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Figure 9-20 The figure illustrates the market for rice in Vietnam. Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20.From the figure it is apparent that A) Vietnam has a comparative advantage in producing rice, relative to the rest of the world. B) foreign countries have a comparative advantage in producing rice, relative to Vietnam. C) Vietnam has an absolute advantage in producing rice, relative to the rest of the world. D) foreign countries have an absolute advantage in producing rice, relative to Vietnam. -Refer to Figure 9-20.From the figure it is apparent that


A) Vietnam has a comparative advantage in producing rice, relative to the rest of the world.
B) foreign countries have a comparative advantage in producing rice, relative to Vietnam.
C) Vietnam has an absolute advantage in producing rice, relative to the rest of the world.
D) foreign countries have an absolute advantage in producing rice, relative to Vietnam.

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

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Figure 9-12 Figure 9-12 -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. D) exports 800 units of the good. -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.
D) exports 800 units of the good.

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

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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 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) . -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) .

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

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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 $45.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. 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 $45.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. 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 $45.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. 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 $45.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. 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 $45.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. 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 $45.Then,relative to the no-trade situation,international trade in cardboard A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00. B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50. C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50. D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00. again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then,relative to the no-trade situation,international trade in cardboard


A) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00.
B) benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50.
C) benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50.
D) harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00.

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

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Zelzar 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 incense,exporting steel,and neither importing nor exporting rugs.Which groups in Zelzar are better off as a result of the new free-trade policy?


A) producers of incense and consumers of steel
B) consumers of all three goods
C) consumers of incense and producers of rugs
D) producers of steel and consumers of incense

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

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The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

A) True
B) False

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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. -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.

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

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The world price of a ton of steel is $650.Before Russia allowed trade in steel,the price of a ton of steel there was $1,000.Once Russia allowed trade in steel with other countries,Russia began


A) exporting steel and the price per ton in Russia decreased to $650.
B) exporting steel and the price per ton in Russia remained at $1,000.
C) importing steel and the price per ton in Russia decreased to $650.
D) importing steel and the price per ton in Russia remained at $1,000.

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

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


A) domestic producers become better off, and domestic consumers become worse off.
B) domestic producers become worse off, and domestic consumers become better off.
C) domestic producers become better off, but the effect on the well-being of domestic consumers is ambiguous.
D) domestic consumers become worse off, but the effect on the well-being of domestic producers is ambiguous.

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

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Japan imposes a $300 per ton tariff on imported steel,raising the price charged in Japan to $1,000.Using only this information,which of the following statements is correct?


A) The world price for steel is $300.
B) The world price for steel is $700.
C) The world price for steel is $1,000.
D) The world price for steel is $1,300.

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

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The General Agreement on Tariffs and Trade (GATT) was initiated in response to


A) in increase in exports of low-priced goods from developing countries to developed countries.
B) the replacement of manufacturing jobs with service jobs in developed countries.
C) economic dislocations caused by the North American Free Trade Agreement (NAFTA) in the 1990s.
D) high tariffs imposed during the Great Depression of the 1930s.

E) A) and B)
F) B) 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 $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. 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 $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. 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 $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. 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 $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. 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 $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. 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 $45.Then Boxland's gains from international trade in cardboard amount to A) $88.75. B) $102.50. C) $122.50. D) $135.00. again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then Boxland's gains from international trade in cardboard amount to


A) $88.75.
B) $102.50.
C) $122.50.
D) $135.00.

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

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The world price of a simple electronic calculator is $5.00.Before Zimbabwe allowed trade in calculators,the price of a calculator there was $7.50.Once Zimbabwe began allowing trade in calculators with other countries,Zimbabwe began


A) importing calculators and the price of a calculator in Zimbabwe decreased to $5.00.
B) importing calculators and the price of a calculator in Zimbabwe remained at $7.50.
C) exporting calculators and the price of a calculator in Zimbabwe decreased to $5.00.
D) exporting calculators and the price of a calculator in Zimbabwe remained at $7.50.

