Question 1

Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that

Accepted Answer

A)   if Canada were to allow trade, it would export hockey sticks.
B)   Canada has an absolute advantage, relative to other countries, in producing hockey sticks.
C)   Canada has a comparative advantage, relative to other countries, in producing baseball bats.
D)   All of the above are correct.E) A) and C)
F) All of the above

Question 2

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) A) and B)
F) B) and D)

Question 3

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, and suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how much are consumer surplus, producer surplus, tariff revenue, and total surplus?

Accepted Answer

With trade and a tariff, consu...

Question 4

When a country that imports a particular good imposes an import quota on that good,

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

Question 5

Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

Accepted Answer

A) True 
 B)False

Question 6

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off.

Accepted Answer

A) True 
 B)False

Question 7

The two basic approaches that a country can take as a means to achieve free trade are the

Accepted Answer

A)   unilateral approach and the multilateral approach.
B)   short-run approach and the long-run approach.
C)   continental approach and the global approach.
D)   industry approach and the security approach.E) A) and C)
F) B) and C)

Question 8

Which of the following statements is true?

Accepted Answer

A)   Free trade benefits a country when it exports but harms it when it imports.
B)   "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs placed on Canadian hog exports.
C)   Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses, whereas quotas do not impose deadweight losses.
D)   Free trade benefits a country both when it exports and when it imports.E) B) and C)
F) A) and C)

Question 9

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

Accepted Answer

A)   A.
B)   B + C.
C)   A + B + D.
D)   C.E) A) and D)
F) None of the above

Question 10

Figure 9-17 
-Refer to Figure 9-17. With free trade, the country imports

Accepted Answer

A)   16 units of the good.
B)   24 units of the good.
C)   60 units of the good.
D)   64 units of the good.E) None of the above
F) All of the above

Question 11

Suppose Brazil has an absolute advantage over other countries in producing almonds, but other countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

Accepted Answer

A)   will import almonds.
B)   will export almonds.
C)   will either import almonds or export almonds, but it is not clear from the given information.
D)   would have nothing to gain either from exporting or importing almonds.E) None of the above
F) B) and D)

Question 12

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Accepted Answer

A) True 
 B)False

Question 13

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) C) 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. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

Accepted Answer

A)   above $2.
B)   below $4.
C)   above $4.
D)   below $7.E) A) and B)
F) A) and C)

Question 15

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 price of peaches in the United States

Accepted Answer

A)   will be greater than the world price.
B)   will be equal to the world price.
C)   will be less than the world price.
D)   could be greater than, equal to, or less than the world price; this cannot be determined.E) B) and D)
F) None of the above

Question 16

The North American Free Trade Agreement

Accepted Answer

A)   is an example of the unilateral approach to free trade.
B)   eliminated tariffs on imports to North America from the rest of the world.
C)   reduced trade restrictions among Canada, Mexico and the United States.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 17

According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Accepted Answer

A) True 
 B)False

Question 18

Figure 9-9 
-Refer to Figure 9-9. Total surplus in this market before trade is

Accepted Answer

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

Question 19

Both tariffs and import quotas

Accepted Answer

A)   increase the quantity of imports and raise the domestic price of the good.
B)   increase the quantity of imports and lower the domestic price of the good.
C)   decrease the quantity of imports and raise the domestic price of the good.
D)   decrease the quantity of imports and lower the domestic price of the good.E) B) and C)
F) All of the above

Question 20

Suppose in the country of Jumanji that the price of wheat with no trade allowed is above the world price of wheat. If Jumanji allows free trade, will Jumanji be an importer or an exporter of wheat?

Accepted Answer

Jumanji wi...

Exam 9: Application: International Trade

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

Correct Answer
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The North American Free Trade Agreement

Correct Answer
verified

Suppose in the country of Jumanji that the price of wheat with no trade allowed is above the world price of wheat. If Jumanji allows free trade, will Jumanji be an importer or an exporter of wheat?

Correct Answer
verified
Jumanji wi...
View Answer

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

Correct Answer
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According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Correct Answer
verified

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. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

Correct Answer
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Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

Correct Answer
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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 price of peaches in the United States

Correct Answer
verified

When a country that imports a particular good imposes an import quota on that good,

Correct Answer
verified

Figure 9-9 -Refer to Figure 9-9. Total surplus in this market before trade is

Correct Answer
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Which of the following statements is true?

Correct Answer
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Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that

Correct Answer
verified

Suppose Brazil has an absolute advantage over other countries in producing almonds, but other countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

Correct Answer
verified

Figure 9-17 -Refer to Figure 9-17. With free trade, the country imports

Correct Answer
verified

Tariffs and quotas are different in the sense that

Correct Answer
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Correct Answer
verified
With trade and a tariff, consu...
View Answer

The two basic approaches that a country can take as a means to achieve free trade are the

Correct Answer
verified

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off.

Correct Answer
verified

Both tariffs and import quotas

Correct Answer
verified

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

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

The North American Free Trade Agreement

Correct AnswerverifiedShow Answer

Suppose in the country of Jumanji that the price of wheat with no trade allowed is above the world price of wheat. If Jumanji allows free trade, will Jumanji be an importer or an exporter of wheat?

Correct AnswerverifiedJumanji wi...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

According to the principle of comparative advantage, all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

Correct AnswerverifiedShow Answer

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. If Isoland allows international trade, then it will be an exporter of peaches if and only if the world price of peaches is

Correct AnswerverifiedShow Answer

Economists feel that national security concerns never provide a legitimate rationale for trade restrictions.

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 price of peaches in the United States

Correct AnswerverifiedShow Answer

When a country that imports a particular good imposes an import quota on that good,

Correct AnswerverifiedShow Answer

Figure 9-9 -Refer to Figure 9-9. Total surplus in this market before trade is

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that

Correct AnswerverifiedShow Answer

Suppose Brazil has an absolute advantage over other countries in producing almonds, but other countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. With free trade, the country imports

Correct AnswerverifiedShow Answer

Tariffs and quotas are different in the sense that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWith trade and a tariff, consu...View AnswerShow Answer

The two basic approaches that a country can take as a means to achieve free trade are the

Correct AnswerverifiedShow Answer

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off.

Correct AnswerverifiedShow Answer

Both tariffs and import quotas

Correct AnswerverifiedShow Answer

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

Correct AnswerverifiedShow Answer

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Jumanji wi...
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With trade and a tariff, consu...
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