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Chapter 9/Application: International Trade ❖ 21
58. Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes with trade?
a.
Consumer surplus increases by $1,800 and producer surplus increases by $1,600.
b.
Consumer surplus decreases by $1,000 and producer surplus increases by $1,500.
c.
Consumer surplus decreases by $1,000 and producer surplus increases by $1,750.
d.
Total surplus increases by $400.
59. Refer to Figure 9-3. The increase in total surplus in China when trade is allowed is
a.
$400.
b.
$500.
c.
$600.
d.
$750.
Figure 9-4. The domestic country is Nicaragua.
60. Refer to Figure 9-4. With trade, Nicaragua
a.
imports 150 calculators.
b.
imports 250 calculators.
c.
exports 100 calculators.
d.
exports 250 calculators.
61. Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is
a.
$375.
b.
$2,000.
c.
$2,250.
d.
$8,700.
22 ❖ Chapter 9/Application: International Trade
62. 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.
63. 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).
Scenario 9-1
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.
64. Refer to Scenario 9-1. If trade in peaches is allowed, the United States
a.
will become an importer of peaches.
b.
will become an exporter of peaches.
c.
may become either an importer or an exporter of peaches, but this cannot be determined.
d.
will experience increases in both consumer surplus and producer surplus.
65. Refer to Scenario 9-1. 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.
66. Refer to Scenario 9-1. If trade in peaches is allowed, the price of peaches in the United States
a.
will be greater than the world price.
b.
will be equal to the world price.
c.
will be less than the world price.
d.
could be greater than, equal to, or less than the world price; this cannot be determined.
Chapter 9/Application: International Trade ❖ 23
67. Refer to Scenario 9-1. 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.
68. Refer to Scenario 9-1. 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.
Figure 9-5
69. Refer to Figure 9-5. The horizontal line at the world price of wagons represents the
a.
demand for wagons from the rest of the world.
b.
supply of wagons from the rest of the world.
c.
level of inefficiency in the domestic market caused by trade.
d.
surplus in the domestic wagon market.
70. Refer to Figure 9-5. With trade, this country
a.
exports 20 wagons.
b.
exports 50 wagons.
c.
imports 30 wagons.
d.
imports 50 wagons.
24 ❖ Chapter 9/Application: International Trade
71. Refer to Figure 9-5. Without trade, consumer surplus amounts to
a.
$210.50.
b.
$245.50.
c.
$367.50.
d.
$607.50.
72. Refer to Figure 9-5. Without trade, producer surplus amounts to
a.
$210.
b.
$245.
c.
$450.
d.
$455.
73. Refer to Figure 9-5. Without trade, total surplus amounts to
a.
$122.50.
b.
$245.
c.
$367.50.
d.
$612.50.
74. Refer to Figure 9-5. With trade, the price of wagons in this country is
a.
$8, with 70 wagons produced in this country, 20 of which are exported.
b.
$8, with 90 wagons produced in this country, 50 of which are exported.
c.
$5, with 40 wagons produced in this country and another 30 wagons imported.
d.
$5, with 40 wagons produced in this country and another 50 wagons imported.
75. Refer to Figure 9-5. With trade, consumer surplus is
a.
$245.
b.
$362.50.
c.
$367.50.
d.
$607.50.
76. Refer to Figure 9-5. With trade, producer surplus is
a.
$80.
b.
$150.
c.
$210.
d.
$245.
Chapter 9/Application: International Trade ❖ 25
77. Refer to Figure 9-5. With trade, total surplus is
a.
$245.
b.
$367.50.
c.
$607.50.
d.
$687.50.
78. Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by
a.
$60.
b.
$75.
c.
$135.
d.
$210.
79. Refer to Figure 9-5. The increase in total surplus resulting from trade is
a.
$60, since producer surplus increases by $180 and consumer surplus falls by $240.
b.
$60, since consumer surplus increases by $180 and producer surplus falls by $240.
c.
$75, since consumer surplus increases by $240 and producer surplus falls by $165.
d.
$75, since consumer surplus increases by $300 and producer surplus falls by $225.
80. Refer to Figure 9-5. If this country allows free trade in wagons,
a.
consumers will gain and producers will lose.
b.
consumers will lose and producers will gain.
c.
both consumers and producers will gain.
d.
both consumers and producers will lose.
81. Refer to Figure 9-5. If this country allows free trade in wagons,
a.
consumers will gain more than producers will lose.
b.
producers will gain more than consumers will lose.
c.
producers and consumers will both gain equally.
d.
producers and consumers will both lose equally.
82. Refer to Figure 9-5. Bearing in mind that this country is “small,” which of the following events conceivably
could cause the country to switch from being an importer of wagons to an exporter of wagons?
a.
