Microeconomics Chapter 9 Study Guide

Refer to figure 9-25 Suppose the government imposes a tariff of $5 per unit. The deadweight loss caused by the tariff is

$100

Refer to figure 9-20 Vietnams gains from trade in rice amount to

1500

Refer to figure 9-1 in the absence of trade, total surplus in Guatemala is represented by the area

A+B+C+D+F

Refer to figure 9-10 When trade takes place, the quantity Q2-Q1 is

The number of rifles imported by mexico

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases

Refer to figure 9-20 From the figure it is apparent that

Vietnam has a comparative advantage in producing rice, relative to the rest of the world

When a country takes a unilateral approach to free trade, it

removes trade restrictions on its own

A major difference between tariffs and import quotas is that

tariffs raise revenue for the government, but import quotas create surplus for those who get the license to import

Refer to figure 9-21 Producer surplus with free trade is

$32,000

Refer to figure 9-13 Producer surplus before trade is

$3600

Refer to figure 9-21 With free trade, the domestic price and domestic quantity demanded are

$40 and $800

Refer to figure 9-21 Consumer surplus with free trade is

$8,000

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

A+B+D

If the United States imports televisions and the U.S. government imposes a tariff on televisions, then

All of the above are correct

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

C

Refer to figure 9-22 Suppose the government imposes a tariff of $20 per unit. Relative to free trade outcome, the imposition of the tariff

Decreases imports of the good by 600 units and increases domestic production of the good by 300 units

Refer to figure 9-10 The areas bounded by the point (Q2,P0)(Q2,P1) and (Q1,P1) represents

Mexico's gains from trade

When a country allows trade and becomes an importer of jet skis,

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

The problem with the protection as a bargaining chip argument for trade restrictions is

if it fails the country faces a choice between two bad options

Domestic producers of a good become better off , and domestic consumers of a good become worse off when a country begins allowing international trade in that good and

the world price exceeds the domestic price of the good that prevailed before international trade was allowed