Question 1

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

Question 2

Suppose the United States exports cars to Switzerland and imports cheese from France. This situation suggests

Accepted Answer

A)  the United States has a comparative advantage relative to France in producing cheese, and Switzerland has a comparative advantage to the United States in producing cars.
B)  the United States has a comparative advantage relative to Switzerland in producing cars, and France has a comparative advantage relative to the United States in producing cheese.
C)  the United States has an absolute advantage relative to Switzerland in producing cars, and France has an absolute advantage relative to the United States in producing cheese.
D)  the United States has an absolute advantage relative to France in producing cheese, and Switzerland has an absolute advantage relative to the United States in producing cars.E) None of the above
F) All of the above

Question 3

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. 0Q0. B) Producer surplus with trade = (1/2) P1Q1. C) Producer surplus with trade = (1/2) P1Q2. D) None of the above is correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?

Accepted Answer

A)  Producer surplus with trade = (1/2) P0Q0.
B)  Producer surplus with trade = (1/2) P1Q1.
C)  Producer surplus with trade = (1/2) P1Q2.
D)  None of the above is correct.E) A) and C)
F) All of the above

Question 4

The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Accepted Answer

A) True 
 B)False

Question 5

Domestic consumers gain and domestic producers lose when the government imposes a tariff on imports.

Accepted Answer

A) True 
 B)False

Question 6

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Accepted Answer

A) True 
 B)False

Question 7

Import quotas and tariffs both cause the quantity of imports to fall.

Accepted Answer

A) True 
 B)False

Question 8

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Accepted Answer

A)  foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding.
B)  foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs.
C)  the critics are correct, so countries must protect their industries with tariffs or quotas.
D)  foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.E) All of the above
F) A) and B)

Question 9

Finland allows trade with the rest of the world. We can determine whether Finland has a comparative advantage in producing pork if we

Accepted Answer

A)  know whether Finland imports or exports pork.
B)  compare the world price of pork to the price of pork that would prevail in Finland if trade with the rest of the world were not allowed.
C)  compare the quantity of pork consumed in Finland with the quantity of pork that would be consumed in Finland if trade with the rest of the world were not allowed.
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 10

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

Accepted Answer

A)  export zinc, since that country has a comparative advantage in zinc.
B)  import zinc, since that country has a comparative advantage in zinc.
C)  neither export nor import zinc, since that country cannot gain from trade.
D)  neither export nor import zinc, since that country already produces zinc at a low cost compared to other countries.E) B) and C)
F) None of the above

Question 11

Scenario 9-2
For a small country called Boxland, the equation of the domestic demand curve for cardboard is

QD=200−2PQ ^ { D } = 200 - 2 PQD=200−2P  ,
where  QDQ ^ { D }QD  represents the domestic quantity of cardboard demanded, in tons, and  PPP  represents the price of a ton of cardboard.For Boxland, the equation of the domestic supply curve for cardboard is

QS=−60+3PQ ^ { S } = - 60 + 3 PQS=−60+3P  ,
where  QsQ ^ { s }Qs  represents the domestic quantity of cardboard supplied, in tons, and  PPP  again represents the price of a ton of cardboard.
-Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then Boxland's gains from international trade in cardboard amount to

Accepted Answer

A)  $88.75.
B)  $102.50.
C)  $122.50.
D)  $135.00. E) A) and B)
F) A) and C)

Question 12

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

Accepted Answer

A)  an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus.
B)  an import quota has no effect on producer surplus, while a tariff decreases producer surplus.
C)  a tariff raises total surplus, while an import quota does not.
D)  a tariff raises revenue for that country's government, while an import quota does not.E) B) and D)
F) A) and B)

Question 13

The "unfair-competition" argument might be cited by an American who believes that

Accepted Answer

A)  almost every country has a comparative advantage, relative to the United States, in producing almost all goods.
B)  young industries should be protected against foreign competition until they become profitable.
C)  the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost.
D)  the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.E) B) and C)
F) C) and D)

Question 14

Free trade causes job losses in industries in which a country does not have a comparative advantage, but it also causes job gains in industries in which the country has a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 15

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

Accepted Answer

A)  both producers of automobiles and consumers of automobiles in that nation became better off as a result.
B)  the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation.
C)  the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation.
D)  even though total surplus in that nation decreased, it was still true that consumer surplus and producer surplus increased.E) None of the above
F) All of the above

Question 16

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?

