Chapter 9Application: International TradeTest A1. When the United States engages in international trade with China,a. it is an equal tradeoff so neither country benefits nor loses.b. China reaps economic benefits and the United States loses.c. both China and the United States reap economic benefits.d. China loses and the United States reaps economic benefits.ANSWER: c. both China and the United States reap economic benefits.TYPE: M KEY1: C OBJECTIVE: 1 RANDOM: Y2. Countries usually impose restrictions on free foreign trade to protecta. domestic consumers.b. foreign consumers.c. foreign producers.d. domestic producers.ANSWER: d. domestic producers.TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y3. If a country allows trade and the domestic price of a good is higher than the world price,a. the country will become an importer of the good.b. the country will become an exporter of the good.c. the country will neither export nor import the good.d. additional information about demand is needed to determine whether the country will export orimport the good.ANSWER: a. the country will become an importer of the good.TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 1 RANDOM: Y4. A country has a comparative advantage in a product if the world price isa. equal to its domestic price.b. higher than its domestic price.c. lower than its domestic price.d. There is no way to tell by comparing the world price with the domestic price.ANSWER: b. higher than its domestic price.TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y5. When a country allows trade and becomes an exporter of a good,a. both domestic producers and domestic consumers are better off.b. both domestic producers and domestic consumers are worse off.c. domestic producers are better off, and domestic consumers are worse off.d. domestic producers are worse off, and domestic consumers are better off.ANSWER: c. domestic producers are better off, and domestic consumers are worse off.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y96 ❖ Chapter 9/Application: International Trade6. When a country allows trade and becomes an importer of a good,a. everyone in the country benefits.b. everyone 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.ANSWER: d. the gains of the winners exceed the losses of the losers.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y7. When a country allows free trade,a. the domestic price will equal the world price.b. the domestic price will be lower than the world price.c. the domestic price will be greater than the world price.d. it does not matter what the world price is, the domestic price is the prevailing price. ANSWER: a. the domestic price will equal the world price.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: YThe before-trade domestic price of pineapple in the United States is $500 per ton. The world price of pineapple is $600 per ton. The United States is a price-taker in the pineapple market.8. According to this scenario, if trade in pineapple is allowed, the price of pineapple in the United Statesa. will decrease.b. will increase.c. will be unaffected.d. could increase or decrease.ANSWER: b. will increase.TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 4 RANDOM: Y9. According to this scenario, if trade in pineapple is allowed, total well-being in the United Statesa. will decrease.b. will increase.c. will be unaffected.d. could increase or decrease.ANSWER: b. will increase.TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 4 RANDOM: YChapter 9/Application: International Trade ❖ 9710. According to the graph, Argentina woulda. export Q3– Q1 saddles.b. export Q2– Q1 saddles.c. import Q3– Q1 saddles.d. import Q3– Q2 saddles.ANSWER: a. export Q3– Q1 saddles.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 8 RANDOM: Y11. According to the graph, consumer surplus in Argentina after trade is equal toa. A.b. C.c. A + B.d. A + B + D.ANSWER: a. A.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 8 RANDOM: Y12. According to the graph, the change in total surplus in Argentina because of trade is equal toa. F.b. A + B.c. B + D.d. D + E.ANSWER: a. F.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 8 RANDOM: Y98 ❖ Chapter 9/Application: International Trade13. According to the graph, Spain woulda. export Q3 – Q1 barrels of oil.b. export Q2 – Q1 barrels of oil.c. import Q3– Q1 barrels of oil.d. import Q3– Q2 barrels of oil.ANSWER: c. import Q3– Q1 barrels of oil.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 1 RANDOM: Y14. According to the graph, producer surplus in Spain after trade would be equal toa. C.b. C + B.c. A + B + C.d. B + C + D + E.ANSWER: a. C.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 1 RANDOM: N15. According to the graph, producer surplus plus consumer surplus in Spain after trade is equal toa. A + B.b. A + B + C.c. B + C + D.d. A + B + C + D + E.ANSWER: d. A + B + C + D + E.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 1 RANDOM: NChapter 9/Application: International Trade ❖ 9916. A tariff on a product makes domestic sellersa. better off and domestic buyers better off.b. worse off and domestic buyers better off.c. better off and domestic buyers worse off.d. worse off and domestic buyers worse off.ANSWER: c. better off and domestic buyers worse off.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 4 RANDOM: YThe United States is an importer of down pillows. The world price of these pillows is $25. The United States imposes a $10 tariff on pillows. The United States is a price-taker in the pillow market.17. As a result of the tariff the U.S. price of pillows will bea. $25 and the quantity of pillows purchased will increase.b. $35 and the quantity of pillows purchased will increase.c. $25 and the quantity of pillows purchased will decrease.d. $35 and the quantity of pillows purchased will decrease.ANSWER: d. $35 and the quantity of pillows purchased will decrease.TYPE: M KEY1: E SECTION: 2 OBJECTIVE: 4 INSTRUCTION: 2 RANDOM: N18. In the figure shown, consumer surplus after the tariff would be equal toa. A.b. A + B.c. A + C + G.d. A + B + C + D +E + F.ANSWER: b. A + B.