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Suppose a country begins to allow international trade in steel. Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel?


A) The sum of consumer surplus and producer surplus for domestic traders of steel increases.
B) The quantity of steel demanded by domestic consumers increases.
C) Domestic producers of steel receive a higher price for steel.
D) The losses of the losers exceed the gains of the winners.

E) All of the above
F) A) and B)

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When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?


A) The price paid by domestic consumers of the good increases.
B) The price received by domestic producers of the good increases.
C) The losses of domestic consumers of the good exceed the gains of domestic producers of the good.
D) The gains of domestic producers of the good exceed the losses of domestic consumers of the good.

E) A) and D)
F) None of the above

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When a country allows international trade and becomes an importer of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off.

A) True
B) False

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Figure 9-11 Figure 9-11 -Refer to Figure 9-11. The change in total surplus in this market because of trade is A) A, and this area represents a loss of total surplus. B) B, and this area represents a gain in total surplus. C) C, and this area represents a loss of total surplus. D) D, and this area represents a gain in total surplus. -Refer to Figure 9-11. The change in total surplus in this market because of trade is


A) A, and this area represents a loss of total surplus.
B) B, and this area represents a gain in total surplus.
C) C, and this area represents a loss of total surplus.
D) D, and this area represents a gain in total surplus.

E) None of the above
F) A) and D)

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A logical starting point from which the study of international trade begins is


A) the recognition that not all markets are competitive.
B) the recognition that government intervention in markets sometimes enhances the economic welfare of the society.
C) the principle of absolute advantage.
D) the principle of comparative advantage.

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

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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


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

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A tariff on a product makes


A) domestic sellers better off and domestic buyers worse off.
B) domestic sellers worse off and domestic buyers worse off.
C) domestic sellers better off and domestic buyers better off.
D) domestic sellers worse off and domestic buyers better off.

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

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


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

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Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. Figure 9-24 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit. -Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The amount of revenue collected by the government from the tariff is A) $50. B) $100. C) $150. D) $200. -Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The amount of revenue collected by the government from the tariff is


A) $50.
B) $100.
C) $150.
D) $200.

E) None of the above
F) A) and B)

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Suppose in the country of Nash that the price of corn is $4 per bushel with no trade allowed. If the world price of corn is $3 per bushel and if Nash allows free trade, will Nash be an importer or an exporter of corn?

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Nash will ...

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Figure 9-29 The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. Figure 9-29 The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. -Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how many units will be imported? -Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how many units will be imported?

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With trade and a tar...

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If the demand curve and the supply curve for a good are straight lines, then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by


A) the area of one triangle.
B) the area of one rectangle.
C) the combined areas of two different triangles.
D) the combined areas of two different rectangles.

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

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Figure 9-15 Figure 9-15 -Refer to Figure 9-15. With the tariff, the quantity of saddles imported is A) Q3 - Q1. B) Q3 - Q2. C) Q4 - Q1. D) Q4 - Q2. -Refer to Figure 9-15. With the tariff, the quantity of saddles imported is


A) Q3 - Q1.
B) Q3 - Q2.
C) Q4 - Q1.
D) Q4 - Q2.

E) B) and C)
F) C) and D)

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Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. The amount of revenue collected by the government from the tariff is A) $50. B) $100. C) $150. D) $200. -Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. The amount of revenue collected by the government from the tariff is


A) $50.
B) $100.
C) $150.
D) $200.

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

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


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

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


A) domestic producers gain and domestic consumers lose.
B) domestic producers lose and domestic consumers gain.
C) domestic producers and domestic consumers both gain.
D) domestic producers and domestic consumers both lose.

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

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Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -Refer to Figure 9-14. The country for which the figure is drawn A) has a comparative advantage relative to other countries in the production of crude oil and it will export crude oil. B) has a comparative advantage relative to other countries in the production of crude oil and it will import crude oil. C) has a comparative disadvantage relative to other countries in the production of crude oil and it will export crude oil. D) has a comparative disadvantage relative to other countries in the production of crude oil and it will import crude oil. -Refer to Figure 9-14. The country for which the figure is drawn


A) has a comparative advantage relative to other countries in the production of crude oil and it will export crude oil.
B) has a comparative advantage relative to other countries in the production of crude oil and it will import crude oil.
C) has a comparative disadvantage relative to other countries in the production of crude oil and it will export crude oil.
D) has a comparative disadvantage relative to other countries in the production of crude oil and it will import crude oil.

E) All of the above
F) A) and B)

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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.

A) True
B) False

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


A) the jobs argument
B) the national-security argument
C) the infant-industry argument
D) the efficiency argument

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

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Figure 9-17 Figure 9-17 -Refer to Figure 9-17. With free trade, consumer surplus is A) $400 and producer surplus is $200. B) $400 and producer surplus is $800. C) $1,600 and producer surplus is $200. D) $1,600 and producer surplus is $800. -Refer to Figure 9-17. With free trade, consumer surplus is


A) $400 and producer surplus is $200.
B) $400 and producer surplus is $800.
C) $1,600 and producer surplus is $200.
D) $1,600 and producer surplus is $800.

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

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