Microeconomics Exam 2; chapter 9

Refer to figure 9-5; with trade, consumer surplus is

$607.50

Refer to figure 9-13; with trade, producer surplus is

$900

In December 2007, the Los Angeles Times asked members of the American public whether free international trade has helped or hurt the economy. Of those surveyed,

27 percent said free international trade helped the economy.

Refer to figure 9-12; with trade, domestic production and domestic consumption respectively, are

800 and 400

Refer to figure 9-9; consumer surplus in this market before trade is

A+B

refer to figure 9-15; consumer surplus with the tariff is

A+B

Refer to figure 9-15; consumer surplus with trade and without a tariff is

A+B+C+D+E+F

Refer to figure 9-10; the area bounded by the points (Q0, P0), (Q2, P1) and (Q1, P1) represents

Australia's gains from trade, the amount by which Australia's gain in consumer surplus exceeds its loss in producer surplus due to trade, and Australia's gain in total surplus due to trade. (all of the above are correct)

Refer to figure 9-15; the amount of government revenue created by the tariff is

E

Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

P0 and Q0

Refer to figure 9-7; with trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are

P1 and Q1

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Turkish consumers of wheat become worse off and Turkish producers of wheat become better off.

For a country that is considering the adoption of either a tariff or an import quota on a particular good, an important difference is that

a tariff raises revenue for that country's government, while an import quota does not.

Both tariffs and import quotas

decrease the quantity of imports and raise the domestic price of the good.

A tariff on a product makes

domestic sellers better off and domestic buyers worse off

Refer to figure 9-7; with trade, Wales

exports Q2-Q1 units of cheese

If the Japanese steel industry subsidizes the steel that it sells to the United States, the

harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel

Refer to figure 9-8; the country for which the figure is drawn

has a comparative disadvantage relative to other countries in the production of cars and it will import cars.

Refer to figure 9-8; the country for which the figure is drawn, total surplus with international trade in cars

is larger than total surplus without international trade in cars

One should be especially wary of the national-security argument for restricting trade when that argument is made by

representatives of the industry

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

the country will be an importer of the good

Which of the Ten Principles of Economics is the study of international trade most closely connected?

trade can make everyone better off

The before-trade domestic price of tomatoes in the United States is $500 per ton. The world price of tomatoes is $600 per ton. The U.S. is a price-taker in the market for tomatoes. If trade in tomatoes is allowed, the United States

will become an exporter of tomatoes

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

will import oranges

The before-trade domestic price of tomatoes in the United States is $500 per ton. The world price of tomatoes is $600 per ton. The U.S. is a price-taker in the market for tomatoes. If trade in tomatoes is allowed, the price of tomatoes in the United States

will increase, and this will cause consumer surplus to decrease