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 4 GRAPH FORMAT: M QUESTION GRAPH: RANDOM: Y19. In the figure shown, as a result of the tariff, government tariff revenue would be equal toa. B.b. E.c. D + F.d. B + D + E + F.ANSWER: b. E.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 4 GRAPH FORMAT: M QUESTION GRAPH: RANDOM: Y100 ❖ Chapter 9/Application: International Trade20. When a quota is imposed on a market thea. supply curve (above the world price) shifts to the left by the amount of the quota.b. supply curve (above the world price) shifts to the right by the amount of the quota.c. demand curve (above the world price) shifts to the right by the amount of the quota.d. demand curve (above the world price) shifts to the left by the amount of the quota. ANSWER: b. supply curve (above the world price) shifts to the right by the amount of the quota. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 4 RANDOM: Y21. A tariff and an import quota will botha. increase the quantity of imports and raise domestic price.b. increase the quantity of imports and lower domestic price.c. reduce the quantity of imports and lower domestic price.d. reduce the quantity of imports and raise domestic price.ANSWER: d. reduce the quantity of imports and raise domestic price.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 4 RANDOM: Y22. In the figure shown, after the quota, imports would be equal toa. Q4 minus Q1.b. Q3 minus Q2.c. Q3 minus Q2.d. Q2 minus Q1.ANSWER: b. Q3 minus Q2.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 4 GRAPH FORMAT: M QUESTION GRAPH: RANDOM: Y23. In the figure shown, after the quota, deadweight loss would be equal toa. B.b. E.c. D + F.d. B + D + E + F.ANSWER: c. D + F.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 4 GRAPH FORMAT: M QUESTION GRAPH: RANDOM: YChapter 9/Application: International Trade ❖ 10124. Which of the following is NOT an argument for restricting trade?a. the jobs argumentb. the efficiency argumentc. the infant-industry argumentd. the national security argumentANSWER: b. the efficiency argumentTYPE: M KEY1: D SECTION: 3 OBJECTIVE: 5 RANDOM: Y25. The North American Free Trade Agreementa. increased trade restrictions among Canada, Mexico and the United States.b. reduced trade restrictions among Canada, Mexico and the United States.c. eliminated tariffs on imports to North America from the rest of the world.d. reduced trade restrictions among European countries.ANSWER: b. reduced trade restrictions among Canada, Mexico and the United States.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 5 RANDOM: Y1 ANSWER: c. both China and the United States reap economic benefits.TYPE: M KEY1: C OBJECTIVE: 1 RANDOM: Y2 ANSWER: d. domestic producers.TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y3 ANSWER: a. the country will become an importer of the good.TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 1 RANDOM: Y4 ANSWER: b. higher than its domestic price.TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y5 ANSWER: c. domestic producers are better off, and domestic consumers are worse off.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y6 ANSWER: d. the gains of the winners exceed the losses of the losers.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y7 ANSWER: a. the domestic price will equal the world price.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y8 ANSWER: b. will increase.TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 4 RANDOM: Y102 ❖ Chapter 9/Application: International Trade9 ANSWER: b. will increase.TYPE: M KEY1: T SECTION: 2 OBJECTIVE: 2 INSTRUCTION: 4 RANDOM: Y10 ANSWER: a. export Q3– Q1 saddles.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 8 RANDOM: Y11 ANSWER: a. A.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 8 RANDOM: Y12 ANSWER: a. F.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 8 RANDOM: Y13 ANSWER: c. import Q3– Q1 barrels of oil.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 1 RANDOM: Y14 ANSWER: a. C.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 1 RANDOM: N15 ANSWER: d. A + B + C + D + E.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 3 GRAPH FORMAT: M QUESTION GRAPH: INSTRUCTION: 1 RANDOM: N16 ANSWER: c. better-off and domestic buyers worse-off.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 4 RANDOM: Y17 ANSWER: d. $35 and the quantity of pillows purchased will decrease.TYPE: M KEY1: E SECTION: 2 OBJECTIVE: 4 INSTRUCTION: 2 RANDOM: N18 ANSWER: b. A + B.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 4 GRAPH FORMAT: M QUESTION GRAPH: RANDOM: YChapter 9/Application: International Trade ❖ 103 19 ANSWER: b. E.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 4 GRAPH FORMAT: M QUESTION GRAPH: RANDOM: Y20 ANSWER: b. supply curve (above the world price) shifts to the right by the amount of the quota. TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 4 RANDOM: Y21 ANSWER: d. reduce the quantity of imports and raise domestic price.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 4 RANDOM: Y22 ANSWER: b. Q3 minus Q2.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 4 GRAPH FORMAT: M QUESTION GRAPH: RANDOM: Y23 ANSWER: c. D + F.TYPE: M KEY1: G SECTION: 2 OBJECTIVE: 4 GRAPH FORMAT: M QUESTION GRAPH: RANDOM: Y24 ANSWER: b. the efficiency argumentTYPE: M KEY1: D SECTION: 3 OBJECTIVE: 5 RANDOM: Y25 ANSWER: b. reduced trade restrictions among Canada, Mexico and the United States.TYPE: M KEY1: D SECTION: 3 OBJECTIVE: 5 RANDOM: Y。