Question 1

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.

Accepted Answer

A) True 
 B)False

Question 2

Figure 9-17 
-Refer to Figure 9-17. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)   $32.
B)   $288.
C)   $368.
D)   $720.E) A) and B)
F) A) and C)

Question 3

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

Accepted Answer

A)   both domestic producers and domestic consumers become better off.
B)   domestic producers become better off, and domestic consumers become worse off.
C)   domestic producers become worse off, and domestic consumers become better off.
D)   both domestic producers and domestic consumers become worse off.E) B) and C)
F) All of the above

Question 4

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

Question 5

Spain is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Spain imposes a $5 tariff on chips. As a result,

Accepted Answer

A)   Spanish consumers of chips and Spanish producers of chips both gain.
B)   Spanish consumers of chips gain and Spanish producers of chips lose.
C)   Spanish consumers of chips lose and Spanish producers of chips gain.
D)   Spanish consumers of chips and Spanish producers of chips both lose.E) A) and B)
F) C) and D)

Question 6

Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is
$52 per bushel. The U.S. is a price-taker in the market for peaches.
-Refer to Scenario 9-1. If trade in peaches is allowed, the United States

Accepted Answer

A)   will become an importer of peaches.
B)   will become an exporter of peaches.
C)   may become either an importer or an exporter of peaches, but this cannot be determined.
D)   will experience increases in both consumer surplus and producer surplus.E) A) and D)
F) B) and C)

Question 7

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 8

Figure 9-3. The domestic country is China. 
-Refer to Figure 9-3. With trade, producer surplus in China is

Accepted Answer

A)   $800.
B)   $1,200.
C)   $1,800.
D)   $2,700.E) B) and C)
F) All of the above

Question 9

When a country allows trade and becomes an importer of coal,

Accepted Answer

A)   the losses of the domestic producers of coal exceed the gains of the domestic consumers of coal.
B)   the losses of the domestic consumers of coal exceed the gains of the domestic producers of coal.
C)   the gains of the domestic producers of coal exceed the losses of the domestic consumers of coal.
D)   the gains of the domestic consumers of coal exceed the losses of the domestic producers of coal.E) C) and D)
F) B) and D)

Question 10

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. 
-Refer to Figure 9-16. The area C + D + E + F represents

Accepted Answer

A)   the decrease in consumer surplus caused by the tariff.
B)   the decrease in total surplus caused by the tariff.
C)   the deadweight loss of the tariff minus government revenue raised by the tariff.
D)   the deadweight loss of the tariff plus government revenue raised by the tariff.E) None of the above
F) B) and C)

Question 11

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular 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) None of the above
F) All of the above

Question 12

Suppose the world price of coffee is $2 per pound and Brazil's domestic price of coffee without trade is $3 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

Accepted Answer

Brazil wil...

Question 13

Figure 9-11 
-Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is

Accepted Answer

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

Question 14

Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the price of peaches. The domestic country is Isoland. 
-Refer to Figure 9-18. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $5, then the policy change results in a

Accepted Answer

A)   $25 decrease in consumer surplus.
B)   $20 increase in consumer surplus.
C)   $25 decrease in producer surplus.
D)   $20 increase in producer surplus.E) B) and C)
F) A) and B)

Question 15

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Accepted Answer

A)   the country will be an exporter of the good.
B)   the country will be an importer of the good.
C)   the country will be neither an exporter nor an importer of the good.
D)   Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.E) A) and B)
F) None of the above

Question 16

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) B) and C)

Question 17

Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market. 
-Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, how many units will domestic consumers demand, and how many units will domestic producers produce?

Accepted Answer

Domestic consumers w...

Question 18

The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of wine imported, and increase the quantity of wine produced domestically.

Accepted Answer

A) True 
 B)False

Question 19

Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Accepted Answer

A)   Guatemala has a comparative advantage over other countries in the production of coffee, and Guatemala will export coffee.
B)   Guatemala has a comparative advantage over other countries in the production of coffee, and Guatemala will import coffee.
C)   other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will export coffee.
D)   other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will import coffee.E) B) and C)
F) A) and D)

Question 20

A country has a comparative advantage in a product if the world price is than that country's domestic price without trade.

Accepted Answer

The answer of A country has a comparative advantage in...

Exam 9: Application: International Trade

Suppose the world price of coffee is $2 per pound and Brazil's domestic price of coffee without trade is $3 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

Correct Answer
verified
Brazil wil...
View Answer

Figure 9-17 -Refer to Figure 9-17. The amount of revenue collected by the government from the tariff is

Correct Answer
verified

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

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
verified

Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Correct Answer
verified

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the United States

Correct Answer
verified

Correct Answer
verified

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Correct Answer
verified

When a country allows trade and becomes an importer of coal,

Correct Answer
verified

The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of wine imported, and increase the quantity of wine produced domestically.

Correct Answer
verified

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The area C + D + E + F represents

Correct Answer
verified

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

Spain is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Spain imposes a $5 tariff on chips. As a result,

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

A country has a comparative advantage in a product if the world price is than that country's domestic price without trade.

Correct Answer
verified

Figure 9-11 -Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is

Correct Answer
verified

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

Correct Answer
verified

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With trade, producer surplus in China is

Correct Answer
verified

Correct Answer
verified
Domestic consumers w...
View Answer

Exam 9: Application: International Trade

Suppose the world price of coffee is $2 per pound and Brazil's domestic price of coffee without trade is $3 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

Correct AnswerverifiedBrazil wil...View AnswerShow Answer

Figure 9-17 -Refer to Figure 9-17. The amount of revenue collected by the government from the tariff is

Correct AnswerverifiedShow 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

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

Assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. This suggests that

Correct AnswerverifiedShow Answer

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, the United States

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Correct AnswerverifiedShow Answer

When a country allows trade and becomes an importer of coal,

Correct AnswerverifiedShow Answer

The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the quantity of wine imported, and increase the quantity of wine produced domestically.

Correct AnswerverifiedShow Answer

Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P represents price. -Refer to Figure 9-16. The area C + D + E + F 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

Spain is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Spain imposes a $5 tariff on chips. As a result,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

A country has a comparative advantage in a product if the world price is than that country's domestic price without trade.

Correct AnswerverifiedShow Answer

Figure 9-11 -Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is

Correct AnswerverifiedShow Answer

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good,

Correct AnswerverifiedShow Answer

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. With trade, producer surplus in China is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDomestic consumers w...View AnswerShow Answer

Correct Answer
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Brazil wil...
View Answer

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Domestic consumers w...
View Answer