Incomes of domestic citizens increase, and wagons are a normal good.
b.
Within this country, the price of a substitute for wagons decreases.
c.
Within this country, the price of a complement to wagons decreases.
d.
Wages increase for domestic workers who produce wagons.
26 ❖ Chapter 9/Application: International Trade
83. Refer to Figure 9-5. Bearing in mind that this country is “small,” what would happen if there were a decrease
in the price of horses within this country, given that wagons and horses are complements?
a.
The quantity of wagons that this country imports would increase.
b.
The quantity of wagons that this country imports would decrease, but the country would still be an
importer of wagons.
c.
This country would switch from being an importer of wagons to an exporter of wagons.
Figure 9-6
84. Refer to Figure 9-6. Without trade, the equilibrium price of carnations is
a.
$8 and the equilibrium quantity is 300.
b.
$6 and the equilibrium quantity is 200.
c.
$6 and the equilibrium quantity is 400.
d.
$4 and the equilibrium quantity is 500.
85. Refer to Figure 9-6. With trade and without a tariff,
a.
the domestic price is equal to the world price.
b.
carnations are sold at $8 in this market.
c.
there is a shortage of 400 carnations in this market.
d.
this country imports 200 carnations.
Chapter 9/Application: International Trade ❖ 27
86. Refer to Figure 9-6. Before the tariff is imposed, this country
a.
imports 200 carnations.
b.
imports 400 carnations.
c.
exports 200 carnations.
d.
exports 400 carnations.
87. Refer to Figure 9-6. The size of the tariff on carnations is
a.
$8 per dozen.
b.
$6 per dozen.
c.
$4 per dozen.
d.
$2 per dozen.
88. Refer to Figure 9-6. The imposition of a tariff on carnations
a.
increases the number of carnations imported by 100.
b.
increases the number of carnations imported by 200.
c.
decreases the number of carnations imported by 200.
d.
decreases the number of carnations imported by 400.
89. 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.
90. Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers
a.
gain by $100.
b.
gain by $200.
c.
gain by $300.
d.
lose by $100.
91. Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals
a.
$100.
b.
$200.
c.
$400.
d.
$500.
28 ❖ Chapter 9/Application: International Trade
92. Refer to Figure 9-6. When the tariff is imposed, domestic consumers
a.
lose by $500.
b.
lose by $900.
c.
gain by $500.
d.
gain by $900.
93. 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 a price-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.
94. 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 better off.
b.
worse off, its producers of fish will become better off, and on balance the citizens of Denmark will
become worse off.
c.
worse off, its producers of fish will become better off, and on balance the citizens of Denmark will
become worse off.
d.
better off, its producers of fish will become worse off, and on balance the citizens of Denmark will
become better off.
Chapter 9/Application: International Trade ❖ 29
Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
95. Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are
a.
P1 and Q2.
b.
P1 and Q1.
c.
P0 and Q0.
d.
P0 and Q1.
96. Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese demanded are
a.
P1 and Q2.
b.
P1 and Q1.
c.
P0 and Q0.
d.
P3 and Q1.
97. Refer to Figure 9-7. With trade, Wales
a.
imports Q2 - Q1 units of cheese.
b.
exports Q2 - Q1 units of cheese.
c.
imports Q2 - Q0 units of cheese.
d.
exports Q2 - Q0 units of cheese.
98. Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus with trade?
a.
Consumer surplus with trade = (1/2)(Q0)(P1 - P0).
b.
Consumer surplus with trade = (1/2)(Q0)(P3 - P0).
c.
Consumer surplus with trade = (1/2)(Q1)(P3 - P1).
d.
None of the above is correct.
30 ❖ Chapter 9/Application: International Trade
99. Refer to Figure 9-7. Which of the following is a valid equation for Welsh producer surplus with trade?
a.
Producer surplus with trade = (1/2)P0Q0.
b.
Producer surplus with trade = (1/2)P1Q1.
c.
Producer surplus with trade = (1/2)P1Q2.
d.
None of the above is correct.
100. Refer to Figure 9-7. Which of the following is a valid equation for the gains from trade?
a.
Gains from trade = (1/2)(P1 - P0)(Q2 - Q1).
b.
Gains from trade = (1/2)(P1 - P0)(Q2 - Q0)
c.
Gains from trade = (1/2)(P1 - P0)(Q1 + Q2).
d.
Gains from trade = (1/2)(Q1)(P3 - P1).
Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars.
101. Refer to Figure 9-8. The price corresponding to the horizontal dotted line on the graph represents the price of
cars
a.
after trade is allowed.
b.
before trade is allowed.
c.
that maximizes total surplus when trade is allowed.
d.
that minimizes the well-being of domestic car producers when trade is allowed.
