Eco ch.9

c

Refer to Figure 9-6. The imposition of a tariff on roses a. increases the number of roses imported by 100. b. increases the number of roses imported by 200. c. decreases the number of roses imported by 200. d. decreases the number of roses imported by 400.

c

Refer to Figure 9-9. Consumer surplus in this market after trade is a. A + B. b. C. c. A. d. A + B + D

c

Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that a. Canada has an absolute advantage, relative to other countries, in producing hockey sticks. b. All of the above are correct. c. if Canada were to allow trade, it would export hockey sticks. d. Canada has a comparative advantage, relative to other countries, in producing baseball bats.

a

If the world price of coffee is higher than Colombia's domestic price of coffee without trade, then Colombia a. has a comparative advantage in coffee and should export coffee. b. should produce no coffee domestically. c. should import coffee. d. should produce just enough coffee to satisfy domestic demand.

b

Check My Work When a country allows trade and becomes an exporter of bicycles, a. domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country falls. b. domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country rises. c. domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country falls. d. domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country rises.

b

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible? a. Danish consumers of chips become better off. b. More Danish-produced chips are sold in Denmark. c. More foreign-produced chips are sold in Denmark. d. Total surplus in the Danish chip market increases.

d

A common argument in favor of restricting trade a. is that efforts should be made to get new industries started. b. emphasizes the belief that all countries should play by the same rules. c. concerns the strategy of bargaining. d. All of the above are correct.

a

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that a. foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. b. the critics are correct, so countries must protect their industries with tariffs or quotas. c. foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs. d. foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs.

a

Refer to Figure 9-1. From the figure it is apparent that a. Guatemala has a comparative advantage in producing coffee, relative to the rest of the world. b. Guatemala will experience a surplus of coffee if trade is not allowed. c. Guatemala will experience a shortage of coffee if trade is not allowed. d. foreign countries have a comparative advantage in producing coffee, relative to Guatemala.

b

Refer to Figure 9-17. With free trade, total surplus is a. $1,200. b. $1,800. c. $600. d. $2,400.

c

Refer to Figure 9-22. With free trade, consumer surplus is a. $18,000 and producer surplus is $12,000. b. $18,000 and producer surplus is $48,000. c. $108,000 and producer surplus is $12,000. d. $48,000 and producer surplus is $48,000.

a

Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The amount of revenue collected by the government from the tariff is a. $100. b. $200. c. $150. d. $50.

c

Refer to Figure 9-25. With free trade, total surplus is a. $1,600. b. $800. c. $2,000. d. $1,200.

d

Refer to Figure 9-5. Without trade, producer surplus amounts to a. $1,620. b. $810. c. $6,480. d. $3,240.

d

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an a. importer of fish and the price of fish in Germany will be $8.00. b. exporter of fish and the price of fish in Germany will be $6.00. c. exporter of fish and the price of fish in Germany will be $8.00. d. importer of fish and the price of fish in Germany will be $6.00.

a

The world price of a ton of steel is $650. Before Russia allowed trade in steel, the price of a ton of steel there was $1,000. Once Russia allowed trade in steel with other countries, Russia began a. importing steel and the price per ton in Russia decreased to $650. b. exporting steel and the price per ton in Russia remained at $1,000. c. exporting steel and the price per ton in Russia decreased to $650. d. importing steel and the price per ton in Russia remained at $1,000.

a

When a country allows trade and becomes an exporter of a good, a. consumer surplus decreases and producer surplus increases. b. consumer surplus increases and producer surplus decreases. c. consumer surplus and producer surplus both decrease. d. consumer surplus and producer surplus both increase

b

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy, a. producer surplus increases and total surplus increases in the market for that good. b. producer surplus increases and total surplus decreases in the market for that good. c. producer surplus decreases and total surplus decreases in the market for that good. d. producer surplus decreases and total surplus increases in the market for that good.

a

When a country that imports a particular good imposes a tariff on that good, a. consumer surplus decreases and total surplus decreases in the market for that good. b. consumer surplus increases and total surplus increases in the market for that good. c. consumer surplus decreases and total surplus increases in the market for that good. d. consumer surplus increases and total surplus decreases in the market for that good.

c

Workers displaced by trade eventually find jobs in a. a different company in the same industry. b. the government sector. c. the industries in which the country has a comparative advantage. d. another country.