Accepted Answer

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

Question 17

Figure 9-15 1 and Q1. B) P1 and Q4. C) P2 and Q2. D) P2 and Q3." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are

Accepted Answer

A)  P1 and Q1.
B)  P1 and Q4.
C)  P2 and Q2.
D)  P2 and Q3.E) B) and D)
F) A) and C)

Question 18

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Accepted Answer

A)  the domestic price of coffee will be greater than the world price of coffee.
B)  the domestic price of coffee will be lower than the world price of coffee.
C)  the domestic price of coffee will equal the world price of coffee.
D)  The world price of coffee does not matter; the domestic price of coffee prevails.E) B) and C)
F) B) and D)

Question 19

Figure 9-17 
-Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer surplus

Accepted Answer

A)  decreases by $576 and producer surplus does not change.
B)  decreases by $576 and producer surplus increases by $192.
C)  decreases by $792 and producer surplus does not change.
D)  decreases by $792 and producer surplus increases by $192.E) A) and B)
F) A) and C)

Question 20

Figure 9-5 
-Refer to Figure 9-5. With trade, total surplus is

Accepted Answer

A)  $245.
B)  $367.50.
C)  $607.50.
D)  $687.50.E) A) and D)
F) All of the above

Exam 9: Application: International Trade

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

Correct Answer
verified

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

The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Correct Answer
verified

Figure 9-15 -Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are

Correct Answer
verified

Figure 9-5 -Refer to Figure 9-5. With trade, total surplus is

Correct Answer
verified

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

Correct Answer
verified

The "unfair-competition" argument might be cited by an American who believes that

Correct Answer
verified

Figure 9-17 -Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer surplus

Correct Answer
verified

Suppose the United States exports cars to Switzerland and imports cheese from France. This situation suggests

Correct Answer
verified

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?

Correct Answer
verified

Free trade causes job losses in industries in which a country does not have a comparative advantage, but it also causes job gains in industries in which the country has a comparative advantage.

Correct Answer
verified

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Correct Answer
verified

Correct Answer
verified

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Correct Answer
verified

Finland allows trade with the rest of the world. We can determine whether Finland has a comparative advantage in producing pork if we

Correct Answer
verified

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?

Correct Answer
verified

Domestic consumers gain and domestic producers lose when the government imposes a tariff on imports.

Correct Answer
verified

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

Correct Answer
verified

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

Correct Answer
verified

Import quotas and tariffs both cause the quantity of imports to fall.

Correct Answer
verified

Exam 9: Application: International Trade

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

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

The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are

Correct AnswerverifiedShow Answer

Figure 9-5 -Refer to Figure 9-5. With trade, total surplus is

Correct AnswerverifiedShow Answer

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

Correct AnswerverifiedShow Answer

The "unfair-competition" argument might be cited by an American who believes that

Correct AnswerverifiedShow Answer

Figure 9-17 -Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer surplus

Correct AnswerverifiedShow Answer

Suppose the United States exports cars to Switzerland and imports cheese from France. This situation suggests

Correct AnswerverifiedShow Answer

Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?

Correct AnswerverifiedShow Answer

Free trade causes job losses in industries in which a country does not have a comparative advantage, but it also causes job gains in industries in which the country has a comparative advantage.

Correct AnswerverifiedShow Answer

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Correct AnswerverifiedShow Answer

Finland allows trade with the rest of the world. We can determine whether Finland has a comparative advantage in producing pork if we

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Domestic consumers gain and domestic producers lose when the government imposes a tariff on imports.

Correct AnswerverifiedShow Answer

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Import quotas and tariffs both cause the quantity of imports to fall.

Correct AnswerverifiedShow Answer

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