Question 1

If Belgium exports chocolate to the rest of the world,Belgian chocolate sellers benefit from higher producer surplus,Belgian chocolate buyers are worse off because of lower consumer surplus,but total surplus in Belgium increases because of trade.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

Accepted Answer

A) True 
 B)False

Question 3

Figure 9-2
 
-Refer to Figure 9-2.What happens to the demand and supply in the Chinese market of pencil sharpeners at the world price

Accepted Answer

A)  The domestic quantity demanded is greater than the domestic quantity supplied.
B)  The domestic quantity demanded is less than the domestic quantity supplied.
C)  China should raise the domestic demand.
D)  China should raise the domestic supply.E) None of the above
F) All of the above

Question 4

When Canadian goods are sold to the United Kingdom,how are the goods described

Accepted Answer

A)  exported by Canada and imported by the United Kingdom
B)  imported by Canada and exported by the United Kingdom
C)  exported by Canada and exported by the United Kingdom
D)  imported by Canada and imported by the United KingdomE) A) and D)
F) A) and B)

Question 5

Figure 9-10
 
-Refer to Figure 9-10.What would be consumer surplus before trade

Accepted Answer

A)  $2500
B)  $3600
C)  $5500
D)  $7200E) A) and D)
F) A) and B)

Question 6

The world price of umbrellas is $4.00 each.The pre-trade price of umbrellas in England is $15 each.What would happen if England allows trade in umbrellas

Accepted Answer

A)  England will import umbrellas, and the price in England will be $20 each.
B)  England will import umbrellas, and the price in England will be $15 each.
C)  England will export umbrellas, and the price in England will be $20 each.
D)  England will export umbrellas, and the price in England will be $15 each.E) A) and B)
F) A) and C)

Question 7

What will necessarily occur after a country allows free trade

Accepted Answer

A)  Domestic quantity demanded must equal domestic quantity supplied at the world price.
B)  The world price equals the domestic price for a product and the country can choose either to import or to export the product.
C)  Both producers and consumers in that country will gain from trade.
D)  The domestic price will rise to equal the world price.E) A) and D)
F) A) and C)

Question 8

If Argentina exports oranges to the rest of the world,Argentina's producers of oranges are worse off as a result of trade,but Argentina's consumers of oranges are better off.

Accepted Answer

A) True 
 B)False

Question 9

Figure 9-11
 
-Refer to Figure 9-11.When a tariff is imposed in the market,how much do producers gain or lose

Accepted Answer

A)  lose $100
B)  gain $100
C)  lose $200
D)  gain $300E) All of the above
F) C) and D)

Question 10

Figure 9-6
 
-Refer to Figure 9-6.With free trade,what would total surplus be

Accepted Answer

A)  $245.00
B)  $367.50
C)  $687.50
D)  $807.50E) A) and C)
F) A) and D)

Question 11

Figure 9-4
 
-Refer to Figure 9-4.What is producer surplus in this market before trade

Accepted Answer

A)  A
B)  C + B
C)  C
D)  C + D + BE) All of the above
F) None of the above

Question 12

Figure 9-6
 
-Refer to Figure 9-6.What is the increase in total surplus resulting from trade

Accepted Answer

A)  $0, since consumer surplus increases by $240 and producer surplus falls by $240
B)  $60, since consumer surplus increases by $180 and producer surplus falls by $240
C)  $60, since producer surplus increases by $240 and consumer surplus falls by $180
D)  $75, since consumer surplus increases by $240 and producer surplus falls by $165E) A) and D)
F) A) and C)

Question 13

How do we compare the multilateral approach with the unilateral approach

Accepted Answer

A)  The multilateral approach has the potential to result in freer trade than does the unilateral approach.
B)  The multilateral approach may have a political advantage over the unilateral approach.
C)  The multilateral approach is simpler than the unilateral approach.
D)  NAFTA uses the unilateral approach and GATT uses the multilateral approach to free trade.E) None of the above
F) B) and C)

Question 14

Australia is an importer of computer chips and is also a price taker in the chip market.The world price of these computer chips is $25.If Australia imposes a $5 tariff on chips,what would be the price of computer chips and what will happen to the quantity purchased

