
F) A) and C)

Question 20

Figure 9-14
 
-Refer to Figure 9-14.Producer surplus with the tariff is

Accepted Answer

A)  G.
B)  C + G.
C)  A + C + G.
D)  A + B + C + G.E) All of the above
F) C) and D)

Exam 9: Application: International Trade

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

Correct Answer
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A

A tariff is a tax placed on

Correct Answer
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D

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
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When a nation first begins to trade with other countries and the nation becomes an exporter of corn,

Correct Answer
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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.

Correct Answer
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Figure 9-5 -Refer to Figure 9-5.When a tariff is imposed in the market,domestic producers

Correct Answer
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Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners. -Refer to Figure 9-9.When trade takes place,the quantity Q₂ - Q₁ is

Correct Answer
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Figure 9-3. The domestic country is Jamaica. -Refer to Figure 9-3.Consumer surplus in Jamaica without trade is

Correct Answer
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Figure 9-5 -Refer to Figure 9-5.With trade and without a tariff,

Correct Answer
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Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners. -Refer to Figure 9-9.The area bounded by the points (Q₀,P₀) ,(Q₂,P₁) ,and (Q₁,P₁) represents

Correct Answer
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Correct Answer
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a. $6,84 b. 66 c. 44 d. $384 e. $294 f. $45 g. $80 h. $44 i. $11

Figure 9-1 -Refer to Figure 9-1.Without trade,consumer surplus is

Correct Answer
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Figure 9-11 -Refer to Figure 9-11.Producer surplus before trade is

Correct Answer
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Without free trade,the domestic price of a good must be equal to the world price of a good.

Correct Answer
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Figure 9-1 -Refer to Figure 9-1.With free trade,consumer surplus is

Correct Answer
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Tariffs and quotas are different in the sense that

Correct Answer
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Figure 9-1 -Refer to Figure 9-1.At the world price and with free trade,

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

Correct Answer
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Several arguments for restricting trade have been advanced.Those arguments do not include

Correct Answer
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Figure 9-14 -Refer to Figure 9-14.Producer surplus with the tariff is

Correct Answer
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Exam 9: Application: International Trade

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

Correct AnswerverifiedA

A tariff is a tax placed on

Correct AnswerverifiedD

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 nation first begins to trade with other countries and the nation becomes an exporter of corn,

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Figure 9-5 -Refer to Figure 9-5.When a tariff is imposed in the market,domestic producers

Correct AnswerverifiedShow Answer

Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners. -Refer to Figure 9-9.When trade takes place,the quantity Q₂ - Q₁ is

Correct AnswerverifiedShow Answer

Figure 9-3. The domestic country is Jamaica. -Refer to Figure 9-3.Consumer surplus in Jamaica without trade is

Correct AnswerverifiedShow Answer

Figure 9-5 -Refer to Figure 9-5.With trade and without a tariff,

Correct AnswerverifiedShow Answer

Figure 9-9. The figure applies to the nation of Kenya and the good is air conditioners. -Refer to Figure 9-9.The area bounded by the points (Q₀,P₀) ,(Q₂,P₁) ,and (Q₁,P₁) represents

Correct AnswerverifiedShow Answer

Correct Answerverifieda. $6,84 b. 66 c. 44 d. $384 e. $294 f. $45 g. $80 h. $44 i. $11

Figure 9-1 -Refer to Figure 9-1.Without trade,consumer surplus is

Correct AnswerverifiedShow Answer

Figure 9-11 -Refer to Figure 9-11.Producer surplus before trade is

Correct AnswerverifiedShow Answer

Without free trade,the domestic price of a good must be equal to the world price of a good.

Correct AnswerverifiedShow Answer

Figure 9-1 -Refer to Figure 9-1.With free trade,consumer surplus is

Correct AnswerverifiedShow Answer

Tariffs and quotas are different in the sense that

Correct AnswerverifiedShow Answer

Figure 9-1 -Refer to Figure 9-1.At the world price and with free trade,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Several arguments for restricting trade have been advanced.Those arguments do not include

Correct AnswerverifiedShow Answer

Figure 9-14 -Refer to Figure 9-14.Producer surplus with the tariff is

Correct AnswerverifiedShow Answer

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A

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a. $6,84 b. 66 c. 44 d. $384 e. $294 f. $45 g. $80 h. $44 i. $11

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