Chapter 9/Application: International Trade ❖ 31
102. Refer to Figure 9-8. The country for which the figure is drawn
a.
has a comparative advantage relative to other countries in the production of cars and it will export
cars.
b.
has a comparative advantage relative to other countries in the production of cars and it will import
cars.
c.
has a comparative disadvantage relative to other countries in the production of cars and it will
export cars.
d.
has a comparative disadvantage relative to other countries in the production of cars and it will
import cars.
103. Refer to Figure 9-8. When the country for which the figure is drawn allows international trade in cars,
a.
consumer surplus increases by the area B.
b.
producer surplus decreases by the area B + D.
c.
total surplus increases by the area D.
d.
All of the above are correct.
104. Refer to Figure 9-8. In the country for which the figure is drawn, total surplus with international trade in cars
a.
is represented by the area A + B + C.
b.
is represented by the area A + B + D.
c.
is smaller than producer surplus without international trade in cars.
d.
is larger than total surplus without international trade in cars.
32 ❖ Chapter 9/Application: International Trade
Figure 9-9
105. Refer to Figure 9-9. Consumer surplus in this market before trade is
a.
A.
b.
A + B.
c.
A + B + D.
d.
C.
106. Refer to Figure 9-9. Consumer surplus in this market after trade is
a.
A.
b.
A + B.
c.
A + B + D.
d.
C.
107. Refer to Figure 9-9. Producer surplus in this market before trade is
a.
A.
b.
A + B.
c.
B + C + D.
d.
C.
108. Refer to Figure 9-9. Producer surplus in this market after trade is
a.
A.
b.
A + B.
c.
B + C + D.
d.
C.
Chapter 9/Application: International Trade ❖ 33
109. Refer to Figure 9-9. Total surplus in this market before trade is
a.
A + B.
b.
A + B + C.
c.
A + B + C + D.
d.
B + C + D.
110. Refer to Figure 9-9. Total surplus in this market after trade is
a.
A + B.
b.
A + B + C.
c.
A + B + C + D.
d.
B + C + D.
111. Refer to Figure 9-9. The change in total surplus in this market because of trade is
a.
D, and this area represents a loss of total surplus because of trade.
b.
D, and this area represents a gain in total surplus because of trade.
c.
B + D, and this area represents a loss of total surplus because of trade.
d.
B + D, and this area represents a gain in total surplus because of trade.
Figure 9-10. The figure applies to Mexico and the good is rifles.
112. Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is
a.
P0 and Q0.
b.
P1 and Q1.
c.
P2 and Q2.
d.
P1 and Q0.
34 ❖ Chapter 9/Application: International Trade
113. Refer to Figure 9-10. With trade, the equilibrium price of rifles and the equilibrium quantity of rifles de-
manded in Mexico are
a.
P1 and Q1.
b.
P1 and Q2.
c.
P2 and Q2.
d.
P0 and Q0.
114. Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is
a.
the number of rifles bought and sold in Mexico.
b.
the number of rifles produced in Mexico.
c.
the number of rifles exported by Mexico.
d.
the number of rifles imported by Mexico.
115. Refer to Figure 9-10. Mexico’s gains from trade are represented by the area that is bounded by the points
a.
(0, P0), (Q0, P0), (Q2, P1), and (0, P1).
b.
(0, P1), (0, P2), (Q0, P0), and (Q1, P1).
c.
(Q0, P0), (Q2, P1), and (Q1, P1).
d.
(0, P0), (0, P2), and (Q0, P0).
116. Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents
a.
Mexico’s gains from trade.
b.
the amount by which Mexico’s gain in consumer surplus exceeds its loss in producer surplus due to
trade.
c.
Mexico’s gain in total surplus due to trade.
d.
All of the above are correct.
117. Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1) represents
a.
Mexico’s gains from trade.
b.
the amount by which Mexico’s gain in producer surplus exceeds its loss in consumer surplus due to
trade.
c.
Mexico’s loss in total surplus due to trade.
d.
All of the above are correct.
Chapter 9/Application: International Trade ❖ 35
Figure 9-11
118. Refer to Figure 9-11. Consumer surplus in this market before trade is
a.
A.
b.
B + C.
c.
A + B + D.
d.
C.
119. Refer to Figure 9-11. Consumer surplus in this market after trade is
a.
A.
b.
C + B.
c.
A + B + D.
d.
B + C + D.
120. Refer to Figure 9-11. Producer surplus in this market before trade is
a.
C.
b.
B + C.
c.
A + B + D.
d.
B + C + D.
121. Refer to Figure 9-11. Producer surplus in this market after trade is
a.
C.
b.
C + B.
c.
