Question 1

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip.Suppose Denmark removes the tariff.Which of the following outcomes is not possible?

Accepted Answer

A)   More Danish-produced chips are sold in Denmark.
B)   More foreign-produced chips are sold in Denmark.
C)   Danish consumers of chips become better off.
D)   Total surplus in the Danish chip market increases.E) B) and D)
F) B) and C)

Question 2

When a country takes a multilateral 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) A) and B)
F) B) and C)

Question 3

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

Accepted Answer

A) True 
 B)False

Question 4

Figure 9-10. The figure applies to Mexico and the good is rifles.
 
-Refer to Figure 9-10.When trade takes place,the quantity Q₂ - Q₁ is

Accepted Answer

A)   the number of rifles bought and sold in Mexico.
B)   the number of rifles produced in Mexico.
C)   the number of rifles exported by Mexico.
D)   the number of rifles imported by Mexico.E) C) and D)
F) B) and C)

Question 5

A tariff

Accepted Answer

A)   lowers the domestic price of the exported good below the world price.
B)   keeps the domestic price of the exported good the same as the world price.
C)   raises the domestic price of the imported good above the world price.
D)   lowers the domestic price of the imported good below the world price.E) A) and B)
F) A) and C)

Question 6

A common argument in favor of restricting trade

Accepted Answer

A)   concerns the strategy of bargaining.
B)   is that efforts should be made to get new industries started.
C)   emphasizes the belief that all countries should play by the same rules.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 7

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

Accepted Answer

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

Question 8

The world price of cotton is the highest price of cotton observed anywhere in the world.

Accepted Answer

A) True 
 B)False

Question 9

Suppose New Zealand goes from being an isolated country to being an exporter of wool.As a result,

Accepted Answer

A)   consumer surplus increases for consumers of wool in New Zealand.
B)   producer surplus increases for producers of wool in New Zealand.
C)   total surplus remains unchanged in the wool market in New Zealand.
D)   it is reasonable to infer that other countries have a comparative advantage over New Zealand in wool production.E) A) and C)
F) A) and B)

Question 10

The nation of Fastbrooke forbids international trade.In Fastbrooke,you can exchange 1 television for 3 computers.In other countries,you can exchange 1 television for 2 computers.These facts indicate that

Accepted Answer

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

Question 11

Relative to a situation in which domestic firms do not compete with foreign firms,firms in countries that engage in free trade

Accepted Answer

A)   can realize economies of scale more fully.
B)   have greater market power.
C)   experience larger producer surplus.
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 12

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

Question 13

In principle,trade can make a nation better off,because the gains to the winners exceed the losses to the losers.

Accepted Answer

A) True 
 B)False

Question 14

Most economists view the United States' experience with trade as

Accepted Answer

A)   one from which no firm conclusions about the virtues of free trade can be reached, due to the relatively short history of international trade in the U.S.
B)   one from which no firm conclusions about the virtues of free trade can be reached, due to the lack of trade within the U.S. throughout most of the early history of the U.S.
C)   an ongoing experiment that confirms the virtues of free trade.
D)   an ongoing experiment that calls into serious question the notion that free trade enhances the economic well-being of a nation.E) B) and C)
F) A) and D)

Question 15

Figure 9-12
 
-Refer to Figure 9-12.Consumer surplus after trade is

Accepted Answer

A)   $1,600.
B)   $2,400.
C)   $3,200.
D)   $3,600.E) B) and D)
F) A) and B)

Question 16

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) None of the above

Question 17

Chile allows trade with the rest of the world.We know that Chile has a comparative advantage in producing lemons if we know that

Accepted Answer

A)   Chile imports lemons.
B)   the world price of lemons is higher than the price of lemons that would prevail in Chile if trade with other countries were not allowed.
C)   consumer surplus in Chile would exceed producer surplus in Chile if trade with other countries were not allowed.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 18

When the nation of Isoland opens up its steel market to international trade,that change

Accepted Answer

A)   creates winners and losers, regardless of whether Isoland ends up exporting or importing steel.
B)   results in a decrease in total surplus, regardless of whether Isoland ends up exporting or importing steel.
C)   creates winners, but no losers, if Isoland ends up exporting steel.
D)   creates losers, but no winners, if Isoland ends up importing steel.E) B) and C)
F) A) and D)

