Question 1

The nation of Woodland forbids international trade.In Woodland,you can exchange 1 pound of chicken for 5 pounds of salt.In other countries,you can exchange 1 pound of chicken for 7 pounds of salt.These facts indicate that

Accepted Answer

A)   Woodland has a comparative advantage,relative to other countries,in producing chicken.
B)   other countries have an absolute advantage,relative to Woodland,in producing chicken.
C)   the price of chicken in Woodland exceeds the world price of chicken.
D)   if Woodland were to allow trade,it would export salt.E) A) and D)
F) A) and C) A

Question 2

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

Question 3

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A)   protectionism based on the national-security argument.
B)   protectionism based on the infant-industry argument.
C)   protectionism based on the unfair-competition argument.
D)   keeping world markets relatively open.E) B) and C)
F) B) and D)

Question 4

If Freedonia changes its laws to allow international trade in software and the world price is lower than its domestic price,then it must be the case that

Accepted Answer

A)   both consumer surplus and producer surplus increase.
B)   consumer surplus increases and producer surplus decreases.
C)   consumer surplus decreases and producer surplus increases.
D)   both consumer surplus and producer surplus decrease.E) C) and D)
F) A) and B)

Question 5

Figure 9-6 
-Refer to Figure 9-6.The imposition of a tariff on carnations

Accepted Answer

A)   increases the number of carnations imported by 100.
B)   increases the number of carnations imported by 200.
C)   decreases the number of carnations imported by 200.
D)   decreases the number of carnations imported by 400.E) All of the above
F) B) and D)

Question 6

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

Accepted Answer

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

Question 7

If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   will import sugar.
B)   will export sugar.
C)   will either export sugar or export sugar,but it is not clear from the given information.
D)   would have nothing to gain either from exporting or importing sugar.E) A) and B)
F) A) and C)

Question 9

The price of sugar that prevails in international markets is called the

Accepted Answer

A)   export price of sugar.
B)   import price of sugar.
C)   comparative-advantage price of sugar.
D)   world price of sugar.E) C) and D)
F) B) and D)

Question 10

What are the arguments in favor of trade restrictions,and what are the counterarguments? According to most economists,do any of these arguments really justify trade restrictions? Explain.

Accepted Answer

Arguments mentioned in the text include ...

Question 11

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 tariff

Accepted Answer

A)   decreases producer surplus by the area C,decreases consumer surplus by the area C + D + E,and decreases total surplus by the area D + F.
B)   increases producer surplus by the area C,decreases consumer surplus by the area C + D + E + F,and decreases total surplus by the area D + F.
C)   creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F.
D)   increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.E) All of the above
F) None of the above

Question 12

Figure 9-5 
-Refer to Figure 9-5.Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of wagons to an exporter of wagons?

Accepted Answer

A)   Incomes of domestic citizens increase,and wagons are a normal good.
B)   Within this country,the price of a substitute for wagons decreases.
C)   Within this country,the price of a complement to wagons decreases.
D)   Wages increase for domestic workers who produce wagons.E) None of the above
F) A) and C)

Question 13

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 D)

Question 14

Figure 9-3.The domestic country is China. 
-Refer to Figure 9-3.The increase in total surplus in China when trade is allowed is

Accepted Answer

A)   $400.
B)   $500.
C)   $600.
D)   $750.E) All of the above
F) A) and D)

Question 15

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. 2 - Q1 units of cheese. B)  exports Q2 - Q1 units of cheese. C)  imports Q2 - Q0 units of cheese. D)  exports Q2 - Q0 units of cheese." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 9-7.With trade,Wales

Accepted Answer

A)   imports Q2 - Q1 units of cheese.
B)   exports Q2 - Q1 units of cheese.
C)   imports Q2 - Q0 units of cheese.
D)   exports Q2 - Q0 units of cheese.E) All of the above
F) B) and C)

Question 16

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

Accepted Answer

A)   $80.
B)   $150.
C)   $210.
D)   $245.E) B) and D)
F) None of the above

Question 17

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) A) and B) D

Question 18

Figure 9-2 
-Refer to Figure 9-2.The world price for baskets represents

Accepted Answer

A)   the demand for baskets from the rest of the world.
B)   the supply of baskets from the rest of the world.
C)   the level of inefficiency in the domestic market caused by trade.
D)   the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.E) None of the above
F) A) and B)

Question 19

When a country takes a unilateral approach to free trade,it

Accepted Answer

A)   removes trade restrictions on its own.
B)   reduces its trade restrictions while other countries do the same.
C)   does not remove trade restrictions no matter what other countries do.
D)   is willing to trade with multiple countries at once.E) B) and C)
F) None of the above

Question 20

The infant-industry argument

Accepted Answer

A)   is based on the belief that protecting industries when they are young will pay off later.
B)   is based on the belief that protecting industries producing goods and services for infants is necessary if a country is to have healthy children.
C)   has the support of most economists.
D)   is an argument that is advanced by advocates of free trade.E) A) and C)
F) None of the above

Exam 9: Application: International Trade

The nation of Woodland forbids international trade.In Woodland,you can exchange 1 pound of chicken for 5 pounds of salt.In other countries,you can exchange 1 pound of chicken for 7 pounds of salt.These facts indicate that

Correct AnswerverifiedA

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 AnswerverifiedA

In a December 2007 New York Times column Paul Krugman argued in favor of

Correct AnswerverifiedShow Answer

If Freedonia changes its laws to allow international trade in software and the world price is lower than its domestic price,then it must be the case that

Correct AnswerverifiedShow Answer

Figure 9-6 -Refer to Figure 9-6.The imposition of a tariff on carnations

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The price of sugar that prevails in international markets is called the

Correct AnswerverifiedShow Answer

What are the arguments in favor of trade restrictions,and what are the counterarguments? According to most economists,do any of these arguments really justify trade restrictions? Explain.

Correct AnswerverifiedArguments mentioned in the text include ...View AnswerShow 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 tariff

Correct AnswerverifiedShow Answer

Figure 9-5 -Refer to Figure 9-5.Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of wagons to an exporter of wagons?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-3.The domestic country is China. -Refer to Figure 9-3.The increase in total surplus in China when trade is allowed is

Correct AnswerverifiedShow Answer

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.With trade,Wales

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

Figure 9-2 -Refer to Figure 9-2.The world price for baskets represents

Correct AnswerverifiedShow Answer

When a country takes a unilateral approach to free trade,it

Correct AnswerverifiedShow Answer

The infant-industry argument

Correct AnswerverifiedShow Answer

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Arguments mentioned in the text include ...
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