Ch 9

A tax on an imported good is called a.a quota b.an import limit c.an import penalty d.a tariff

d.a tariff

Suppose the fictional country of Suria begins free trade in steel. As a result, Suria no longer produces steel. Since steel is used for guns and tanks, if there is a disruption in the supply of steel, Suria would not be able to defend itself in the event of a foreign conflict. In this case, and similar such cases, economists would argue that the national security argument would provide a legitimate reason for trade restrictions. True False

True

The infant-industry argument is difficult to implement in practice. True False

True

Free trade prevents firms from realizing economies of scale, resulting in lower production costs. True False

False

Quotas and tariffs are similar in that they both decrease the quantity of imports and raise the domestic price of the good. True False

True

True or False: The idea that one nation might want to threaten another nation with a trade restriction is associated with the "infant-industry" argument for restricting trade. True False

False

Some economists would argue that while free trade may destroy jobs in some industries, it creates jobs in other industries. True False

True

If Germany threatens to impose a tariff on Danish cookies if Denmark does not remove automotive subsidies, then Germany will be left a.worse off if Demark refuses to remove the subsidies despite the threat. b.better off, whether Denmark complies or not. c.worse off if Denmark removes the subsidies in response to the threat. d.worse off, whether Denmark complies or not

a.worse off if Demark refuses to remove the subsidies despite the threat.

Which of the following is a common argument in favor of restricting trade? a.the no-deadweight-loss argument. b.the jobs argument. c.the antipoverty argument. d.the efficiency argument.

b.the jobs argument.

Suppose Mexico has outlawed the international trade of oranges. Without international trade the domestic price of oranges cannot adjust to balance the quantity of oranges supplied and the quantity of oranges demanded in the domestic orange market. True False

False

NAFTA is an example of a multilateral approach to achieving free trade. True False

True

True or False: If a country purchases corn that is subsidized and produced in a foreign country, the benefit to domestic corn consumers is greater than the harm done to domestic corn producers. True False

True

https://cxp-cdn.cengage.info/protected/prod/assets/1b/8/1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f1b%2f8%2f1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png*~hmac=49cb52fa621557723789eef8f47c60cbb2a64b58e8c71417ac5ded6128c4cd91 Refer to the figure. The total deadweight loss resulting from the tariff is a.$1,200. b.$600. c.$4,800. d.$2,400.

a.$1,200.

https://cxp-cdn.cengage.info/protected/prod/assets/fe/7/fe7666b1-3906-43b1-b84c-38239af81e60.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2ffe%2f7%2ffe7666b1-3906-43b1-b84c-38239af81e60.png*~hmac=f70b6446af481fe7bdc44e29cd0ac6b45c6b41a0d95823cd454dca43d5f9aa54 Refer to the Figure. Without trade, consumer surplus is a.$12.5 thousand. b.$10 thousand. c.$25 thousand. d.$4.5 thousand.

a.$12.5 thousand.

https://cxp-cdn.cengage.info/protected/prod/assets/fe/7/fe7666b1-3906-43b1-b84c-38239af81e60.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2ffe%2f7%2ffe7666b1-3906-43b1-b84c-38239af81e60.png*~hmac=f70b6446af481fe7bdc44e29cd0ac6b45c6b41a0d95823cd454dca43d5f9aa54 Refer to the Figure. Without trade, producer surplus amounts to a.$12.5 thousand. b.$10 thousand. c.$25 thousand. d.$4.5 thousand.

a.$12.5 thousand.

https://cxp-cdn.cengage.info/protected/prod/assets/1b/8/1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f1b%2f8%2f1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png*~hmac=49cb52fa621557723789eef8f47c60cbb2a64b58e8c71417ac5ded6128c4cd91 Refer to the figure. The amount of revenue collected by the government from the tariff is a.$2,400. b.$1,200. c.$4,800. d.$12,000.

a.$2,400.

https://cxp-cdn.cengage.info/protected/prod/assets/fe/7/fe7666b1-3906-43b1-b84c-38239af81e60.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2ffe%2f7%2ffe7666b1-3906-43b1-b84c-38239af81e60.png*~hmac=f70b6446af481fe7bdc44e29cd0ac6b45c6b41a0d95823cd454dca43d5f9aa54 Refer to the Figure. Without trade, total surplus amounts to a.$25 thousand. b.$10 thousand. c.$50 thousand. d.$4.5 thousand .

a.$25 thousand.

https://cxp-cdn.cengage.info/protected/prod/assets/3d/3/3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f3d%2f3%2f3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png*~hmac=3d8fc69e7cf250380b49bbb510de2c70342cd7b7d2651db555f9e2d5fb86d0c1 Refer to the Figure. The amount of revenue collected by the Soburg government from the tariff is a.$4 thousand. b.$6 thousand. c.$2 thousand. d.$5 thousand.

a.$4 thousand.

https://cxp-cdn.cengage.info/protected/prod/assets/53/4/5340be03-aabe-478e-a9e5-e017b70d2c0e.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f53%2f4%2f5340be03-aabe-478e-a9e5-e017b70d2c0e.png*~hmac=82e86e1ee55b4abf2a79656bb3489b4810ea96e346e0b4689245f8e264712c2e Refer to the figure, which illustrates the market for cotton in Vietnam. If there is no trade, total surplus in the Vietnamese cotton market is represented by the area a.A + B + C + D + F. b.A + B + C. c.A + B + C + D + F + G + H d.B + C + D + F + G

a.A + B + C + D + F.

