Chapter 9 Application: International Trade
Test B
1
When two countries choose to engage in international trade, a. both countries will benefit. b. one country benefits while the other country loses. c. since it is an equal exchange, neither country benefits nor loses. d. Without additional information, we will not be able to know if either country benefits or loses. ANSWE ! a. both countries will benefit. "#$E! % &E#1! ' ()*E'"+,E! 1 AN-(%! #
.
When a country/s domestic 0rice of a 0roduct is lower than the world 0rice and free trade is allowed, a. the country will become an im0orter of the 0roduct. b. the country will become an ex0orter of the 0roduct. c. we know that consumers must not demand the 0roduct since the domestic 0rice is lower, so the country will ha1e no need to ex0ort nor im0ort the 0roduct. d. additional information about domestic su00ly is needed to determine whether the country will ex0ort or im0ort the good. ANSWE ! b. the country will become an ex0orter of the 0roduct. "#$E! % &E#1! ' SE'"+(N! 1 ()*E'"+,E! 1 AN-(%! #
2
When the world 0rice of a 0roduct is higher than a country/s domestic 0rice we know that the country a. should im0ort that 0roduct. b. should no longer 0roduce that 0roduct. c. has a com0arati1e ad1antage in that 0roduct. d. could benefit by im0osing a tariff on that 0roduct. ANSWE ! c. has a com0arati1e ad1antage in that 0roduct. "#$E! % &E#1! - SE'"+(N! 1 ()*E'"+,E! 1 AN-(%! #
3
When countries im0ort a 0roduct, domestic 0roducers a. and domestic consumers of that 0roduct both benefit. b. benefit but domestic consumers lose. c. lose but domestic consumers benefit. d. and domestic consumers both lose. ANSWE ! c. lose but domestic consumers benefit. "#$E! % &E#1! - SE'"+(N! . ()*E'"+,E! . AN-(%! #
4
When a country becomes an ex0orter of a good, a. e1eryone in the country benefits. b. e1eryone in the country loses. c. the losses of the losers exceed the gains of the winners. d. the gains of the winners exceed the losses of the losers. ANSWE ! d. the gains of the winners exceed the losses of the losers. "#$E! % &E#1! - SE'"+(N! . ()*E'"+,E! . AN-(%! #
'o0yright 5 6arcourt, +nc.
171
17. 'ha0ter 89A00lication! +nternational "rade
:
;or a country, the domestic 0rice of a 0roduct will equal the world 0rice a. when the domestic su00ly of the 0roduct increases. b. when the country allows free trade. c. when trade restrictions are im0osed on the 0roduct. d. if the country chooses to ex0ort and not im0ort the 0roduct. ANSWE ! b. when the country allows free trade. "#$E! % &E#1! - SE'"+(N! . ()*E'"+,E! . AN-(%! # "he world 0rice of soybeans is <2.77 0er bushel. "he 0re=trade 0rice of soybeans in 'hile is <..47 0er bushel.
>
+f 'hile allows trade in soybeans 'hile will a. im0ort soybeans and the 0rice in 'hile will be <2.77 0er bushel. b. im0ort soybeans and the 0rice in 'hile will be <..47 0er bushel. c. ex0ort soybeans and the 0rice in 'hile will be <2.77 0er bushel. d. ex0ort soybeans and the 0rice in 'hile will be <..47 0er bushel. ANSWE ! c. ex0ort soybeans and the 0rice in 'hile will be <2.77 0er bushel. "#$E! % &E#1! E SE'"+(N! . ()*E'"+,E! 2 +NS" ?'"+(N! : AN-(%! N
@
With free trade in the soybean market in 'hile, consumers a. and 0roducers will both lose. b. and 0roducers will both benefit. c. will lose and 0roducers will benefit. d. will benefit and 0roducers will not be affected. ANSWE ! c. will lose and 0roducers will benefit. "#$E! % &E#1! E SE'"+(N! . ()*E'"+,E! 2 +NS" ?'"+(N! : AN-(%! N
'o0yright 5 6arcourt, +nc.
'ha0ter 89A00lication! +nternational "rade 172
According to the gra0h, 'anada will a. im0ort .77 calculators. b. im0ort 377 calculators. c. ex0ort .77 calculators. d. ex0ort 377 calculators. ANSWE ! d. ex0ort 377 calculators. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! @ AN-(%! #
17
According to the gra0h, 0roducer sur0lus in 'anada after trade is a. <2,.77. b. <>,.77. c. <17,377. d. <1.,@77. ANSWE ! d. <1.,@77. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! @ AN-(%! #
11
According to the gra0h, the increase in total sur0lus in 'anada because of trade is a. <1777. b. <1277. c. <1:77. d. <1877. ANSWE ! c. <1:77. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! @ AN-(%! #
'o0yright 5 6arcourt, +nc.
