Chapter 9

Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals a. $100. b. $200. c. $400. d. $500.

a. $100.

Refer to Figure 9-1. With trade, total surplus in the Guatemalan coffee market amounts to a. 1,250. b. 1,468. c. 1,870. d. 1,980.

c. 1,870.

Refer to Figure 9-6. When the tariff is imposed, domestic consumers a. lose by $200. b. lose by $450. c. gain by $200. d. gain by $450.

b. lose by $450.

Refer to Figure 9-1. When trade in coffee is allowed, producer surplus in Guatemala a. increases by the area B + D. b. increases by the area B + D + G. c. decreases by the area C + F. d. decreases by the area G.

b. increases by the area B + D + G.

Refer to Figure 9-6. Before the tariff is imposed, this country a. imports 200 roses. b. imports 400 roses. c. exports 200 roses. d. exports 400 roses.

b. imports 400 roses.

Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is a. $375. b. $2,000. c. $2,250. d. $8,700.

c. $2,250.

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.

Refer to Figure 9-6. The amount of revenue collected by the government from the tariff is a. $200. b. $400. c. $500. d. $600.

a. $200.

Refer to Figure 9-6. Without trade, the equilibrium price of roses is a. $4 and the equilibrium quantity is 300. b. $3 and the equilibrium quantity is 200. c. $3 and the equilibrium quantity is 400. d. $2 and the equilibrium quantity is 500.

a. $4 and the equilibrium quantity is 300.

Refer to Figure 9-4. The change in total surplus in Nicaragua because of trade is a. $625, and this is an increase in total surplus. b. $750, and this is an increase in total surplus. c. $625, and this is a decrease in total surplus. d. $750, and this is a decrease in total surplus.

a. $625, and this is an increase in total surplus.

When a country allows trade and becomes an exporter of a good, a. domestic producers gain and domestic consumers lose. b. domestic producers lose and domestic consumers gain. c. domestic producers and domestic consumers both gain. d. domestic producers and domestic consumers both lose.

a. domestic producers gain and domestic consumers lose.

When a country allows trade and becomes an importer of jet skis, a. domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country rises. b. domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country falls. c. domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country rises. d. domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and the economic well-being of the country falls.

a. domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and the economic well-being of the country rises.

Refer to Figure 9-1. With trade, Guatemala will a. export 22 units of coffee. b. export 10 units of coffee. c. import 30 units of coffee. d. import 12 units of coffee.

a. export 22 units of coffee.

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should a. export copper, since that country has a comparative advantage in copper. b. import copper, since that country has a comparative advantage in copper. c. neither export nor import copper, since that country cannot gain from trade. d. neither export nor import copper, since that country already produces copper at a low cost compared to othercountries.

a. export copper, since that country has a comparative advantage in copper.

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 aprice-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.

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television therewas $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began a. importing televisions and the price of a television in Paraguay decreased to $300. b. importing televisions and the price of a television in Paraguay remained at $350. c. exporting televisions and the price of a television in Paraguay decreased to $300. d. exporting televisions and the price of a television in Paraguay remained at $350.

a. importing televisions and the price of a television in Paraguay decreased to $300.

The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. If trade in peaches is allowed, U.S. producers of peaches a. will be better off. b. will be worse off. c. will be unaffected. d. will experience a decrease in their collective producer surplus.

a. will be better off.

The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. If trade in peaches is allowed, the price of peaches in the United States a. will increase, and this will cause consumer surplus to decrease. b. will decrease, and this will cause consumer surplus to increase. c. will be unaffected, and consumer surplus will be unaffected as well. d. could increase or decrease or be unaffected; this cannot be determined.

a. will increase, and this will cause consumer surplus to decrease.

Refer to Figure 9-1. In the absence of trade, total surplus in the Guatemalan coffee market amounts to a. 750. b. 1,100. c. 1,514. d. 1,650.

d. 1,650.

Refer to Figure 9-1. In the absence of trade, total surplus in Guatemala is represented by the area a. A + B + C. b. A + B + C + D + F. c. A + B + C + D + F + G. d. A + B + C + D + F + G + H.

b. A + B + C + D + F.

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that a. Ireland has a comparative advantage relative to the United States in producing pineapples, and China has a comparativeadvantage relative to Ireland in producing beer. b. Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantagerelative to Ireland in producing pineapples. c. Ireland has an absolute advantage relative to the United States in producing pineapples, and China has an absoluteadvantage relative to Ireland in producing beer. d. Ireland has an absolute advantage relative to China in producing beer, and the United States has an absolute advantagerelative to Ireland in producing pineapples.

b. Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantagerelative to Ireland in producing pineapples.

Refer to Figure 9-4. Which of the following statements is accurate? a. Consumer surplus with trade is $3,200. b. Producer surplus with trade is $375. c. The gains from trade amount to $800. d. The gains from trade are represented on the graph by the area bounded by the points (0, $12), (300, $12), (300, $7)and (0, $7).

b. Producer surplus with trade is $375.

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almondsthere was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began a. exporting almonds and the price per pound in Uruguay remained at $3.00. b. exporting almonds and the price per pound in Uruguay increased to $4.50. c. importing almonds and the price per pound in Uruguay remained at $3.00. d. importing almonds and the price per pound in Uruguay increased to $4.50.

b. exporting almonds and the price per pound in Uruguay increased to $4.50.

Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers a. gain $100 of producer surplus. b. gain $150 of producer surplus. c. gain $200 of producer surplus. d. gain $300 of producer surplus.

b. gain $150 of producer surplus.

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.

Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala a. increases by the area B + D. b. increases by the area C + F. c. decreases by the area B + D. d. decreases by the area D + G.

c. decreases by the area B + D.

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 economicwell-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.

When a nation first begins to trade with other countries and the nation becomes an importer of corn, a. this is an indication that the world price of corn exceeds the nation's domestic price of corn in the absence of trade. b. this is an indication that the nation has a comparative advantage in producing corn. c. the nation's consumers of corn become better off and the nation's producers of corn become worse off. d. All of the above are correct.

c. the nation's consumers of corn become better off and the nation's producers of corn become worse off.

Trade enhances the economic well-being of a nation in the sense that a. both domestic producers and domestic consumers of a good become better off with trade, regardless of whether thenation imports or exports the good in question. b. the gains of domestic producers of a good exceed the losses of domestic consumers of a good, regardless ofwhether the nation imports or exports the good in question. c. trade results in an increase in total surplus. d. trade puts downward pressure on the prices of all goods.

c. trade results in an increase in total surplus.

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans, a. this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absenceof trade. b. this is an indication that the nation has a comparative advantage in producing soybeans. c. the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off. d. All of the above are correct.

d. All of the above are correct.

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become a. better off, its producers of fish will become better off, and on balance the citizens of Denmark will become betteroff. b. worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worseoff. c. worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worseoff. d. better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off.

d. better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off.

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. Inother countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that a. Wheatland has a comparative advantage, relative to other countries, in producing corn. b. other countries have a comparative advantage, relative to Wheatland, in producing fish. c. the price of fish in Wheatland exceeds the world price of fish. d. if Wheatland were to allow trade, it would import corn.

d. if Wheatland were to allow trade, it would import corn.

The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. If trade in peaches is allowed, the a. price paid by American consumers of peaches is unchanged relative to the no-trade situation. b. total well-being of American producers of peaches is diminished relative to the no-trade situation. c. total well-being of American consumers of peaches is enhanced relative to the no-trade situation. d. total well-being of the United States is enhanced relative to the no-trade situation.

d. total well-being of the United States is enhanced relative to the no-trade situation.