Suppose France allows the international trade of wine. The domestic price of one case of wine in France, without trade, is 5 ounces of gold. The world price of one case of wine is 3 ounces of gold. a.France will import wine. b.France will not export wine or import wine. c.France will ban the international trade of wine. d.France will export wine.

a.France will import wine.

The fictional country of Xaca is considering threatening the fictional country of Bugro with tariffs on imported Bugroian donuts in an attempt to get Bugro to remove tariffs on imported Xaca beef. Why might Xaca think twice before making this threat? a.If the threat does not work, Xaca must either enact the tariff, and reduce surplus in its own donut market, or risk damaging the Xaca international reputation. b.If Xaca makes this threat, then Xaca will have to impose tariffs on Bugroian donuts which will increase total surplus in the Xaca donut market. c.There are no downsides to making this threat. d.If Xaca makes the threat, Bugro will immediately remove the tariffs on Xaca beef.

a.If the threat does not work, Xaca must either enact the tariff, and reduce surplus in its own donut market, or risk damaging the Xaca international reputation.

https://cxp-cdn.cengage.info/protected/prod/assets/53/4/5340be03-aabe-478e-a9e5-e017b70d2c0e.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f53%2f4%2f5340be03-aabe-478e-a9e5-e017b70d2c0e.png*~hmac=82e86e1ee55b4abf2a79656bb3489b4810ea96e346e0b4689245f8e264712c2e Refer to the figure, which illustrates the market for cotton in Vietnam. When trade is allowed, a.Vietnamese producers of cotton increase their surplus by area B + D + G and Vietnamese consumers of cotton decrease their surplus by area B + D. b.Vietnamese consumers of cotton increase their surplus by area G and Vietnamese producers of cotton decrease their surplus by area F. c.both Vietnamese producers and consumers of cotton decrease their surplus by area H. d.both Vietnamese producers and consumers of cotton increase their surplus by area G.

a.Vietnamese producers of cotton increase their surplus by area B + D + G and Vietnamese consumers of cotton decrease their surplus by area B + D.

https://cxp-cdn.cengage.info/protected/prod/assets/1b/8/1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f1b%2f8%2f1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png*~hmac=49cb52fa621557723789eef8f47c60cbb2a64b58e8c71417ac5ded6128c4cd91 Refer to the figure. This country decided to impose a tariff after allowing trade. The tariff causes a.a decrease in imports of 400 units. b.a decrease in imports of 200 units. c.an increase in imports of 400 units. d.an increase in imports of 200 units.

a.a decrease in imports of 400 units.

https://cxp-cdn.cengage.info/protected/prod/assets/66/4/6641ee01-46c9-47c0-b548-1d34be73d203.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f66%2f4%2f6641ee01-46c9-47c0-b548-1d34be73d203.png*~hmac=5c60c18f2cd5e0af3a353ea050d8d68dab38a6b45945a8a8839e5db01157428f Refer to the Figure. Compared to without trade, producer surplus with trade a.decreases by $3,000. b.increases by $3,000. c.increases by $1,200. d.decreases by $1,200.

a.decreases by $3,000.

Senator Gordon argues that the gains from trade are based on comparative advantage, and as such, free trade will not cause a net job loss because workers can find new jobs in the industry in which the United States has a comparative advantage. Which aspect of the job argument is Senator Gordon refuting? a.everything can be produced at lower cost in other countries, so free trade cannot create jobs domestically. b.there is no evidence that any worker ever lost his or her job because of free trade. c.there will be no gains from trade. d.Unemployment of labor is not a serious problem relative to other economic problems.

a.everything can be produced at lower cost in other countries, so free trade cannot create jobs domestically.

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. When trade in eggs is allowed, producer surplus in Brazil a.increases by the area B + E + G. b.decreases by the area G. c.increases by the area B + E. d.decreases by the area C + F.

a.increases by the area B + E + G.

https://cxp-cdn.cengage.info/protected/prod/assets/1b/8/1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f1b%2f8%2f1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png*~hmac=49cb52fa621557723789eef8f47c60cbb2a64b58e8c71417ac5ded6128c4cd91 Refer to the figure. When a tariff is imposed on this market, the price a.increases from $30 to $36. b.decreases from $42 to $36. c.decreases from $36 to $30. d.increases from $30 to $42.

a.increases from $30 to $36.