A + B + D.
d.
B + C + D.
36 ❖ Chapter 9/Application: International Trade
122. Refer to Figure 9-11. Producer surplus plus consumer surplus in this market before trade is
a.
A + B.
b.
A + B + C.
c.
A + B + C + D.
d.
B + C + D.
123. Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is
a.
A + B.
b.
A + B + C.
c.
B + C + D.
d.
A + B + C + D.
124. Refer to Figure 9-11. The change in total surplus in this market because of trade is
a.
A, and this area represents a loss of total surplus.
b.
B, and this area represents a gain in total surplus.
c.
C, and this area represents a loss of total surplus.
d.
D, and this area represents a gain in total surplus.
Figure 9-12
Domestic Supply
Domestic Demand
World Price
200 400 600 800 1000 1200 1400 Quantity
3
6
9
12
15
18
21
24
27
30
33
36
39
42
Price
125. Refer to Figure 9-12. Equilibrium price and equilibrium quantity without trade are
a.
$27 and 400.
b.
$27 and 800.
c.
$21 and 400.
d.
$21 and 600.
Chapter 9/Application: International Trade ❖ 37
126. Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are
a.
$27 and 400.
b.
$27 and 800.
c.
$21 and 400.
d.
$21 and 600.
127. Refer to Figure 9-12. With trade, domestic production and domestic consumption, respectively, are
a.
600 and 400.
b.
800 and 400.
c.
400 and 600.
d.
400 and 800.
128. Refer to Figure 9-12. Consumer surplus before trade is
a.
$3,600.
b.
$4,200.
c.
$5,400.
d.
$6,000.
129. Refer to Figure 9-12. Consumer surplus after trade is
a.
$1,600.
b.
$2,400.
c.
$3,200.
d.
$3,600.
130. Refer to Figure 9-12. Producer surplus before trade is
a.
$3,600.
b.
$4,600.
c.
$5,400.
d.
$6,250.
131. Refer to Figure 9-12. Producer surplus after trade is
a.
$7,000.
b.
$7,500.
c.
$8,800.
d.
$9,600.
38 ❖ Chapter 9/Application: International Trade
132. Refer to Figure 9-12. With trade allowed, this country
a.
exports 200 units of the good.
b.
exports 400 units of the good.
c.
imports 200 units of the good.
Figure 9-13
133. Refer to Figure 9-13. The price and domestic quantity demanded after trade are
a.
$8 and 300.
b.
$8 and 900.
c.
$14 and 900.
d.
$14 and 600.
134. Refer to Figure 9-13. With trade, domestic production and domestic consumption, respectively, are
a.
600 and 600.
b.
600 and 300.
c.
300 and 900.
d.
600 and 900.
Chapter 9/Application: International Trade ❖ 39
135. Refer to Figure 9-13. Consumer surplus before trade is
a.
$1,600.
b.
$2,400.
c.
$3,200.
d.
$3,600.
136. Refer to Figure 9-13. Consumer surplus after trade is
a.
$3,600.
b.
$5,400.
c.
$7,200.
d.
$8,100.
137. Refer to Figure 9-13. Producer surplus before trade is
a.
$3,600.
b.
$4,400.
c.
$5,200.
d.
$6,600.
138. Refer to Figure 9-13. With trade, producer surplus is
a.
$900.
b.
$1,100.
c.
$1,500.
d.
$2,000.
139. Refer to Figure 9-13. With trade, the country
a.
exports 200 units of the good.
b.
exports 400 units of the good.
c.
imports 400 units of the good.
d.
imports 600 units of the good.
40 ❖ Chapter 9/Application: International Trade
Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil.
140. Refer to Figure 9-14. When the country for which the figure is drawn allows international trade in crude oil,
a.
consumer surplus for domestic crude-oil consumers decreases.
b.
the demand for crude oil by domestic crude-oil consumers decreases.
c.
the losses of the domestic losers outweigh the gains of the domestic winners.
d.
domestic crude-oil producers sell less crude oil.
141. Refer to Figure 9-14. When the country for which the figure is drawn allows international trade in crude oil,
a.
consumer surplus changes from the area A + B + D to the area A.
b.
producer surplus changes from the area C to the area B + C + D.
c.
total surplus decreases by the area D.
d.
All of the above are correct.
142. Refer to Figure 9-14. The country for which the figure is drawn
a.
has a comparative advantage relative to other countries in the production of crude oil and it will
export crude oil.
b.
has a comparative advantage relative to other countries in the production of crude oil and it will
import crude oil.
c.
has a comparative disadvantage relative to other countries in the production of crude oil and it will
export crude oil.
d.
has a comparative disadvantage relative to other countries in the production of crude oil and it will
import crude oil.
