chapter 9 quiz

After a certain nation changed its policy from one that banned international trade in wheat to one that allowed international trade in wheat, the nation began importing wheat. As a result, total surplus in the wheat market increased by $10 million. Which of the following changes could have occurred as well?

Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million.

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.

suppose Iceland goes from being an isolated country to being an importer of coats. As a result,

consumer surplus increases for consumers of coats in Iceland.

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new freetrade policy has

decreased consumer surplus in the steel market and increased total surplus in the incense market.

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

has a comparative advantage in apples.

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

if Wheatland were to allow trade, it would import corn

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

increase poverty in poor countries and benefit U.S. firms which compete with these imports.

When the nation of Worldova allows trade and becomes an exporter of silk

residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises.

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed.

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

worse off if Honduras doesn't give in to the threat.