Question 1

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. The size of the tariff on roses is
A)$4.
B)$2.
C)-$2.
D)$1.

Accepted Answer

The answer of Figure 9-6
The figure illustrates the market for...

Question 2

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.

Accepted Answer

When the tariff is imposed, the price of roses for domestic consumers increases from $6 to $8 per dozen. Therefore, domestic consumers lose by $2 per dozen, and with a demand of 150 dozen, their loss is $300. However, the government gains $150 in revenue from the tariff, and domestic producers gain $300 from the increase in price and quantity sold. So, the overall gain is $450, but it is not gained by domestic consumers, as they face higher prices. Therefore, choice B is correct.

Question 3

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. Before the tariff is imposed, this country
A)imports 200 roses.
B)imports 400 roses.
C)exports 200 roses.
D)exports 400 roses.

Accepted Answer

The answer of Figure 9-6
The figure illustrates the market for...

Question 4

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 and producers will lose.
B)consumers will lose and producers will gain.
C)both consumers and producers will gain.
D)both consumers and producers will lose.

Accepted Answer

The answer of Figure 9-5
The figure illustrates the market for...

Question 5

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. Without trade, the equilibrium price of roses is
A)$4 and the equilibrium quantity is 300.
B)$3 and the equilibrium quantity is 200.
C)$3 and the equilibrium quantity is 400.
D)$2 and the equilibrium quantity is 500.

Accepted Answer

The answer of Figure 9-6
The figure illustrates the market for...

Question 6

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.

Accepted Answer

With trade, the domestic price of tricycles decreases from $160 to $120, while the world price remains at $100. At the new price of $120, the quantity demanded increases to 90, and the quantity supplied increases to 80. The total gain in consumer surplus is the area A + B + C + D, which is equal to 1/2 x ($160-$120) x 90 = $1,800. However, since there are two units of consumers, the total gain in consumer surplus is $1,800 x 2 = $3,600. Therefore, the new total consumer surplus is $6,040 + $3,600 = $9,640. The loss in producer surplus is the area E + F + G + H, which is equal to 1/2 x ($120-$100) x 80 = $800. However, since there are two units of producers, the total loss in producer surplus is $800 x 2 = $1,600. Therefore, the total gains from trade are $3,600 - $1,600 = $2,000.

Question 7

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals
A)$100.
B)$200.
C)$400.
D)$500.

Accepted Answer

The answer of Figure 9-6
The figure illustrates the market for...

Question 8

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.

Accepted Answer

The answer of Figure 9-5
The figure illustrates the market for...

Question 9

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. The imposition of a tariff on roses
A)increases the number of roses imported by 100.
B)increases the number of roses imported by 200.
C)decreases the number of roses imported by 200.
D)decreases the number of roses imported by 400.

Accepted Answer

When a tariff is imposed on imported roses, the price of imported roses increases from Pw to Pw+t. As a result, the quantity demanded of imported roses decreases from Q1 to Q2, while the quantity supplied of domestic roses increases from Q1 to Q3. The difference between Q2 and Q3 represents the decrease in the quantity of imported roses due to the tariff, which is 200. Therefore, the correct answer is (C) decreases the number of roses imported by 200.

Question 10

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. The amount of revenue collected by the government from the tariff is
A)$200.
B)$400.
C)$500.
D)$600.

Accepted Answer

The answer of Figure 9-6
The figure illustrates the market for...

Question 11

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. With trade, the price of tricycles in this country is
A)$11, with 200 tricycles produced in this country and another 320 tricycles imported.
B)$11, with 360 tricycles produced in this country and another 160 tricycles imported.
C)$19, with 200 tricycles produced in this country and another 160 tricycles imported.
D)$19, with 360 tricycles produced in this country and another 320 tricycles imported.

Accepted Answer

The answer of Figure 9-5
The figure illustrates the market for...

