Question 1

Figure 9-20
The figure illustrates the market for rice in Vietnam. 
-Refer to Figure 9-20. With trade, Vietnamese rice producers will produce

Accepted Answer

A)  2,000 units of rice and their producer surplus will be 4,000.
B)  2,000 units of rice and their producer surplus will be 7,500.
C)  3,000 units of rice and their producer surplus will be 7,500.
D)  3,000 units of rice and their producer surplus will be 9,000.E) B) and C)
F) A) and B)

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 B)
F) A) and C)

Question 3

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Accepted Answer

A)  People face tradeoffs.
B)  Trade can make everyone better off.
C)  Governments can sometimes improve market outcomes.
D)  Prices rise when the government prints too much money.E) A) and B)
F) A) and C)

Question 4

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

Accepted Answer

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

Question 5

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Accepted Answer

A)  there is no evidence that any worker ever lost his or her job because of free trade.
B)  unemployment of labor is not a serious problem relative to other economic problems.
C)  the gains from trade are based on comparative advantage.
D)  the gains from trade are based on absolute advantage.E) None of the above
F) A) and B)

Question 6

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Accepted Answer

A)  because it is impossible to analyze the gains and losses from international trade without making this assumption.
B)  because then we can assume that world prices of goods are unaffected by that country's participation in international trade.
C)  in order to rule out the possibility of tariffs or quotas.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 7

Figure 9-10. The figure applies to Mexico and the good is rifles. 0) , (Q0, P0) , (Q2, P1) , and (0, P1) . B) (0, P1) , (0, P2) , (Q0, P0) , and (Q1, P1) . C) (Q0, P0) , (Q2, P1) , and (Q1, P1) . D) (0, P0) , (0, P2) , and (Q0, P0) ." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

Accepted Answer

A)  (0, P0) , (Q0, P0) , (Q2, P1) , and (0, P1) .
B)  (0, P1) , (0, P2) , (Q0, P0) , and (Q1, P1) .
C)  (Q0, P0) , (Q2, P1) , and (Q1, P1) .
D)  (0, P0) , (0, P2) , and (Q0, P0) .E) None of the above
F) All of the above

Question 8

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

Question 9

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Accepted Answer

A)  A multilateral approach can reduce trade restrictions abroad as well as at home.
B)  A multilateral approach has the potential to result in freer trade.
C)  A multilateral approach requires the agreement of two or more nations.
D)  A multilateral approach may have political advantages.E) B) and D)
F) B) and C)

Question 10

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade, then Vietnam

Accepted Answer

A)  should import textiles.
B)  has a comparative advantage in textiles.
C)  should produce just enough textiles to meet its domestic demand.
D)  should refrain altogether from producing textiles.E) A) and B)
F) None of the above

Question 11

Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight loss of the tariff is $300 million.

Accepted Answer

A) True 
 B)False

Question 12

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Accepted Answer

A) True 
 B)False

Question 13

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) None of the above
F) All of the above A

Question 14

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

Accepted Answer

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

Question 15

Suppose England exports cars to Australia and imports cheese from Mexico. This situation suggests that

Accepted Answer

A)  England has a comparative advantage relative to Mexico in producing cheese, and Australia has a comparative advantage relative to England in producing cars.
B)  England has a comparative advantage relative to Australia in producing cars, and Mexico has a comparative advantage relative to England in producing cheese.
C)  England has an absolute advantage relative to Mexico in producing cheese, and Australia has an absolute advantage relative to England in producing cars.
D)  England has an absolute advantage relative to Australia in producing cars, and Mexico has an absolute advantage relative to England in producing cheese.E) A) and C)
F) All of the above

Question 16

A quota is

Accepted Answer

A)  a tax placed on imports.
B)  a limit on the quantity of imports.
C)  a tax on exports to other countries.
D)  an excess of exports over imports.E) B) and C)
F) None of the above

Question 17

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

Accepted Answer

A)  a decrease in consumer surplus.
B)  an increase in producer surplus.
C)  an increase in total surplus.
D)  All of the above are correct.E) A) and B)
F) B) and C) D

Question 18

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

Question 19

If the world price of sugar is lower than Brazil's domestic price of sugar without trade, then Brazil

Accepted Answer

A)  should import sugar.
B)  has a comparative advantage in sugar.
C)  should produce just enough sugar to satisfy domestic demand.
D)  should produce no sugar domestically.E) A) and C)
F) B) and C)

Question 20

Assume, for the U.S., that the domestic price of tea without international trade is higher than the world price of tea. This suggests that

Accepted Answer

A)  other countries have a comparative advantage over the U.S. in producing tea.
B)  the U.S. has an absolute advantage over other countries in producing tea.
C)  the U.S. will export tea if international trade is allowed.
D)  American tea buyers will become worse off if international trade is allowed.E) C) and D)
F) None of the above

Exam 9: Application: International Trade

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. With trade, Vietnamese rice producers will produce

Correct Answer
verified

A tariff is a tax placed on

Correct Answer
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With which of the Ten Principles of Economics is the study of international trade most closely connected?

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

Correct Answer
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B

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Correct Answer
verified

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Correct Answer
verified

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

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

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Correct Answer
verified

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade, then Vietnam

Correct Answer
verified

Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight loss of the tariff is $300 million.

Correct Answer
verified

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Correct Answer
verified

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

Correct Answer
verified
A

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

Correct Answer
verified

Suppose England exports cars to Australia and imports cheese from Mexico. This situation suggests that

Correct Answer
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A quota is

Correct Answer
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Correct Answer
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D

A major difference between tariffs and import quotas is that

Correct Answer
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If the world price of sugar is lower than Brazil's domestic price of sugar without trade, then Brazil

Correct Answer
verified

Assume, for the U.S., that the domestic price of tea without international trade is higher than the world price of tea. This suggests that

Correct Answer
verified

Exam 9: Application: International Trade

Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20. With trade, Vietnamese rice producers will produce

Correct AnswerverifiedShow Answer

A tariff is a tax placed on

Correct AnswerverifiedShow Answer

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedB

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

Correct AnswerverifiedShow Answer

In analyzing international trade, we often focus on a country whose economy is small relative to the rest of the world. We do so

Correct AnswerverifiedShow Answer

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10. Mexico's gains from trade are represented by the area that is bounded by the points

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

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Correct AnswerverifiedShow Answer

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade, then Vietnam

Correct AnswerverifiedShow Answer

Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is $100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is $500 million, the deadweight loss of the tariff is $300 million.

Correct AnswerverifiedShow Answer

If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

Suppose England exports cars to Australia and imports cheese from Mexico. This situation suggests that

Correct AnswerverifiedShow Answer

A quota is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

A major difference between tariffs and import quotas is that

Correct AnswerverifiedShow Answer

If the world price of sugar is lower than Brazil's domestic price of sugar without trade, then Brazil

Correct AnswerverifiedShow Answer

Assume, for the U.S., that the domestic price of tea without international trade is higher than the world price of tea. This suggests that

Correct AnswerverifiedShow Answer

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B

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A

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D

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