Micro Chapter 9

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. decreases the number of roses imported by 200.

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. exporting 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. importing 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.

c. importing steel and the price per ton in Russia decreased to $650.

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

a. A.

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. More Danish-produced chips are sold in Denmark. b. More foreign-produced chips are sold in Denmark. c. Danish consumers of chips become better off. d. Total surplus in the Danish chip market increases.

a. More Danish-produced chips are sold in Denmark.

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. if Canada were to allow trade, it would export hockey sticks. b. Canada has an absolute advantage, relative to other countries, in producing hockey sticks. c. Canada has a comparative advantage, relative to other countries, in producing baseball bats. d. All of the above are correct.

a. if Canada were to allow trade, it would export hockey sticks.

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

d. $2,000.

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

d. All of the above are correct

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

d. consumer surplus decreases and producer surplus increases.

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

d. consumer surplus decreases and total surplus decreases in the market for that good

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. 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. c. the critics are correct, so countries must protect their industries with tariffs or quotas. d. 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.

a. foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding.

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 $6.00. b. importer of fish and the price of fish in Germany will be $8.00. c. exporter of fish and the price of fish in Germany will be $6.00. d. exporter of fish and the price of fish in Germany will be $8.00.

a. importer of fish and the price of fish in Germany will be $6.00

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. $50. b. $100. c. $150. d. $200.

b. $100.

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

b. has a comparative advantage in coffee and should export coffee.

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 increases in the market for that good. d. producer surplus decreases and total surplus decreases in the market for that good.

b. producer surplus increases and total surplus decreases in the market for that good.

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

c. $1,800.

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

c. $108,000 and producer surplus is $12,000.

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

c. $3,240.

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

c. Guatemala has a comparative advantage in producing coffee, relative to the rest of the world

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 rises. b. domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country falls. c. domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country rises. d. domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country falls.

c. domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country rises.

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

c. the industries in which the country has a comparative advantage.