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

Correct Answer

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Figure 9-10. The figure applies to Mexico and the good is rifles. Figure 9-10. The figure applies to Mexico and the good is rifles. -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) . -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) .

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

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If a country is an exporter of a good,then it must be the case that


A) the world price is less than its domestic price.
B) consumer surplus is higher than a no trade situation.
C) the world price is greater than its domestic price.
D) they used an infant-industry argument to protect its producers.

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

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Figure 9-11 Figure 9-11 -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. -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.

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

Correct Answer

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Figure 9-6 Figure 9-6 -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. -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.

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.If Boxland prohibits international trade in cardboard,then the equilibrium price of a ton of cardboard is A) $36 and the equilibrium quantity of cardboard is 74 tons. B) $44 and the equilibrium quantity of cardboard is 88 tons. C) $52 and the equilibrium quantity of cardboard is 96 tons. D) $60 and the equilibrium quantity of cardboard is 100 tons. 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.If Boxland prohibits international trade in cardboard,then the equilibrium price of a ton of cardboard is A) $36 and the equilibrium quantity of cardboard is 74 tons. B) $44 and the equilibrium quantity of cardboard is 88 tons. C) $52 and the equilibrium quantity of cardboard is 96 tons. D) $60 and the equilibrium quantity of cardboard is 100 tons. 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.If Boxland prohibits international trade in cardboard,then the equilibrium price of a ton of cardboard is A) $36 and the equilibrium quantity of cardboard is 74 tons. B) $44 and the equilibrium quantity of cardboard is 88 tons. C) $52 and the equilibrium quantity of cardboard is 96 tons. D) $60 and the equilibrium quantity of cardboard is 100 tons. 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.If Boxland prohibits international trade in cardboard,then the equilibrium price of a ton of cardboard is A) $36 and the equilibrium quantity of cardboard is 74 tons. B) $44 and the equilibrium quantity of cardboard is 88 tons. C) $52 and the equilibrium quantity of cardboard is 96 tons. D) $60 and the equilibrium quantity of cardboard is 100 tons. 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.If Boxland prohibits international trade in cardboard,then the equilibrium price of a ton of cardboard is A) $36 and the equilibrium quantity of cardboard is 74 tons. B) $44 and the equilibrium quantity of cardboard is 88 tons. C) $52 and the equilibrium quantity of cardboard is 96 tons. D) $60 and the equilibrium quantity of cardboard is 100 tons. 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.If Boxland prohibits international trade in cardboard,then the equilibrium price of a ton of cardboard is A) $36 and the equilibrium quantity of cardboard is 74 tons. B) $44 and the equilibrium quantity of cardboard is 88 tons. C) $52 and the equilibrium quantity of cardboard is 96 tons. D) $60 and the equilibrium quantity of cardboard is 100 tons. again represents the price of a ton of cardboard. -Refer to Scenario 9-2.If Boxland prohibits international trade in cardboard,then the equilibrium price of a ton of cardboard is


A) $36 and the equilibrium quantity of cardboard is 74 tons.
B) $44 and the equilibrium quantity of cardboard is 88 tons.
C) $52 and the equilibrium quantity of cardboard is 96 tons.
D) $60 and the equilibrium quantity of cardboard is 100 tons.

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

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Figure 9-17 Figure 9-17 -Refer to Figure 9-17.With trade and a tariff,total surplus is A) $1,224. B) $1,416. C) $1,512. D) $1,704. -Refer to Figure 9-17.With trade and a tariff,total surplus is


A) $1,224.
B) $1,416.
C) $1,512.
D) $1,704.

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

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Figure 9-20 The figure illustrates the market for rice in Vietnam. Figure 9-20 The figure illustrates the market for rice in Vietnam. -Refer to Figure 9-20.With trade,Vietnam will A) export 1,000 units of rice. B) export 1,500 units of rice. C) import 1,000 units of rice. D) import 1,500 units of rice. -Refer to Figure 9-20.With trade,Vietnam will


A) export 1,000 units of rice.
B) export 1,500 units of rice.
C) import 1,000 units of rice.
D) import 1,500 units of rice.

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

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