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Exam 9: Application: International Trade

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Question 71

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​If we know that Canada exports maple syrup, we can conclude that maple syrup consumers in Canada are worse off than they would be in the absence of trade.

A) True
B) False

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Question 72

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Figure 9-9 The following diagram shows the domestic demand and domestic supply curves in a market. ​ -Refer to Figure 9-9. With no trade allowed, how much are consumer surplus, producer surplus, and total surplus in this market?

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Consumer surplus is ...

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Question 73

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If a country allows free trade and imports cars, then it is the case that the gains to domestic producers outweigh the losses to domestic consumers.

Economists view free trade as a way to raise living standards both at home and abroad.

Figure 9-5 -When a country that imports a particular good imposes an import quota on that good,

Figure 9-1 ​ Uganda -Refer to Figure 9-1. In the absence of trade, the equilibrium price of coffee in Uganda is

Scenario 9-2 Suppose domestic demand and domestic supply in a market are given by the following equations: $\begin{array} { l } Q ^ { D } = 20 - P \\Q ^ { S } = P\end{array}$ ​ -Refer to Scenario 9-2. 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?

Figure 9-5 -Refer to Figure 9-5. Producer surplus plus consumer surplus in this market before trade is

The nation of Spritzland used to prohibit international trade, but now trade is allowed, and Spritzland is exporting wristwatches. Relative to the previous no-trade situation, total surplus in the market for wristwatches in Spritzland has increased.

Figure 9-2 ​ -Refer to Figure 9-2. The increase in total surplus resulting from trade is

Figure 9-9 The following diagram shows the domestic demand and domestic supply curves in a market. ​ -Refer to Figure 9-9. Suppose the world price in this market is $6. If the country allows free trade, how much is producer surplus?

Figure 9-7 The following diagram shows the domestic demand and domestic supply curves in a market. ​ -Refer to Figure 9-7. Suppose the world price in this market is $7. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

Trade decisions are based on the principle of absolute advantage.

Figure 9-1 ​ Uganda -Refer to Figure 9-1. In the absence of trade, total surplus in Uganda is represented by the area

Suppose India exports cars to France and imports wine from Argentina. This situation suggests

The greater the elasticities of supply and demand, the smaller are the gains from trade.

A tax on an imported good is called a ______ .

Without free trade, the domestic price of a good must be equal to the world price of a good.

Scenario 9-2 Suppose domestic demand and domestic supply in a market are given by the following equations: $\begin{array} { l } Q ^ { D } = 20 - P \\Q ^ { S } = P\end{array}$ ​ -Refer to Scenario 9-2. Suppose the world price in this market is $8 per unit. If the country allows free trade, by how much do consumer surplus, producer surplus, and producer surplus change?