173 'ha0ter 89A00lication! +nternational "rade
1.
According to the gra0h, Areece would a. im0ort 277 books. b. im0ort :77 books. c. ex0ort 277 books. d. ex0ort :77 books. ANSWE ! b. im0ort :77 books. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! 1 AN-(%! #
12
According to the gra0h, consumer sur0lus in Areece before trade is a. <1,@77. b. <4,377. c. <>,.77. d. <1:,.77. ANSWE ! c. <>,.77. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! 1 AN-(%! N
13
According to the gra0h, the change in total sur0lus in Areece because of trade is a. <.,377. b. <2,:77. c. <3,@77. d. <:,777. ANSWE ! b. <2,:77. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! 1 AN-(%! #
'o0yright 5 6arcourt, +nc.
'ha0ter 89A00lication! +nternational "rade 174
14
A tariff is a tax on a. ex0orted goods that lowers the domestic 0rice below the world 0rice. b. ex0orted goods that kee0s the domestic 0rice the same as the world 0rice. c. im0orted goods that lowers the domestic 0rice below the world 0rice. d. im0orted goods that raises the domestic 0rice abo1e the world 0rice. ANSWE ! d. im0orted goods that raises the domestic 0rice abo1e the world 0rice. "#$E! % &E#1! - SE'"+(N! . ()*E'"+,E! 3 AN-(%! # 6olland is an im0orter of com0uter scanners and is also a 0rice=taker in the scanner market. "he world 0rice of these scanners is <117.
1:
According to this scenario, if 6olland im0oses a <14 tariff on scanners, the result in 6olland would be that the 0rice of scanners will be a. <1.4 and the quantity 0urchased will fall. b. <117 and the quantity 0urchased will fall. c. <84 and the quantity 0urchased will increase. d. <1.4 and the quantity 0urchased will increase. ANSWE ! a. <1.4 and the quantity 0urchased will fall. "#$E! % &E#1! E SE'"+(N! . ()*E'"+,E! 3 +NS" ?'"+(N! . AN-(%! N
1>
According to this scenario, if 6olland im0oses a <14 tariff on scanners, the result in 6olland would be that consumers a. and 0roducers will both gain. b. and 0roducers will both lose. c. will gain and 0roducers will lose. d. will lose and 0roducers will gain. ANSWE ! d. will lose and 0roducers will gain. "#$E! % &E#1! E SE'"+(N! . ()*E'"+,E! 3 +NS" ?'"+(N! . AN-(%! N
1@
+n the figure shown, the free=trade 0rice and quantity demanded would be a. $1, B1. b. $1, B3. c. $., B.. d. $., B2. ANSWE ! b. $1, B3. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6! AN-(%! #
'o0yright 5 6arcourt, +nc.
17: 'ha0ter 89A00lication! +nternational "rade
18
+n the figure shown, the loss in consumer sur0lus due to the tariff would be equal to a. A. b. A C ). c. - C E C ;. d. ' C - CE C ;. ANSWE ! d. ' C - CE C ;. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6! AN-(%! #
.7
+n the figure shown, the deadweight loss caused by the tariff would be equal to a. ). b. E. c. - C ;. d. ) C - C E C ;. ANSWE ! c. - C ;. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6! AN-(%! # NOTE: THE FOLLOWING QUESTION IS REPEATED FROM THE ON-LINE QUI STUDENTS MA" HA#E ALREAD" SEEN THIS QUESTION AND ITS ANSWER!
.1
ES! "OUR
;rom the im0orting country/s 0oint of 1iew, a tariff is better than a quota because a. a tariff has a smaller effect on im0orts than does a quota. b. a tariff has a larger effect on im0orts than does a quota. c. the tariff generates tax re1enue for the go1ernment. d. both reduce im0orts but only quotas increase 0rice. ANSWE ! c. the tariff generates tax re1enue for the go1ernment. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 AN-(%! #
..
+n the figure shown, as a result of the quota being im0osed, im0orts would be equal to a. B. D B1. b. B2 D B1. c. B2 D B.. d. B3 D B2. ANSWE ! c. B2 D B.. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6! AN-(%! #
'o0yright 5 6arcourt, +nc.
'ha0ter 89A00lication! +nternational "rade 17>
.2
+n the figure shown, the area that re0resents the sur0lus recei1ed by im0ort license holders would be a. ). b. E. c. - C ;. d. ) C - C E C ;. ANSWE ! b. E. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6! AN-(%! # NOTE: THE FOLLOWING QUESTION IS REPEATED FROM THE ON-LINE QUI STUDENTS MA" HA#E ALREAD" SEEN THIS QUESTION AND ITS ANSWER!