Suppose Zusau opens its borders to international trade and becomes an exporter of shirts. As a result, a.producer surplus increases for producers of shirts in Zusau. b.total surplus remains the same in the coat market in Zusau c.consumer surplus remains the same for consumers of shirts in Zusau. d.total surplus decreases in the coat market in Zusau

a.producer surplus increases for producers of shirts in Zusau.

One key difference between tariffs and quotas is that a.tariffs raise revenue for the government, while quotas do not. b.tariffs put a legal limit on how much of a good can be imported, while a quota is a tax on imported goods. c.tariffs cause deadweight loss, while quotas do not cause deadweight loss. d.quotas raise revenue for the government, while tariffs do not.

a.tariffs raise revenue for the government, while quotas do not.

https://cxp-cdn.cengage.info/protected/prod/assets/1b/8/1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f1b%2f8%2f1b8677f3-30ab-4d55-a9bf-355ac9e340e9.png*~hmac=49cb52fa621557723789eef8f47c60cbb2a64b58e8c71417ac5ded6128c4cd91 Refer to the figure. With trade and without a tariff, a.the domestic price is equal to the world price of $30. b.1,200 units of this product are sold at a price of $42 per unit. c.this country imports 400 units of this product. d.there is a shortage of 800 units of this product.

a.the domestic price is equal to the world price of $30.

https://cxp-cdn.cengage.info/protected/prod/assets/3d/3/3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f3d%2f3%2f3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png*~hmac=3d8fc69e7cf250380b49bbb510de2c70342cd7b7d2651db555f9e2d5fb86d0c1 Refer to the Figure. The size of the tariff on energy drinks is a.$3. b.$1. c.$4. d.$2.

b.$1.

Refer to the Figure. With trade, producer surplus is a a.$49 thousand. b.$4.5 thousand. c.$24.5 thousand. d.$25 thousand.

b.$4.5 thousand.

https://cxp-cdn.cengage.info/protected/prod/assets/66/4/6641ee01-46c9-47c0-b548-1d34be73d203.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f66%2f4%2f6641ee01-46c9-47c0-b548-1d34be73d203.png*~hmac=5c60c18f2cd5e0af3a353ea050d8d68dab38a6b45945a8a8839e5db01157428f Refer to the figure. With trade, consumer surplus is a.$5,400. b.$9,600. c.$2,400. d.$19,200.

b.$9,600.

President Johnson represents a country in which several firms manufacture cars. She wants to lift all tariffs on all imported cars from abroad to open free trade in cars. Which of the following is the least likely consequence of such tariffs? a.Increased competition from foreign car producers. b.Domestic car producers will gain surplus. c.Domestic car buyers will have larger variety of cars available. d.Domestic furniture car will have a higher rate of technological advance.

b.Domestic car producers will gain surplus.

Suppose Denmark forbids its citizens from international trade in danishes. Which of the following must occur? a.total producer surplus exceeds consumer surplus in the Denmark danish market. b.The market for danishes in Denmark consists solely of domestic consumers of danishes and domestic producers of danishes. c.The market for danishes in Denmark consists of domestic consumers of danishes and foreign producers of danishes. d.consumer surplus equals producer surplus in the Denmark danish market.

b.The market for danishes in Denmark consists solely of domestic consumers of danishes and domestic producers of danishes.

If Yonia is assumed to be a small country, this is the same as assuming that a.Yonia's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. b.Yonia is a price taker. c.Yonia can only export goods; it cannot import goods. d.Yonia's trade policy can affect the world price of many goods.

b.Yonia is a price taker.

https://cxp-cdn.cengage.info/protected/prod/assets/66/4/6641ee01-46c9-47c0-b548-1d34be73d203.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f66%2f4%2f6641ee01-46c9-47c0-b548-1d34be73d203.png*~hmac=5c60c18f2cd5e0af3a353ea050d8d68dab38a6b45945a8a8839e5db01157428f Refer to the figure. When trade is allowed, a.domestic producers become better off and domestic consumers become worse off. b.domestic consumers become better off and domestic producers become worse off. c.both domestic producers and consumers become worse off. d.both domestic producers and consumers become better off.

b.domestic consumers become better off and domestic producers become worse off.

https://cxp-cdn.cengage.info/protected/prod/assets/66/4/6641ee01-46c9-47c0-b548-1d34be73d203.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f66%2f4%2f6641ee01-46c9-47c0-b548-1d34be73d203.png*~hmac=5c60c18f2cd5e0af3a353ea050d8d68dab38a6b45945a8a8839e5db01157428f Refer to the figure, which shows the market for cheese in Germany. With trade, Germany will a.import 200 units of cheese. b.import 400 units of cheese. c.export 200 units of cheese. d.export 400 units of cheese.

b.import 400 units of cheese.