Question 19

When a country allows international trade and becomes an importer of a good,

Accepted Answer

A)   domestic producers of the good become better off.
B)   domestic consumers of the good become better off.
C)   the gains of the winners fall short of the losses of the losers.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 20

Figure 9-15
 
-Refer to Figure 9-15.Consumer surplus with trade and without a tariff is

Accepted Answer

A)   A.
B)   A + B.
C)   A + C + G.
D)   A + B + C + D + E + F.E) B) and C)
F) None of the above

Exam 9: Application: International Trade.

Most economists view the United States' experience with trade as

Correct Answer
verified

A quota is

Correct Answer
verified

Figure 9-12 -Refer to Figure 9-12.Consumer surplus after trade is

Correct Answer
verified

Chile allows trade with the rest of the world.We know that Chile has a comparative advantage in producing lemons if we know that

Correct Answer
verified

The world price of cotton is the highest price of cotton observed anywhere in the world.

Correct Answer
verified

In principle,trade can make a nation better off,because the gains to the winners exceed the losses to the losers.

Correct Answer
verified

A tariff

Correct Answer
verified

The nation of Fastbrooke forbids international trade.In Fastbrooke,you can exchange 1 television for 3 computers.In other countries,you can exchange 1 television for 2 computers.These facts indicate that

Correct Answer
verified

When the nation of Isoland opens up its steel market to international trade,that change

Correct Answer
verified

Relative to a situation in which domestic firms do not compete with foreign firms,firms in countries that engage in free trade

Correct Answer
verified

A common argument in favor of restricting trade

Correct Answer
verified

When a country allows international trade and becomes an importer of a good,

Correct Answer
verified

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

Correct Answer
verified

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip.Suppose Denmark removes the tariff.Which of the following outcomes is not possible?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Figure 9-15 -Refer to Figure 9-15.Consumer surplus with trade and without a tariff is

Correct Answer
verified

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

Correct Answer
verified

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10.When trade takes place,the quantity Q₂ - Q₁ is

Correct Answer
verified

Suppose New Zealand goes from being an isolated country to being an exporter of wool.As a result,

Correct Answer
verified

Exam 9: Application: International Trade.

Most economists view the United States' experience with trade as

Correct AnswerverifiedShow Answer

A quota is

Correct AnswerverifiedShow Answer

Figure 9-12 -Refer to Figure 9-12.Consumer surplus after trade is

Correct AnswerverifiedShow Answer

Chile allows trade with the rest of the world.We know that Chile has a comparative advantage in producing lemons if we know that

Correct AnswerverifiedShow Answer

The world price of cotton is the highest price of cotton observed anywhere in the world.

Correct AnswerverifiedShow Answer

In principle,trade can make a nation better off,because the gains to the winners exceed the losses to the losers.

Correct AnswerverifiedShow Answer

A tariff

Correct AnswerverifiedShow Answer

The nation of Fastbrooke forbids international trade.In Fastbrooke,you can exchange 1 television for 3 computers.In other countries,you can exchange 1 television for 2 computers.These facts indicate that

Correct AnswerverifiedShow Answer

When the nation of Isoland opens up its steel market to international trade,that change

Correct AnswerverifiedShow Answer

Relative to a situation in which domestic firms do not compete with foreign firms,firms in countries that engage in free trade

Correct AnswerverifiedShow Answer

A common argument in favor of restricting trade

Correct AnswerverifiedShow Answer

When a country allows international trade and becomes an importer of a good,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip.Suppose Denmark removes the tariff.Which of the following outcomes is not possible?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 9-15 -Refer to Figure 9-15.Consumer surplus with trade and without a tariff is

Correct AnswerverifiedShow Answer

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

Correct AnswerverifiedShow Answer

Figure 9-10. The figure applies to Mexico and the good is rifles. -Refer to Figure 9-10.When trade takes place,the quantity Q₂ - Q₁ is

Correct AnswerverifiedShow Answer

Suppose New Zealand goes from being an isolated country to being an exporter of wool.As a result,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified