Question 1

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. The price corresponding to the horizontal dotted line on the graph represents the price of cars

Accepted Answer

A)  after trade is allowed.
B)  before trade is allowed.
C)  that maximizes total surplus when trade is allowed.
D)  that minimizes the well-being of domestic car producers when trade is allowed.E) All of the above
F) B) and D)

Question 2

Jamaica has a comparative advantage in the production of aluminum, but currently allows no international trade in aluminum. We can conclude that

Accepted Answer

A)  ​the domestic price of aluminum in Jamaica is higher than the world price for aluminum.
B)  ​Jamaica has an absolute advantage in the production of aluminum.
C)  ​Jamaica should import aluminum.
D)  ​the domestic price of aluminum in Jamaica is lower than the world price for aluminum.E) A) and B)
F) A) and C)

Question 3

Assume, for England, that the domestic price of wine without international trade is lower 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) A) and B)

Question 4

Zelzar 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. Which groups in Zelzar are better off as a result of the new free-trade policy?

Accepted Answer

A)  producers of incense and consumers of steel
B)  consumers of all three goods
C)  consumers of incense and producers of rugs
D)  producers of steel and consumers of incenseE) A) and D)
F) A) and C)

Question 5

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Accepted Answer

A)  demand for tricycles from the rest of the world.
B)  supply of tricycles from the rest of the world.
C)  level of inefficiency in the domestic market caused by trade.
D)  surplus in the domestic tricycle market.E) A) and C)
F) A) and B)

Question 6

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) None of the above

Question 7

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) C) and D)
F) All of the above

Question 8

Scenario 9-2
• For a small country called Boxland, the equation of the domestic demand curve for
cardboard is  ,
where  represents the domestic quantity of cardboard demanded, in tons, and  represents the price of a ton of cardboard.
• For Boxland, the equation of the domestic supply curve for cardboard is  ,
where  represents the domestic quantity of cardboard supplied, in tons, and  again
represents the price of a ton of cardboard.
-Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

Accepted Answer

A)  domestic producers of cardboard become better off and domestic consumers of cardboard become better off.
B)  domestic producers of cardboard become better off and domestic consumers of cardboard become worse off.
C)  domestic producers of cardboard become worse off and domestic consumers of cardboard become better off.
D)  domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.E) B) and C)
F) None of the above

Question 9

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Accepted Answer

A)  export copper.
B)  import copper.
C)  neither export nor import copper, since that country cannot gain from trade.
D)  neither export nor import copper, since that country already produces copper at a low cost compared to other countries.E) A) and D)
F) B) and C)

Question 10

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Accepted Answer

A) True 
 B)False

Question 11

Figure 9-2
The figure illustrates the market for calculators in a country. 
-Refer to Figure 9-2. With free trade, producer surplus is

Accepted Answer

A)  $845.
B)  $1,620.
C)  $1,690.
D)  $3,240.E) C) and D)
F) A) and D)

Question 12

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Accepted Answer

A)  benefit the United States as a whole, because they generate revenue for the government. In addition, because the goods are priced below cost, the taxes do not harm domestic consumers.
B)  benefit the United States as a whole, because they generate revenue for the government and increase producer surplus.
C)  harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue.
D)  harm the United States as a whole, because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue.E) A) and B)
F) C) and D)

Question 13

The principle of comparative advantage asserts that

Accepted Answer

A)  not all countries can benefit from trade with other countries.
B)  the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good.
C)  countries can become better off by exporting goods, but they cannot become better off by importing goods.
D)  countries can become better off by specializing in what they do best.E) A) and B)
F) A) and C)

Question 14

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 D)

Question 15

Figure 9-1
The figure illustrates the market for coffee in Guatemala. 
-Refer to Figure 9-1. When trade is allowed,

Accepted Answer

A)  Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off.
B)  Guatemalan consumers of coffee become better off and Guatemalan producers of coffee become worse off.
C)  both Guatemalan producers and consumers of coffee become better off.
D)  both Guatemalan producers and consumers of coffee become worse off.E) None of the above
F) B) and D)

Question 16

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Bearing in mind that this country is "small," what would happen if there were a decrease in the price of tricycle helmets within this country, given that tricycles and tricycle helmets are complements?