The world price of a pound of beef is $5.50. Before Argentina allowed trade in beef, the domestic price of a pound of beef was $7.00. Once Argentina began allowing trade in beef with other countries, Argentina will begin a.importing beef and the price per pound in Argentina will remain at $7.00. b.importing beef and the price per pound in Argentina decrease to $5.50. c.exporting beef and the price per pound in Argentina will remain at $5.50. d.exporting beef and the price per pound in Argentina will remain at $7.00.

b.importing beef and the price per pound in Argentina decrease to $5.50.

If the fictional country of Olar reduces its trade restrictions in conjunction with other countries who also reduce trade restrictions, than Olar has taken what type of approach to free trade? a.bilateral approach. b.multilateral approach. c.isolateral approach. d.unilateral approach.

b.multilateral approach.

The infant-industry argument insists that a.has the support of most conservative economists. b.new industries need trade restrictions to help them grow. After the industry matures, the trade restrictions will no longer be needed. c.is an argument that is opposed by those who do not support free trade. d.protecting industries producing goods and services for infants is necessary if a country is to have healthy children.

b.new industries need trade restrictions to help them grow. After the industry matures, the trade restrictions will no longer be needed.

Which of the following individuals would have the strongest incentives to use the national security argument against free trade, despite having no role or expertise in national defense? a.postal workers . b.representatives of industry. c.auto-mechanics. d.representatives of the defense establishment.

b.representatives of industry.

Suppose the country of Yobar enacts a policy of free-trade and Yobar begins importing chicken. Then a.Yobar has an absolute advantage relative to the rest of the world in the production of chicken. b.the domestic price of chicken will decrease to equal the world price of chicken. c.Yobar has a comparative advantage relative to the rest of the world in the production of chicken. d.at the world price, the total quantity of chicken supplied by chicken producers in Yobar exceeds the quantity of chicken demanded by domestic consumers in Yobar.

b.the domestic price of chicken will decrease to equal the world price of chicken.

Suppose the country of Fiauce enacts a policy of free-trade and Fiauce begins exporting rice. Then a.the rest of the world has an absolute advantage relative to Fiauce in the production of rice. b.the domestic price of rice will increase to equal the world price of rice. c.the rest of the world has a comparative advantage relative to Fiauce in the production of rice. d.at the world price, the total quantity of rice supplied by rice producers in Fiauce falls short of the quantity of rice demanded by domestic consumers in Fiauce.

b.the domestic price of rice will increase to equal the world price of rice.

https://cxp-cdn.cengage.info/protected/prod/assets/fe/7/fe7666b1-3906-43b1-b84c-38239af81e60.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2ffe%2f7%2ffe7666b1-3906-43b1-b84c-38239af81e60.png*~hmac=f70b6446af481fe7bdc44e29cd0ac6b45c6b41a0d95823cd454dca43d5f9aa54 Refer to the Figure. With no international trade, in Italy a.the equilibrium price is $3 per bottle and the equilibrium quantity is 5 thousand bottles of wine. b.the equilibrium price is $5 per bottle and the equilibrium quantity is 5 thousand bottles of wine. c.the equilibrium price is $3 per bottle and the equilibrium quantity is 3 thousand bottles of wine. d.the equilibrium price is $3 per bottle and the equilibrium quantity is 7 thousand bottles of wine.

b.the equilibrium price is $5 per bottle and the equilibrium quantity is 5 thousand bottles of wine.

https://cxp-cdn.cengage.info/protected/prod/assets/3d/3/3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f3d%2f3%2f3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png*~hmac=3d8fc69e7cf250380b49bbb510de2c70342cd7b7d2651db555f9e2d5fb86d0c1 Refer to the Figure. The total deadweight loss resulting from the energy drink tariff is a.$4 thousand. b.$0.5 thousand. c.$1 thousand. d.$2 thousand.

c.$1 thousand.

https://cxp-cdn.cengage.info/protected/prod/assets/fe/7/fe7666b1-3906-43b1-b84c-38239af81e60.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2ffe%2f7%2ffe7666b1-3906-43b1-b84c-38239af81e60.png*~hmac=f70b6446af481fe7bdc44e29cd0ac6b45c6b41a0d95823cd454dca43d5f9aa54 Refer to the Figure. With trade, consumer surplus is a.$49 thousand. b.$12.5 thousand. c.$24.5 thousand. d.$25 thousand.

c.$24.5 thousand.

