Microeconomics Ch 9

Refer to Figure 9-2. With trade, the price of tricycles in this country is

$33, with 200 tricycles produced in this country and another 320 tricycles imported.

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

A multilateral approach requires the agreement of two or more nations.

What is the fundamental basis for trade among nations?

Comparative advantage

Refer to Figure 3. The deadweight loss created by the tariff is represented by the area

D + F

When a government imposes a tariff on a product, the domestic price will equal the world price.

False

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

The price received by domestic producers of silk increases.

​If we know that Canada exports maple syrup, we can conclude that maple syrup consumers in Canada are worse off than they would be in the absence of trade.

True

Refer to Figure 9-3. The imposition of a tariff on roses

decreases the number of roses imported by 200.

Refer to Scenario 9-1. Suppose the world price of cardboard is $139. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

domestic producers of cardboard become better off and domestic consumers of cardboard become worse off.

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

high tariffs imposed during the Great Depression of the 1930s.

Refer to Figure 3. The area C + D + E + F represents

the decrease in consumer surplus caused by the tariff.

Refer to Figure 9-5. Producer surplus in this market before trade is

A + B + D.

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

False

If a small country imposes a tariff on an imported good, domestic sellers will gain producer surplus, the government will gain tariff revenue, and domestic consumers will gain consumer surplus.

False

The history of the textile industry raises important questions for economic policy.

True