Accepted Answer

A)  The quantity of tricycles that this country imports would increase.
B)  The quantity of tricycles that this country imports would decrease, but the country would still be an importer of tricycles.
C)  This country would switch from being an importer of tricycles to an exporter of tricycles.
D)  The domestic price without trade would move closer to the world price.E) A) and B)
F) A) and C)

Question 17

Figure 9-4. The domestic country is Nicaragua. 
-Refer to Figure 9-4. With trade, Nicaragua

Accepted Answer

A)  imports 150 calculators.
B)  imports 250 calculators.
C)  exports 100 calculators.
D)  exports 250 calculators.E) A) and B)
F) B) and C)

Question 18

When, in our analysis of the gains and losses from international trade, we assume that a country is small, we are in effect assuming that the country

Accepted Answer

A)  cannot experience significant gains or losses by trading with other countries.
B)  cannot have a significant comparative advantage over other countries.
C)  cannot affect world prices by trading with other countries.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 19

Which of the following is not a commonly-advanced argument for trade restrictions?

Accepted Answer

A)  the jobs argument
B)  the national-security argument
C)  the infant-industry argument
D)  the efficiency argumentE) None of the above
F) All of the above

Question 20

​We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

Accepted Answer

A) True 
 B)False

Exam 9: Application: International Trade

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

Correct Answer
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Zelzar 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. Which groups in Zelzar are better off as a result of the new free-trade policy?

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. The price corresponding to the horizontal dotted line on the graph represents the price of cars

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

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Correct Answer
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For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Correct Answer
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Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Correct Answer
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Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. With free trade, producer surplus is

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

Correct Answer
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When, in our analysis of the gains and losses from international trade, we assume that a country is small, we are in effect assuming that the country

Correct Answer
verified

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Correct Answer
verified

The principle of comparative advantage asserts that

Correct Answer
verified

We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

Correct Answer
verified

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. With trade, Nicaragua

Correct Answer
verified

Which of the following is not a commonly-advanced argument for trade restrictions?

Correct Answer
verified

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," what would happen if there were a decrease in the price of tricycle helmets within this country, given that tricycles and tricycle helmets are complements?

Correct Answer
verified

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade is allowed,

Correct Answer
verified

Jamaica has a comparative advantage in the production of aluminum, but currently allows no international trade in aluminum. We can conclude that

Correct Answer
verified

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

Correct Answer
verified

Exam 9: Application: International Trade

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

Correct AnswerverifiedShow Answer

Zelzar 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. Which groups in Zelzar are better off as a result of the new free-trade policy?

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. The price corresponding to the horizontal dotted line on the graph represents the price of cars

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

If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good.

Correct AnswerverifiedShow Answer

For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the

Correct AnswerverifiedShow Answer

Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. With free trade, producer surplus is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When, in our analysis of the gains and losses from international trade, we assume that a country is small, we are in effect assuming that the country

Correct AnswerverifiedShow Answer

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

Correct AnswerverifiedShow Answer

The principle of comparative advantage asserts that

Correct AnswerverifiedShow Answer

​We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

Correct AnswerverifiedShow Answer

Figure 9-4. The domestic country is Nicaragua. -Refer to Figure 9-4. With trade, Nicaragua

Correct AnswerverifiedShow Answer

Which of the following is not a commonly-advanced argument for trade restrictions?

Correct AnswerverifiedShow Answer

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Bearing in mind that this country is "small," what would happen if there were a decrease in the price of tricycle helmets within this country, given that tricycles and tricycle helmets are complements?

Correct AnswerverifiedShow Answer

Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. When trade is allowed,

Correct AnswerverifiedShow Answer

Jamaica has a comparative advantage in the production of aluminum, but currently allows no international trade in aluminum. We can conclude that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.

Correct Answer
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