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. With open trade, total surplus in the Brazilian egg market is a.$12.5 thousand. b.$33 thousand. c.$29 thousand. d.$25 thousand.

c.$29 thousand.

https://cxp-cdn.cengage.info/protected/prod/assets/3d/3/3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f3d%2f3%2f3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png*~hmac=3d8fc69e7cf250380b49bbb510de2c70342cd7b7d2651db555f9e2d5fb86d0c1 Refer to the Figure. Without trade, the equilibrium price of energy drinks is a.$3 and the equilibrium quantity is 7 thousand cans. b.$2 and the equilibrium quantity is 8 thousand cans. c.$5 and the equilibrium quantity is 5 thousand cans. d.$5 and the equilibrium quantity is 3 thousand cans.

c.$5 and the equilibrium quantity is 5 thousand cans.

Which individual is most likely to invoke the "unfair-competition" argument? a.An individual who believes trade restrictions are vital to national security. b.An individual who believes free trade will create domestic jobs. c.An individual who believes free trade is desirable only if all countries abide by the same rules and regulations. d.An individual who believes people will not start new firms or businesses without protection against foreign competitors.

c.An individual who believes free trade is desirable only if all countries abide by the same rules and regulations.

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. When trade is allowed, a.Brazilian consumers of eggs become better off and Brazilian producers of eggs become worse off. b.both Brazilian producers and consumers of eggs become worse off. c.Brazil producers of eggs become better off and Brazilian consumers of eggs become worse off. d.both Brazilian producers and consumers of eggs become better off.

c.Brazil producers of eggs become better off and Brazilian consumers of eggs become worse off.

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. From the figure, you can deduce that a.Brazil will import eggs if international trade is allowed. b.the world price will fall if Brazil begins to allow its citizens to trade with other countries. c.Brazil will export eggs if international trade is allowed. d.Brazil has nothing to gain either by importing or exporting eggs.

c.Brazil will export eggs if international trade is allowed.

https://cxp-cdn.cengage.info/protected/prod/assets/fe/7/fe7666b1-3906-43b1-b84c-38239af81e60.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2ffe%2f7%2ffe7666b1-3906-43b1-b84c-38239af81e60.png*~hmac=f70b6446af481fe7bdc44e29cd0ac6b45c6b41a0d95823cd454dca43d5f9aa54 Refer to the Figure. By how much does an open trade policy change producer and consumer surplus in Italy? a.Consumer surplus decreases by $12 thousand and producer surplus increases by $8 thousand. b.Consumer surplus increases by $10 thousand and producer surplus decreases by $3 thousand. c.Consumer surplus increases by $12 thousand and producer surplus decreases by $8 thousand. d.Consumer surplus increases by $8.5 thousand and producer surplus decreases by $12 thousand.

c.Consumer surplus increases by $12 thousand and producer surplus decreases by $8 thousand.

Which of the following is true about the General Agreement on Tariffs and Trade (GATT) a.GATT is an example of a unilateral approach to free trade. b.GATT rules are enforced by the United Nations. c.GATT was initiated in response to high tariffs imposed during the Great Depression of the 1930s. d.GATT has been responsible for increasing tariffs around the world since the end of World War II.

c.GATT was initiated in response to high tariffs imposed during the Great Depression of the 1930s.

Which of the following answer choices lists 4 benefits of international trade? a.Increased variety of goods; lower costs through economies of scale; increased competition; and the jobs argument. b.Increased variety of goods; higher costs through economies of scale; increased competition; and enhanced flow of ideas. c.Increased variety of goods; lower costs through economies of scale; increased competition; and enhanced flow of ideas. d.Increased variety of goods; lower costs through economies of scale; decreased competition; and enhanced flow of ideas.

c.Increased variety of goods; lower costs through economies of scale; increased competition; and enhanced flow of ideas.

When the nation of Tayebar allows trade and becomes an exporter of coconuts, a.The price received by domestic producers of the good decreases and domestic producers are worse off. b.The losses of domestic consumers of the good exceed the gains of domestic producers of the good. c.The price paid by domestic consumers of the good increases and domestic consumers are worse off. d.The price paid by domestic consumers of the good decreases and domestic consumers are better off.

c.The price paid by domestic consumers of the good increases and domestic consumers are worse off.

Suppose the country of Ubait enacts a policy that allows free trade of strawberries. Regardless of whether Ubait becomes an exporter or importer of strawberries, which of the following results does economic analysis predict to occur? a.The quantity of strawberries demanded by consumers in Ubait decreases. b.deadweight loss must occur. c.The total surplus in the domestic market for strawberries will increase. d.strawberry producers in Ubait receive a lower price for strawberries.

c.The total surplus in the domestic market for strawberries will increase.

