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Figure 9-5 Figure 9-5 -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. -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.

E) A) and D)
F) A) and C)

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A possible outcome of the multilateral approach to free trade is that such an approach can


A) win political support when a unilateral approach cannot.
B) result in more restricted trade than under a unilateral approach, when international negotiations fail.
C) result in drastic reductions in tariffs for many countries.
D) All of the above are correct.

E) C) and D)
F) None of the above

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Figure 9-17 Figure 9-17 -Refer to Figure 9-17.Without trade,consumer surplus is A) $400 and producer surplus is $200. B) $400 and producer surplus is $800. C) $1,600 and producer surplus is $200. D) $1,600 and producer surplus is $800. -Refer to Figure 9-17.Without trade,consumer surplus is


A) $400 and producer surplus is $200.
B) $400 and producer surplus is $800.
C) $1,600 and producer surplus is $200.
D) $1,600 and producer surplus is $800.

E) All of the above
F) A) and B)

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The two basic approaches that a country can take as a means to achieve free trade are the


A) unilateral approach and the multilateral approach.
B) short-run approach and the long-run approach.
C) continental approach and the global approach.
D) industry approach and the security approach.

E) B) and D)
F) All of the above

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If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

A) True
B) False

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Scenario 9-2 For a small country called Boxland, the equation of the domestic demand curve for cardboard is Scenario 9-2 For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. B) harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. C) harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. D) harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984. where Scenario 9-2 For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. B) harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. C) harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. D) harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984. represents the domestic quantity of cardboard demanded, in tons, and Scenario 9-2 For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. B) harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. C) harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. D) harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984. represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is Scenario 9-2 For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. B) harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. C) harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. D) harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984. where Scenario 9-2 For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. B) harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. C) harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. D) harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984. represents the domestic quantity of cardboard supplied, in tons, and Scenario 9-2 For a small country called Boxland, the equation of the domestic demand curve for cardboard is where represents the domestic quantity of cardboard demanded, in tons, and represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is where represents the domestic quantity of cardboard supplied, in tons, and again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. B) harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. C) harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. D) harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984. again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard


A) benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660.
B) harms Boxlandian consumers by $736 and harms Boxlandian producers by $598.
C) harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864.
D) harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984.

E) None of the above
F) A) and D)

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Figure 9-2 Figure 9-2 -Refer to Figure 9-2.With free trade,producer surplus is A) $80.00. B) $210.00. C) $245.50. D) $472.50. -Refer to Figure 9-2.With free trade,producer surplus is


A) $80.00.
B) $210.00.
C) $245.50.
D) $472.50.

E) None of the above
F) All of the above

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Figure 9-1 The figure illustrates the market for wool in Scotland. Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1.In the absence of trade,total surplus in Scotland is represented by the area A) A + B + C. B) A + B + C + D + F. C) A + B + C + D + F + G. D) A + B + C + D + F + G + H. -Refer to Figure 9-1.In the absence of trade,total surplus in Scotland is represented by the area


A) A + B + C.
B) A + B + C + D + F.
C) A + B + C + D + F + G.
D) A + B + C + D + F + G + H.

E) None of the above
F) A) and D)

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Figure 9-17 Figure 9-17 -Refer to Figure 9-17.When comparing no trade to free trade,the gains from trade amount to A) $400. B) $600. C) $750. D) $1,000. -Refer to Figure 9-17.When comparing no trade to free trade,the gains from trade amount to


A) $400.
B) $600.
C) $750.
D) $1,000.

E) A) and D)
F) All of the above

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Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the price of crude oil. -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. -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.

E) A) and D)
F) B) and C)

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If a country allows free trade and imports cars,then it is the case that the gains to domestic producers outweigh the losses to domestic consumers.

A) True
B) False

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Figure 9-4. The domestic country is Nicaragua. Figure 9-4. The domestic country is Nicaragua. -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) . -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) .

E) A) and B)
F) A) and D)

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Assume the nation of Cropland does not trade with the rest of the world.By comparing the world price of corn to the price of corn in Cropland,we can determine whether


A) consumer surplus exceeds producer surplus in Cropland.
B) Cropland has an absolute advantage in producing corn.
C) Cropland has a comparative advantage in producing corn.
D) All of the above are correct.

E) A) and B)
F) C) and D)

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Assume,for the U.S.,that the domestic price of wheat without international trade is higher than the world price of wheat.This suggests that,in the production of wheat,


A) the U.S. has a comparative advantage over other countries and the U.S. will export wheat.
B) the U.S. has a comparative advantage over other countries and the U.S. will import wheat.
C) other countries have a comparative advantage over the U.S. and the U.S. will export wheat.
D) other countries have a comparative advantage over the U.S. and the U.S. will import wheat.

E) A) and B)
F) C) and D)

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Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that


A) foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding.
B) foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs.
C) the critics are correct, so countries must protect their industries with tariffs or quotas.
D) foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.

E) C) and D)
F) All of the above

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Figure 9-2 Figure 9-2 -Refer to Figure 9-2.The world price for baskets represents A) the demand for baskets from the rest of the world. B) the supply of baskets from the rest of the world. C) the level of inefficiency in the domestic market caused by trade. D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage. -Refer to Figure 9-2.The world price for baskets represents


A) the demand for baskets from the rest of the world.
B) the supply of baskets from the rest of the world.
C) the level of inefficiency in the domestic market caused by trade.
D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.

E) A) and C)
F) A) and B)

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Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -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. -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.

E) A) and B)
F) All of the above

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Tariffs and quotas are different in the sense that


A) tariffs cause deadweight losses, while quotas do not cause deadweight losses.
B) tariffs raise revenue for the government, while quotas do not raise revenue for the government.
C) tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers.
D) tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of domestic producers.

E) B) and C)
F) A) and D)

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An import quota


A) is preferable to a tariff since an import quota does not create a deadweight loss.
B) is a tax on imported goods.
C) reduces the welfare of domestic consumers.
D) reduces the welfare of domestic producers.

E) A) and D)
F) B) and D)

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Figure 9-15 Figure 9-15 -Refer to Figure 9-15.Consumer surplus with the tariff is A) A. B) A + B. C) A + C + G. D) A + B + C + D +E + F. -Refer to Figure 9-15.Consumer surplus with the tariff is


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

E) B) and D)
F) B) and C)

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