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If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,


A) the country will be an exporter of the good.
B) the country will be an importer of the good.
C) the country will be neither an exporter nor an importer of the good.
D) Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

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

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Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia


A) may prompt Russian farmers to invoke the infant-industry argument.
B) increase the consumer surplus of Russian buyers of wheat.
C) decrease the total surplus of the Russian people.
D) All of the above are correct.

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

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Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. Figure 9-25 The following diagram shows the domestic demand and supply in a market. Assume that the world price in this market is $10 per unit. -Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. The deadweight loss caused by the tariff is A) $25. B) $50. C) $75. D) $100. -Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. The deadweight loss caused by the tariff is


A) $25.
B) $50.
C) $75.
D) $100.

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

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Figure 9-7. The figure applies to the nation of Wales and the good is cheese. Figure 9-7. The figure applies to the nation of Wales and the good is cheese. -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. -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.

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

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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 and international trade is allowed. Then Boxland's consumers demand A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 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 and international trade is allowed. Then Boxland's consumers demand A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 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 and international trade is allowed. Then Boxland's consumers demand A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 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 and international trade is allowed. Then Boxland's consumers demand A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 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 and international trade is allowed. Then Boxland's consumers demand A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 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 and international trade is allowed. Then Boxland's consumers demand A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard. B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard. C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard. D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard. 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 and international trade is allowed. Then Boxland's consumers demand


A) 110 tons of cardboard and Boxland's producers supply 120 tons of cardboard.
B) 96 tons of cardboard and Boxland's producers supply 96 tons of cardboard.
C) 96 tons of cardboard and Boxland's producers supply 115 tons of cardboard.
D) 80 tons of cardboard and Boxland's producers supply 120 tons of cardboard.

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

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Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

A) True
B) False

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If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

A) True
B) False

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If the demand curve and the supply curve for a good are straight lines, then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by


A) the area of one triangle.
B) the area of one rectangle.
C) the combined areas of two different triangles.
D) the combined areas of two different rectangles.

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

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Figure 9-17 Figure 9-17 -Refer to Figure 9-17. Without trade, total surplus is A) $600. B) $1,200. C) $1,800. D) $2,250. -Refer to Figure 9-17. Without trade, total surplus is


A) $600.
B) $1,200.
C) $1,800.
D) $2,250.

E) A) and C)
F) None 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. If this country allows free trade in tricycles, 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. -Refer to Figure 9-5. If this country allows free trade in tricycles,


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.

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

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Figure 9-2 The figure illustrates the market for calculators in a country. Figure 9-2 The figure illustrates the market for calculators in a country. -Refer to Figure 9-2. Without trade, consumer surplus is A) $423. B) $845. C) $1,690. D) $3,380. -Refer to Figure 9-2. Without trade, consumer surplus is


A) $423.
B) $845.
C) $1,690.
D) $3,380.

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

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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. 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 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. 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 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) A) and B)
F) A) and D)

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Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. Figure 9-26 The following diagram shows the domestic demand and domestic supply curves in a market. -Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported? -Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free trade, will the country import or export this good, and how many units will be imported/exported?

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The countr...

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Figure 9-12 Figure 9-12 -Refer to Figure 9-12. Producer surplus after trade is A) $28,000. B) $30,000. C) $35,200. D) $38,400. -Refer to Figure 9-12. Producer surplus after trade is


A) $28,000.
B) $30,000.
C) $35,200.
D) $38,400.

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

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Figure 9-29 The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. Figure 9-29 The following diagram shows the domestic demand and domestic supply curves in a market. Assume that the world price in this market is $1 per unit. -Refer to Figure 9-29. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade? -Refer to Figure 9-29. If the country allows free trade, how much are consumer surplus, producer surplus, and total surplus with trade?

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With trade, consumer...

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Figure 9-9 Figure 9-9 -Refer to Figure 9-9. Consumer surplus in this market after trade is A) A. B) A + B. C) A + B + D. D) C. -Refer to Figure 9-9. Consumer surplus in this market after trade is


A) A.
B) A + B.
C) A + B + D.
D) C.

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

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Trade enhances the economic well-being of a nation in the sense that


A) both domestic producers and domestic consumers of a good become better off with trade, regardless of whether the nation imports or exports the good in question.
B) the gains of domestic producers of a good exceed the losses of domestic consumers of a good, regardless of whether the nation imports or exports the good in question.
C) trade results in an increase in total surplus.
D) trade puts downward pressure on the prices of all goods.

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

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


A) domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country rises.
B) domestic producers of bicycles are worse off, domestic consumers of bicycles are better off, and the economic well-being of the country falls.
C) domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country rises.
D) domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country falls.

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

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The greater the elasticities of supply and demand, the smaller are the gains from trade.

A) True
B) False

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