Question 12

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," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?
A)Incomes of domestic citizens increase, and tricycles are a normal good.
B)Within this country, the price of a substitute for tricycles decreases.
C)Within this country, the price of a complement to tricycles decreases.
D)Wages increase for domestic workers who produce tricycles.

Accepted Answer

The answer of Figure 9-5
The figure illustrates the market for...

Question 13

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. The increase in total surplus resulting from trade is
A)$640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120.
B)$1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240.
C)$2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000.
D)$2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480.

Accepted Answer

The increase in total surplus resulting from trade is the sum of the increase in consumer surplus and the decrease in producer surplus. In this case, consumer surplus increases from $2,880 to $6,400 ($3,520 increase), while producer surplus falls from $4,480 to $2,240 ($2,240 decrease). Therefore, the total surplus increases by $1,280 ($3,520 - $2,240).

Question 14

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by
A)$640.
B)$1,280.
C)$2,560.
D)$3,840.

Accepted Answer

Total surplus with trade is represented by the area A + B + C + D, which equals $1,920. Total surplus without trade is represented by the area A + E, which equals $640. Therefore, total surplus with trade exceeds total surplus without trade by $1,280.

Question 15

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.

Accepted Answer

Free trade leads to an increase in the quantity of tricycles supplied globally, which reduces the price of tricycles for the domestic consumers. However, domestic producers face tougher competition from foreign companies, resulting in a decrease in their market share and profit. Therefore, while consumers gain, producers will suffer.

Question 16

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. With trade and without a tariff,
A)the domestic price is equal to the world price.
B)roses are sold at $4 in this market.
C)there is a shortage of 400 roses in this market.
D)this country imports 200 roses.

Accepted Answer

Without a tariff, the domestic price is equal to the world price. This can be seen in Figure 9-6 where the intersect point of the supply and demand curve (which determines the domestic price) is on the same level as the world price line.

Question 17

Figure 9-6
The figure illustrates the market for roses in a country. 
-Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers
A)gain $100 of producer surplus.
B)gain $150 of producer surplus.
C)gain $200 of producer surplus.
D)gain $300 of producer surplus.

Accepted Answer

The answer of Figure 9-6
The figure illustrates the market for...

Question 18

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. With trade, producer surplus is
A)$500.
B)$1,000.
C)$1,500.
D)$2,000.

Accepted Answer

The answer of Figure 9-5
The figure illustrates the market for...

Question 19

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. Without trade, total surplus amounts to
A)$810.
B)$1,620.
C)$3,240.
D)$6,480.

Accepted Answer

The answer of Figure 9-5
The figure illustrates the market for...

Question 20

Figure 9-5
The figure illustrates the market for tricycles in a country. 
-Refer to Figure 9-5. With trade, total surplus is
A)$3,240.
B)$6,480.
C)$7,760.
D)$15,520.

Accepted Answer

With trade, the domestic quantity supplied decreases to 40 tricycles, while the quantity demanded increases to 220 tricycles. The world price is $80, which is below the domestic equilibrium price of $100. As a result, imports of 180 tricycles are made, and there is a deadweight loss of $520. Consumer surplus increases by $7,600 ($9,000-$1,400), producer surplus decreases by $1,960 ($4,000-$2,040-$520), and there is a net gain in total surplus of $5,640 ($7,600-$1,960). Thus, the total surplus with trade is $7,760 ($1,400+$4,000+$2,040+$520).

Quiz 9: Application: International Trade

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The size of the tariff on roses is

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

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. Before the tariff is imposed, this 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,

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. Without trade, the equilibrium price of roses is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, consumer surplus is

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals

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?

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The imposition of a tariff on roses

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The amount of revenue collected by the government from the tariff is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, the price of tricycles in this country is

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," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. The increase in total surplus resulting from trade is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by

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,

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. With trade and without a tariff,

Figure 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, producer surplus is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. Without trade, total surplus amounts to

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. With trade, total surplus is