Chapter 9 Quiz

Refer to figure 9-12. Producer surplus before trade is...

$3,600

Refer to figure 9-11. Producer surplus plus consumer surplus in this market after trade is...

A+B+C+D

Refer to figure 9-1. In the absence of trade, total surplus in New Zealand is represented by the area...

A+B+C+D+F

Refer to figure 9-11. Consumer surplus in the market after trade is...

A+B+D

When a country allows trade and becomes an importer of a good...

Domestic producers become worse off, and domestic consumers become better off.

Refer to figure 9-1. From the figure it is apparent that...

New Zealand will export wool if trade is allowed

When the nation of Duxembourg allows trade and becomes an importer of software...

Residence of Duxembourg who produced software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises.

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.

Import quotas and tariffs produce some common results. Which of the following is NOT one of those common results?

Revenue is raised for the domestic givernment

Some goods can be produced at low cost if they are produced in large quantities. This phenomenon is called...

economies of scale

Refer to figure 9-1. With trade, New Zealand will...

export 11 units of wool

Refer to figure 9-12. With trade allowed, this country...

exports 400 units of the good

If the Japanese steel industry subsidizes the steel that it sells to the United States, though...

harm done to US steel producers is less than the benefit that accures to US consumers of steel.

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade, then Vietnam...

has a comparative advantage in textiles

Refer to figure 9-14. The country for which the figure is drawn...

has a comparative advantage relative to other countries in the production of computers and it will export computers.

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy...

producer surplus decreases and total surplus decreases in the market for that good

Tariffs and quotas are different in the sense that...

tariffs raise revenue for the government, while quotas do not raise revenue for the government.

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at a lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that...

the gains from trade are based on comparative advantage

Suppose Haiti has an absolute advantage over other countries in producing oranges, but other countries have a comparative advantage over Haiti in producing oranges. If trade in oranges is allowed, Haiti...

will export oranges

Refer to figure 9-13. With trade, domestic production and domestic consumption, respectively, are...

300 and 900