Which of the following arguments for trade restrictions is used too frequently by representatives of private industry who are looking to gain an edge over foreign competition? a.Trade restrictions are necessary for improved flow of ideas. b.Trade restrictions create increased competition. c.Trade restrictions are necessary for national security. d.Trade restrictions increase the variety of goods available to consumers.

c.Trade restrictions are necessary for national security.

https://cxp-cdn.cengage.info/protected/prod/assets/3d/3/3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f3d%2f3%2f3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png*~hmac=3d8fc69e7cf250380b49bbb510de2c70342cd7b7d2651db555f9e2d5fb86d0c1 Refer to the Figure. Suppose Soburg has implemented a $1 tariff on imported energy drinks. The tariff causes a.a decrease in imports of 3 thousand cans. b.an increase in imports of 3 thousand cans. c.a decrease in imports of 2 thousand cans. d.an increase in imports of 2 thousand cans.

c.a decrease in imports of 2 thousand cans.

A Tariff is a.a tax placed on an imported good, which brings the domestic price further from the price which would prevail in the absence of trade. b.a tax placed on an exported good, which brings the domestic price further from the price which would prevail in the absence of trade. c.a tax placed on an imported good, which brings the domestic price closer to that the price which would prevail in the absence of trade. d.a tax placed on an exported good, which brings the domestic price closer to that the price which would prevail in the absence of trade.

c.a tax placed on an imported good, which brings the domestic price closer to that the price which would prevail in the absence of trade.

You can determine whether the United States will export or import hamburgers (assuming trade is allowed) a.by looking at the supply of cheese, a complement good to hamburgers. b.by analyzing if the United States has an absolute advantage relative to the rest of the world in producing hamburgers. c.by comparing the world price of hamburgers to United States' domestic price of hamburgers. d.by looking at the domestic price of hamburgers only.

c.by comparing the world price of hamburgers to United States' domestic price of hamburgers.

Suppose the country of Evana enacts a free-trade policy. As a result, the domestic price of vodka decreases to equal the world price of vodka, then a.consumers in Evana decrease their consumption of vodka, while vodka producers in Evana increase their quantity of vodka supplied. Therefore Evana begins to import vodka. b.consumers in Evana decrease their consumption of vodka, while vodka producers in Evana increase their quantity of vodka supplied. Therefore Evana begins to export vodka. c.consumers in Evana increase their consumption of vodka, while vodka producers in Evana decrease their quantity of vodka supplied. Therefore Evana begins to import vodka. d.consumers in Evana increase their consumption of vodka, while vodka producers in Evana decrease their quantity of vodka supplied. Therefore Evana begins to export vodka.

c.consumers in Evana increase their consumption of vodka, while vodka producers in Evana decrease their quantity of vodka supplied. Therefore Evana begins to import vodka.

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. With open trade, Brazil will a.import 3 thousand cartons of eggs. b.export 3 thousand cartons of eggs. c.export 4 thousand cartons of eggs. d.import 4 thousand cartons of eggs.

c.export 4 thousand cartons of eggs.

Which of the following is not a common argument in favor of restricting trade? a.all countries should play by the same rules. b.trade restrictions can be effective when bargaining with trade partners. c.free trade increases total surplus in the domestic market for the traded good. d.efforts should be made to protect new industries until they mature.

c.free trade increases total surplus in the domestic market for the traded good.

https://cxp-cdn.cengage.info/protected/prod/assets/3d/3/3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f3d%2f3%2f3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png*~hmac=3d8fc69e7cf250380b49bbb510de2c70342cd7b7d2651db555f9e2d5fb86d0c1 Refer to the Figure. With no tariffs on energy drinks, Soburg will a.import 3 thousand cans. b.import 8 thousand cans. c.import 6 thousand cans. d.exports 6 thousand cans.

c.import 6 thousand cans.

Suppose the country of Ublary imposes a tariff on the import of energy drinks, a good that Ublary currently imports from abroad. What will happen to surplus in the Ublarian market for energy drinks? a.producer surplus increases and total surplus increases in the market for energy drinks. b.consumer surplus decreases and total surplus increases in the market for energy drinks. c.producer surplus increases and total surplus decreases in the market for energy drinks. d.consumer surplus increases and total surplus increases in the market for energy drinks.

c.producer surplus increases and total surplus decreases in the market for energy drinks.

https://cxp-cdn.cengage.info/protected/prod/assets/3d/3/3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png?__gda__=st=1618867597~exp=1619472397~acl=%2fprotected%2fprod%2fassets%2f3d%2f3%2f3d39a38a-f0d5-4cf7-8a63-a61c7a1cf67d.png*~hmac=3d8fc69e7cf250380b49bbb510de2c70342cd7b7d2651db555f9e2d5fb86d0c1 Refer to the Figure. With trade and without a tariff, a.Energy drinks are sold at $4 in this market. b.this country imports 2 thousand cans of energy drinks. c.the domestic price is equal to the world price of $2. d.there is a shortage of 4 thousand cans of energy drinks in this market.

c.the domestic price is equal to the world price of $2.

Which of the following is a common argument in favor of restricting international trade? a.international trade is desirable only when countries abide by different rules when trading with one another. b.international trade creates domestic jobs. c.trade restrictions can be useful when one country bargains with its trading partners. d.trade restrictions decrease total surplus in the domestic market for the traded good.

c.trade restrictions can be useful when one country bargains with its trading partners.

