Quiz 2.1

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Refer to Figure 9-5. Without trade, producer surplus amounts to

3,240

Refer to Figure 9-2. Without trade, producer surplus is

845

Producer surplus with trade and without a tariff is

G

Refer to Figure 9-20. With trade, Vietnam will

export 1,500 units of rice

Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit.Refer to Figure 9-22. With free trade, consumer surplus isA. $18,000 and producer surplus is $12,000. B. $18,000 and producer surplus is $48,000. C. $48,000 and producer surplus is $48,000. D. $108,000 and producer surplus is $12,000.

$108,000 and producer surplus is $12,000.

Figure 9-24The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $20 per unit.Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. With trade and a tariff, consumer surplus is

$625 and producer surplus is $225.

. Suppose the world price of cardboard is $45 and international trade is allowed. Then Boxland's consumers demand

110 tons of cardboard and Boxland's producers supply 75 tons of cardboard.

Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, total surplus is

120,000

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

97 percent

Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that amounts to

D + F

Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

Republica began exporting paper as a result of the policy change

​ Mexico has imposed a tariff on the importation of chocolate. As a consequence of the tariff,

a. ​Mexico as a whole is better off, since the tariff results in tax revenue for the

Refer to Figure 9-1. With trade, Guatemala wills

export 22 units of coffees

In a December 2007 New York Times column Paul Krugman argued in favor of

keeping world markets relatively open.

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,

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

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation in the sense that

the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation.

A logical starting point from which the study of international trade begins is

the principle of comparative advantage.

Suppose Iran imposes a tariff on lumber. For the tariff to have any effect, it must be the case that

the world price without the tariff is less than the price of lumber without trade.

A common argument in favor of restricting international trade in good x is based on the premise that

trade restrictions can be useful when one country bargains with its trading partners.

Scenario 9-1The 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.

will be better off.

Suppose the world price of cardboard is $60. Then Boxland's gains from international trade in cardboard amount toA. $145. B. $320. C. $210. D. $160.

160

With free trade, total surplus is

2,000

Scenario 9-1The 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.

will be equal to the world price.

Refer to Figure 9-2. As a result of trade, total surplus increases by

250

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of pistachios decreases to equal the world price of pistachios, then

.at the world price, the quantity of pistachios demanded in that country exceeds the quantity of pistachios supplied in that country.

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

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

Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals

200

Refer to Figure 9-5. Without trade, consumer surplus amounts to

3,240

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

40 and 800

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.

Refer to Figure 9-6. The imposition of a tariff on rosesa. 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 9-15. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

c.Q3 - Q2.

Trade among nations is ultimately based on

comparative advantage

When a country allows trade and becomes an exporter of a good,

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

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies, the United States will be

worse off if Colombia doesn't remove the subsidies in response to the threat.


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