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

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The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither importing nor exporting TVs. We can conclude that producer surplus in Aquilonia is now


A) higher in the steel market, lower in the rice market, and unchanged in the TV market.
B) higher in the rice and steel markets, and unchanged in the TV market.
C) lower in the rice and TV markets, and higher in the steel market.
D) lower in the rice and steel markets, and the same in the TV market.

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

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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. 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. Suppose the government imposes a tariff of $20 per unit. The deadweight loss caused by the tariff is A) $6,000. B) $9,000. C) $12,000. D) $15,000. -Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The deadweight loss caused by the tariff is


A) $6,000.
B) $9,000.
C) $12,000.
D) $15,000.

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

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Figure 9-5 The figure illustrates the market for tricycles in a country. Figure 9-5 The figure illustrates the market for tricycles in a country. -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 tricycle helmets within this country, given that tricycles and tricycle helmets are complements? A) The quantity of tricycles that this country imports would increase. B) The quantity of tricycles that this country imports would decrease, but the country would still be an importer of tricycles. C) This country would switch from being an importer of tricycles to an exporter of tricycles. D) The domestic price without trade would move closer to the world price. -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 tricycle helmets within this country, given that tricycles and tricycle helmets are complements?


A) The quantity of tricycles that this country imports would increase.
B) The quantity of tricycles that this country imports would decrease, but the country would still be an importer of tricycles.
C) This country would switch from being an importer of tricycles to an exporter of tricycles.
D) The domestic price without trade would move closer to the world price.

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

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Figure 9-5 The figure illustrates the market for tricycles in a country. Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, consumer surplus is A) $3,240. B) $6,480. C) $6,760. D) $13,520. -Refer to Figure 9-5. With trade, consumer surplus is


A) $3,240.
B) $6,480.
C) $6,760.
D) $13,520.

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

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


A) the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good.
B) the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good.
C) the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good.
D) the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good.

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

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Figure 9-6 The figure illustrates the market for roses in a country. Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When the tariff is imposed, domestic consumers A) lose by $200. B) lose by $450. C) gain by $200. D) gain by $450. -Refer to Figure 9-6. When the tariff is imposed, domestic consumers


A) lose by $200.
B) lose by $450.
C) gain by $200.
D) gain by $450.

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

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Figure 9-15 Figure 9-15 -Refer to Figure 9-15. Consumer surplus with trade and without a 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 trade and without a tariff is


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

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

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Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: Scenario 9-3 Suppose domestic demand and domestic supply in a market are given by the following equations: -Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit, and suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how much is the deadweight loss caused by the tariff? -Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit, and suppose the country imposes a $1 per unit tariff. If the country allows trade with a tariff, how much is the deadweight loss caused by the tariff?

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The deadwe...

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Figure 9-3. The domestic country is China. Figure 9-3. The domestic country is China. -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. -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.

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

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Figure 9-12 Figure 9-12 -Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are A) $54 and 800. B) $54 and 1,600. C) $42 and 800. D) $42 and 1,200. -Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are


A) $54 and 800.
B) $54 and 1,600.
C) $42 and 800.
D) $42 and 1,200.

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

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What are the arguments in favor of trade restrictions, and what are the counterarguments? According to most economists, do any of these arguments really justify trade restrictions? Explain.

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Arguments mentioned in the text include ...

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When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,


A) producer surplus increases and total surplus increases in the market for that good.
B) producer surplus increases and total surplus decreases in the market for that good.
C) producer surplus decreases and total surplus increases in the market for that good.
D) producer surplus decreases and total surplus decreases in the market for that good.

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

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Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

A) True
B) False

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The nation of Isolani forbids international trade. In Isolani, you can exchange 1 car for 5 motorcycles. In other countries, you can exchange 1 car for 4 motorcycles. These facts indicate that


A) other countries have an absolute advantage, relative to Isolani, in producing cars.
B) Isolani has a comparative advantage, relative to other countries, in producing cars.
C) if Isolani were to allow trade, it would import motorcycles.
D) the world price of motorcycles exceeds the price of motorcycles in Isolani.

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

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Suppose the world price of coffee is $3 per pound and Brazil's domestic price of coffee without trade is $2 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of coffee?

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Brazil wil...

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Figure 9-17 Figure 9-17 -Refer to Figure 9-17. When the country moves from no trade to free trade, consumer surplus A) increases by $1,200 and producer surplus increases by $600. B) increases by $1,200 and producer surplus decreases by $600. C) decreases by $1,350 and producer surplus increases by $450. D) decreases by $1,350 and producer surplus decreases by $450. -Refer to Figure 9-17. When the country moves from no trade to free trade, consumer surplus


A) increases by $1,200 and producer surplus increases by $600.
B) increases by $1,200 and producer surplus decreases by $600.
C) decreases by $1,350 and producer surplus increases by $450.
D) decreases by $1,350 and producer surplus decreases by $450.

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

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Several arguments for restricting trade have been advanced. Those arguments do not include


A) the jobs argument.
B) the protection-as-a-bargaining-chip argument.
C) the no-deadweight-loss argument.
D) the infant-industry argument.

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

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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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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 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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,


A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off.
B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off.
C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off.
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.

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

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Figure 9-1 The figure illustrates the market for coffee in Guatemala. Figure 9-1 The figure illustrates the market for coffee in Guatemala. -Refer to Figure 9-1. With trade, total surplus in the Guatemalan coffee market amounts to A) 1,250. B) 1,468. C) 1,870. D) 1,980. -Refer to Figure 9-1. With trade, total surplus in the Guatemalan coffee market amounts to


A) 1,250.
B) 1,468.
C) 1,870.
D) 1,980.

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

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