If watermelons are sold at a price of P on the world market, then P is called the a.domestic price of watermelons. b.comparative price of watermelons. c.world price of watermelons. d.absolute price of watermelons.

c.world price of watermelons.

https://cxp-cdn.cengage.info/protected/prod/assets/53/4/5340be03-aabe-478e-a9e5-e017b70d2c0e.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f53%2f4%2f5340be03-aabe-478e-a9e5-e017b70d2c0e.png*~hmac=82e86e1ee55b4abf2a79656bb3489b4810ea96e346e0b4689245f8e264712c2e Refer to the figure, which illustrates the market for cotton in Vietnam. With open trade, total surplus in the Vietnamese cotton market is a.$1,650. b.$220. c.$1,600. d.$1,870

d.$1,870

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. In the absence of trade, the equilibrium price of eggs in Brazil is a.$6 per carton. b.$4 per carton. c.$7 per carton. d.$5 per carton.

d.$5 per carton.

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. In the absence of trade, total surplus in Brazil is represented by the area a.A+D b.A+B+C c.B+C+E. d.A+B+C+D+E

d.A+B+C+D+E

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. Based on the figure you know that a.Brazil will experience a surplus of eggs if trade is not allowed. b.foreign countries have a comparative advantage in producing eggs, relative to Brazil. c.Brazil will experience a shortage of eggs if trade is not allowed. d.Brazil has a comparative advantage in producing eggs, relative to the rest of the world.

d.Brazil has a comparative advantage in producing eggs, relative to the rest of the world.

Suppose England allows the international trade of tea. Without trade, the domestic price of one case of tea in England is 1 ounce of gold. The world price of tea is 2 ounces of gold. Then a.England will import tea. b.England will not export tea or import tea. c.England will ban the international trade of tea. d.England will export tea.

d.England will export tea.

Suppose Germany imports laptops from Spain and exports cars to Australia. This situation suggests a.Germany has a comparative advantage relative to Australia in producing cars, and Spain has a comparative advantage relative to Australia in producing laptops. b.Germany has an absolute advantage relative to Australia in producing cars, and Spain has an absolute advantage relative to Germany in producing laptops. c.Australia has a comparative advantage relative to Germany in producing cars, and Germany has a comparative advantage relative to Spain in producing laptops. d.Germany has a comparative advantage relative to Australia in producing cars, and Spain has a comparative advantage relative to Germany in producing laptops.

d.Germany has a comparative advantage relative to Australia in producing cars, and Spain has a comparative advantage relative to Germany in producing laptops.

Canada is an importer of hats, taking the world price of $10 per hat as given. Suppose Canada imposes a $5 tariff on hats. Which of the following outcomes is possible? a.The price of hats in Canada increases to $5; the quantity of Canadian-produced hats increases; and the quantity of hats imported by Canada decreases. b.The price of hats in Canada decreases to $5; the quantity of Canadian-produced hats increases; and the quantity of hats imported by Canada does not change. c.The price of hats in Canada remains at $10; the quantity of Canadian-produced hats increases; and the quantity of hats imported by Canada decreases. d.The price of hats in Canada increases to $15; the quantity of Canadian-produced hats increases; and the quantity of hats imported by Canada decreases.

d.The price of hats in Canada increases to $15; the quantity of Canadian-produced hats increases; and the quantity of hats imported by Canada decreases.

When the nation of Ledor allows trade and becomes an importer of widgets, a.The price received by domestic producers of the good decreases and domestic producers are better off. b.The losses of domestic consumers of the good exceed the gains of domestic producers of the good. c.The price paid by domestic consumers of the good increases and domestic consumers are worse off. d.The price paid by domestic consumers of the good decreases and domestic consumers are better off.

d.The price paid by domestic consumers of the good decreases and domestic consumers are better off.

https://cxp-cdn.cengage.info/protected/prod/assets/53/4/5340be03-aabe-478e-a9e5-e017b70d2c0e.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f53%2f4%2f5340be03-aabe-478e-a9e5-e017b70d2c0e.png*~hmac=82e86e1ee55b4abf2a79656bb3489b4810ea96e346e0b4689245f8e264712c2e Refer to the figure, which illustrates the market for cotton in Vietnam. Based on the figure, a.the price of cotton in Vietnam will be $110 if trade is not allowed. b.the quantity supplied of cotton in Vietnam will be 40 units if trade is not allowed. c.foreign countries have a comparative advantage in producing cotton, relative to Vietnam. d.Vietnam has a comparative advantage in producing cotton, relative to the rest of the world.

d.Vietnam has a comparative advantage in producing cotton, relative to the rest of the world.