.3
ES! "OUR
All of the following are used as arguments against free trade EE'E$" a. free trade makes consumers worse off. b. free trade can threaten national security. c. free trade can destroy domestic Fobs. d. infant industries must be 0rotected from free trade. ANSWE ! a. free trade makes consumers worse off. "#$E! % &E#1! - SE'"+(N! 2 ()*E'"+,E! 4 AN-(%! # NOTE: THE FOLLOWING QUESTION IS REPEATED FROM THE ON-LINE QUI STUDENTS MA" HA#E ALREAD" SEEN THIS QUESTION AND ITS ANSWER!
.4
ES! "OUR
"he Aeneral Agreement on "ariffs and "rade GAA""H a. was enacted to lower trade barriers among Euro0ean countries. b. was enacted to lower trade barriers among the ?nited States, 'anada and %exico. c. was enacted after World War + in res0onse to high tariffs im0osed during the war. d. is a series of continuing negotiations that has the goal of 0romoting free trade. ANSWE ! a. was enacted to lower trade barriers among Euro0ean countries. "#$E! % &E#1! - SE'"+(N! 2 ()*E'"+,E! 4 AN-(%! #
'o0yright 5 6arcourt, +nc.
ANSWE ! a. both countries will benefit. "#$E! % &E#1! ' ()*E'"+,E! 1 AN-(%! #
.
ANSWE ! b. the country will become an ex0orter of the good. "#$E! % &E#1! ' SE'"+(N! 1 ()*E'"+,E! 1 AN-(%! #
2
ANSWE ! c. has a com0arati1e ad1antage in that 0roduct. "#$E! % &E#1! - SE'"+(N! 1 ()*E'"+,E! 1 AN-(%! #
3
ANSWE ! c. lose but domestic consumers benefit. "#$E! % &E#1! - SE'"+(N! . ()*E'"+,E! . AN-(%! #
4
ANSWE ! d. the gains of the winners exceed the losses of the losers. "#$E! % &E#1! - SE'"+(N! . ()*E'"+,E! . AN-(%! #
:
ANSWE ! b. when the country allows free trade. "#$E! % &E#1! - SE'"+(N! . ()*E'"+,E! . AN-(%! #
>
ANSWE ! c. ex0ort soybeans and the 0rice in 'hile will be <2.77 0er bushel. "#$E! % &E#1! E SE'"+(N! . ()*E'"+,E! 2 +NS" ?'"+(N! : AN-(%! N
@
ANSWE ! c. will lose and 0roducers will benefit. "#$E! % &E#1! E SE'"+(N! . ()*E'"+,E! 2 +NS" ?'"+(N! :
8
AN-(%! N
ANSWE ! d. ex0ort 377 calculators. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! @ AN-(%! #
17
ANSWE ! d. <1.,@77. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! @ AN-(%! #
11
ANSWE ! c. <1:77. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! @ AN-(%! #
1.
ANSWE ! b. im0ort :77 books. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! 1 AN-(%! #
12
ANSWE ! c. <>,.77. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! 1 AN-(%! N
13
ANSWE ! b. <2,:77. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 2 A A$6 ;( %A"! % B?ES"+(N A A$6! +NS" ?'"+(N! 1 AN-(%! #
14
ANSWE ! d. im0orted goods that raises the domestic 0rice abo1e the world 0rice. "#$E! % &E#1! - SE'"+(N! . ()*E'"+,E! 3 AN-(%! #
1:
ANSWE ! a. <1.4 and the quantity 0urchased will fall. "#$E! % &E#1! E SE'"+(N! . ()*E'"+,E! 3 +NS" ?'"+(N! . AN-(%! N
1>
ANSWE ! d. will lose and 0roducers will gain. "#$E! % &E#1! E SE'"+(N! . ()*E'"+,E! 3 +NS" ?'"+(N! .
1@
AN-(%! N
ANSWE ! b. $1, B3. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6!
18
AN-(%! #
ANSWE ! d. ' C - CE C ;. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6!
.7
AN-(%! #
ANSWE ! c. - C ;. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6!
.1
AN-(%! #
ANSWE ! c.the tariff generates tax re1enue for the go1ernment. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 AN-(%! #
..
ANSWE ! c. B2 minus B.. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6!
.2
AN-(%! #
ANSWE ! b. E. "#$E! % &E#1! A SE'"+(N! . ()*E'"+,E! 3 A A$6 ;( %A"! % B?ES"+(N A A$6!
.3
AN-(%! #
ANSWE ! a. free trade makes consumers worse off. "#$E! % &E#1! - SE'"+(N! 2 ()*E'"+,E! 4 AN-(%! #
.4
ANSWE ! a. was enacted to lower trade barriers among Euro0ean countries. "#$E! % &E#1! - SE'"+(N! 2 ()*E'"+,E! 4 AN-(%! #