Accepted Answer

A)  $20 and the quantity purchased will increase
B)  $20 and the quantity purchased will fall
C)  $25 and the quantity purchased will increase
D)  $30 and the quantity purchased will fallE) B) and D)
F) B) and C)

Question 15

Figure 9-2
 
-Refer to Figure 9-2.What does the world price for pencil sharpeners represent

Accepted Answer

A)  the demand for pencil sharpeners from the rest of the world
B)  the supply of pencil sharpeners 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 shortageE) None of the above
F) B) and C)

Question 16

Figure 9-12
 
-Refer to Figure 9-12.What would producer surplus be after the tariff

Accepted Answer

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

Question 17

Australia is an importer of computer chips and is also a price taker in the chip market.The world price of these computer chips is $25.If Australia imposes a $5 tariff on chips,who will gain

Accepted Answer

A)  Consumers and producers will both gain.
B)  Consumers and producers will both lose.
C)  Consumers will gain, and producers will lose.
D)  Consumers will lose, and producers will gain.E) A) and D)
F) C) and D)

Question 18

Sweden is an importer of goose down parkas.The world price of these parkas is $500.Sweden imposes a $17 tariff on parkas.Sweden is a price taker in the parka market.As a result of the tariff,what will Sweden's price of parkas be and what will happen to the quantity of parkas purchased

Accepted Answer

A)  $500 and the quantity of parkas purchased will decrease
B)  $500 and the quantity of parkas purchased will increase
C)  $517 and the quantity of parkas purchased will decrease
D)  $517 and the quantity of parkas purchased will increaseE) None of the above
F) All of the above

Question 19

Which of the following is NOT a benefit of trade

Accepted Answer

A)  an increased variety of goods
B)  lower costs through economies of scale
C)  increased competition
D)  an ability to control domestic and world pricesE) A) and B)
F) A) and D)

Question 20

Figure 9-10
 
-Refer to Figure 9-10.What would be consumer surplus after trade

Accepted Answer

A)  $5500
B)  $7200
C)  $8100
D)  $12 600E) A) and D)
F) B) and C)

Exam 9: Application: International Trade

Figure 9-12 -Refer to Figure 9-12.What would producer surplus be after the tariff

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The world price of umbrellas is $4.00 each.The pre-trade price of umbrellas in England is $15 each.What would happen if England allows trade in umbrellas

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Australia is an importer of computer chips and is also a price taker in the chip market.The world price of these computer chips is $25.If Australia imposes a $5 tariff on chips,who will gain

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Figure 9-6 -Refer to Figure 9-6.With free trade,what would total surplus be

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What will necessarily occur after a country allows free trade

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Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

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How do we compare the multilateral approach with the unilateral approach

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Figure 9-4 -Refer to Figure 9-4.What is producer surplus in this market before trade

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Australia is an importer of computer chips and is also a price taker in the chip market.The world price of these computer chips is $25.If Australia imposes a $5 tariff on chips,what would be the price of computer chips and what will happen to the quantity purchased

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Figure 9-10 -Refer to Figure 9-10.What would be consumer surplus after trade

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Which of the following is NOT a benefit of trade

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Figure 9-2 -Refer to Figure 9-2.What does the world price for pencil sharpeners represent

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Figure 9-11 -Refer to Figure 9-11.When a tariff is imposed in the market,how much do producers gain or lose

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When Canadian goods are sold to the United Kingdom,how are the goods described

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If Argentina exports oranges to the rest of the world,Argentina's producers of oranges are worse off as a result of trade,but Argentina's consumers of oranges are better off.

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Figure 9-2 -Refer to Figure 9-2.What happens to the demand and supply in the Chinese market of pencil sharpeners at the world price

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If Belgium exports chocolate to the rest of the world,Belgian chocolate sellers benefit from higher producer surplus,Belgian chocolate buyers are worse off because of lower consumer surplus,but total surplus in Belgium increases because of trade.

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Sweden is an importer of goose down parkas.The world price of these parkas is $500.Sweden imposes a $17 tariff on parkas.Sweden is a price taker in the parka market.As a result of the tariff,what will Sweden's price of parkas be and what will happen to the quantity of parkas purchased

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Figure 9-6 -Refer to Figure 9-6.What is the increase in total surplus resulting from trade

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Figure 9-10 -Refer to Figure 9-10.What would be consumer surplus before trade

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