Which of the following scenarios would most likely cause the country of Oial to invoke the unfair-competition argument? Assume Zole and Oial are the only countries on the planet. a.Zole subsidzies beer production in Zole and Oial subsidizes beer production in Oial b.Zole and Oial have completely both open trade. c.Zole and Oial do not trade with each other. d.Zole subsidzies beer production in Zole and Oial offers no subsidy to Oialian beer producers.

d.Zole subsidzies beer production in Zole and Oial offers no subsidy to Oialian beer producers.

https://cxp-cdn.cengage.info/protected/prod/assets/14/1/1414cad8-9d8a-4175-bcbe-886820116b51.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2f14%2f1%2f1414cad8-9d8a-4175-bcbe-886820116b51.png*~hmac=4dae5843fa34621d29e8c13cbdf8e04def7f4e3cb6af9bada67d94a95793676b Refer to the Figure. When trade in eggs is allowed, consumer surplus in Brazil a.increases by the area D + G. b.decreases by the area D + G. c.increases by the area B + E. d.decreases by the area B + E.

d.decreases by the area B + E.

Suppose Canada has outlawed the international trade of maple syrup. The total benefits of buyers and sellers of maple syrup in Canada is a.domestic consumer surplus plus foreign producer surplus b.foreign consumer surplus plus domestic producer surplus c.foreign consumer surplus plus foreign producer surplus d.domestic consumer surplus plus domestic producer surplus

d.domestic consumer surplus plus domestic producer surplus

Suppose the country of Olar imports beer. The government of Olar has decided to place a tariff on the import of beer. We know from supply and demand analysis that a.domestic producer surplus will remain the same, however a deadweight loss will result in the Olarian market for beer. b.domestic producer surplus will decrease, however a deadweight loss will result in the Olarian market for beer. c.domestic producer surplus will increase, and total surplus will increase in the Olarian market for beer. d.domestic producer surplus will increase, however a deadweight loss will result in the Olarian market for beer.

d.domestic producer surplus will increase, however a deadweight loss will result in the Olarian market for beer.

https://cxp-cdn.cengage.info/protected/prod/assets/fe/7/fe7666b1-3906-43b1-b84c-38239af81e60.png?__gda__=st=1618867598~exp=1619472398~acl=%2fprotected%2fprod%2fassets%2ffe%2f7%2ffe7666b1-3906-43b1-b84c-38239af81e60.png*~hmac=f70b6446af481fe7bdc44e29cd0ac6b45c6b41a0d95823cd454dca43d5f9aa54 Refer to the Figure. With trade, Italy will a.import 5 thousand bottles of wine. b.export 5 thousand bottles of wine. c.import 3 thousand bottles of wine. d.import 4 thousand bottles of wine.

d.import 4 thousand bottles of wine.

"Start up firms, such as the many technology companies in the Silicon Valley area of California, are often willing to incur temporary losses to succeed in the long run, even without protection from competition." This observation helps to explain why many economists do not agree with a.unfair-competition argument. b.national-security argument. c.jobs argument. d.infant-industry argument.

d.infant-industry argument.

Suppose Pora opens its borders to international trade and becomes an importer of cars. As a result a.producer and consumer surplus both remain the same in Pora. b.producer surplus increases and consumer surplus decreases in Pora. c.producer surplus and consumer surplus both increases in Pora. d.producer surplus decreases and consumer surplus increases in Pora.

d.producer surplus decreases and consumer surplus increases in Pora.

Suppose that China has a comparative advantage over the rest of the world in the production of textiles. This suggests that a.the domestic price of textiles in China without international trade is higher than the world price of textiles, and China will export textiles. b.the domestic price of textiles in China without international trade is lower than the world price of textiles, and China will import textiles. c.the domestic price of textiles in China without international trade is higher than the world price of textiles, and China will import textiles. d.the domestic price of textiles in China without international trade is lower than the world price of textiles, and China will export textiles.

d.the domestic price of textiles in China without international trade is lower than the world price of textiles, and China will export textiles.

When the country of Uglana moves away from a free trade policy and implements a tariff policy on bananas, it causes a.the price of bananas imported into Uglana to fall below the world price. b.the price of bananas exported from Uglana to increase to a price above the world price. c.the price of bananas exported from Uglana to fall below the world price. d.the price of bananas imported into Uglana to increase to a price above the world price.

d.the price of bananas imported into Uglana to increase to a price above the world price.

Suppose the fictional country of Meria removes trade restrictions on its own. Meria has decided to use what type of approach to free trade? a.bilateral approach. b.multilateral approach. c.isolated approach. d.unilateral approach.

d.unilateral approach.

Industries in which a country has a comparative advantage a.will no longer exist with free trade, since no country will have a comparative advantage. b.will be destroyed if free trade is enacted. c.will have fewer jobs for workers displaced by free trade. d.will have jobs available for workers displaced by free trade.

d.will have jobs available for workers displaced by free trade.