Bus 201 Chapter 9

A tariff on a product makes A. Domestic sellers better off and domestic buyers worse off B. Domestic sellers worse off and domestic buyers worse off. C. Domestic sellers better off and domestic buyers better off. D. Domestic sellers worse off and domestic buyers better off

A. Domestic sellers better off and domestic buyers worse off

Domestic producers of a good become worse off, and domestic consumers of a good become better off, when a country begins allowing international trade in that good and A. The country becomes an importer of the good as a result. B. The world price exceeds the domestic price of the good that prevailed before international trade was allowed. C. The country in question has a comparative advantage, relative to other countries, in producing the good. D. Total surplus does not change as a result.

A. The country becomes an importer of the good as a result.

When the nation of Mooseland first permitted trade with other nations, domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million. We can conclude that A. Mooseland became an exporter of sugar. B. The overall economic well-being of participants in the sugar market in Mooseland fell because of trade. C. Consumer surplus in Mooseland increased by $7 million. D. The opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

C. Consumer surplus in Mooseland increased by $7 million.

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles, A. Vietnam has a comparative advantage over other countries and Vietnam will import textiles. B. Vietnam has a comparative advantage over other countries and Vietnam will export textiles. C. Other countries have a comparative advantage over Vietnam and Vietnam will import textiles. D. Other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

C. Other countries have a comparative advantage over Vietnam and Vietnam will import textiles.

The North American Free Trade Agreement A. Is an example of the unilateral approach to free trade. B. Eliminated tariffs on imports to North America from the rest of the world. C. Reduced trade restrictions among Canada, Mexico and the United States. D. All of the above are correct.

C. Reduced trade restrictions among Canada, Mexico and the United States.

Assume, for England, that the domestic price of wine without international trade is higher than the world price of wine. This suggests that, in the production of wine, A. England has a comparative advantage over other countries and England will export wine. B. England has a comparative advantage over other countries and England will import wine. C. Other countries have a comparative advantage over England and England will export wine. D. Other countries have a comparative advantage over England and England will import wine.

D. Other countries have a comparative advantage over England and England will import wine.

Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade, Select one: A. U.S. citizens benefit from lower software prices, increasing consumer surplus in the market. B. U.S. software producers are harmed, since the price that these producers receive will decline as the price falls to the world price. C. Total surplus in this market will remain unchanged, as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers. D. U.S. producers benefit from higher software prices, increasing producer surplus in the market.

D. U.S. producers benefit from higher software prices, increasing producer surplus in the market.