International Trade Quiz

Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question. After trade, at a world price of Pw, total economic surplus equals area(s)

A + B + C + D + E + F.

Quotas on an imported product benefit

domestic producers and hurt domestic consumers of the product.

From an economic perspective, the costs of trade barriers

far exceed their benefits for society.

The slopes of the production possibilities curves for two nations reflect the

opportunity costs of production in the two nations.

Use the following table for a certain product's market in Marketopia to answer the next question. If Marketopia is entirely closed to international trade, the equilibrium price and quantity would be

$8 and 1,800 units.

Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product to answer the next question. Sd + Q is the product supply curve after an import quota is imposed. A quota of y−w will result in quota rent equal to areas

G + H.

Use the following table showing maximum-output alternatives for Brazil and Poland to answer the next question. If the two nations open up trade with each other, then

Poland will specialize in producing machines and import wine.

Specialization and international trade will

allow a nation to consume beyond its production possibilities frontier.