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Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8.The price corresponding to the horizontal dotted line on the graph represents the price of cars A) after trade is allowed. B) before trade is allowed. C) that maximizes total surplus when trade is allowed. D) that minimizes the well-being of domestic car producers when trade is allowed. -Refer to Figure 9-8.The price corresponding to the horizontal dotted line on the graph represents the price of cars


A) after trade is allowed.
B) before trade is allowed.
C) that maximizes total surplus when trade is allowed.
D) that minimizes the well-being of domestic car producers when trade is allowed.

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

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The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

A) True
B) False

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Figure 9-13 Figure 9-13 -Refer to Figure 9-13.Producer surplus before trade is A) $3,600. B) $4,400. C) $5,200. D) $6,600. -Refer to Figure 9-13.Producer surplus before trade is


A) $3,600.
B) $4,400.
C) $5,200.
D) $6,600.

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

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If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.

A) True
B) False

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Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of beans increases to equal the world price of beans,then


A) that country becomes an exporter of beans.
B) that country has a comparative advantage in producing beans.
C) at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country.
D) All of the above are correct.

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

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Figure 9-9 Figure 9-9 -Refer to Figure 9-9.The change in total surplus in this market because of trade is A) D, and this area represents a loss of total surplus because of trade. B) D, and this area represents a gain in total surplus because of trade. C) B + D, and this area represents a loss of total surplus because of trade. D) B + D, and this area represents a gain in total surplus because of trade. -Refer to Figure 9-9.The change in total surplus in this market because of trade is


A) D, and this area represents a loss of total surplus because of trade.
B) D, and this area represents a gain in total surplus because of trade.
C) B + D, and this area represents a loss of total surplus because of trade.
D) B + D, and this area represents a gain in total surplus because of trade.

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

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Figure 9-12 Figure 9-12 -Refer to Figure 9-12.With trade,the domestic price and domestic quantity demanded are A) $27 and 400. B) $27 and 800. C) $21 and 400. D) $21 and 600. -Refer to Figure 9-12.With trade,the domestic price and domestic quantity demanded are


A) $27 and 400.
B) $27 and 800.
C) $21 and 400.
D) $21 and 600.

E) All of the above
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,if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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,if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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,if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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,if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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,if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. 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,if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off. B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off. D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off. again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $45.Then,if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,


A) domestic producers of cardboard become better off and domestic consumers of cardboard become better off.
B) domestic producers of cardboard become better off and domestic consumers of cardboard become worse off.
C) domestic producers of cardboard become worse off and domestic consumers of cardboard become better off.
D) domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.

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

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An important factor in the decline of the U.S.textile industry over the past 100 or so years is


A) foreign competitors that can produce quality textile goods at low cost.
B) lower prices of goods that are substitutes for clothing.
C) a decrease in Americans' demand for clothing, due to increased incomes and the fact that clothing is an inferior good.
D) the fact that the minimum wage in the U.S. has failed to keep pace with the cost of living.

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

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About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?


A) 54 percent
B) 72 percent
C) 89 percent
D) 97 percent

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

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Which of the following is not a commonly-advanced argument for trade restrictions?


A) the jobs argument
B) the national-security argument
C) the infant-industry argument
D) the efficiency argument

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

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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 Boxland's gains from international trade in cardboard amount to A) $145. B) $160. C) $210. D) $320. 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 Boxland's gains from international trade in cardboard amount to A) $145. B) $160. C) $210. D) $320. 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 $60.Then Boxland's gains from international trade in cardboard amount to A) $145. B) $160. C) $210. D) $320. 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 Boxland's gains from international trade in cardboard amount to A) $145. B) $160. C) $210. D) $320. 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 Boxland's gains from international trade in cardboard amount to A) $145. B) $160. C) $210. D) $320. 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 $60.Then Boxland's gains from international trade in cardboard amount to A) $145. B) $160. C) $210. D) $320. again represents the price of a ton of cardboard. -Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then Boxland's gains from international trade in cardboard amount to


A) $145.
B) $160.
C) $210.
D) $320.

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

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Suppose a certain country imposes a tariff on a good.Which of the following results of the tariff is possible?


A) Consumer surplus decreases by $100; producer surplus increases by $100; and government revenue from the tariff amounts to $50.
B) Consumer surplus decreases by $200; producer surplus increases by $100; and government revenue from the tariff amounts to $50.
C) Consumer surplus increases by $100; producer surplus decreases by $200; and government revenue from the tariff amounts to $50.
D) Consumer surplus decreases by $50; producer surplus increases by $200; and government revenue from the tariff amounts to $150.

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

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If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies,the United States will be


A) better off no matter how Honduras responds.
B) better off if Honduras gives in, and will be no worse off if it doesn't.
C) worse off if Honduras doesn't give in to the threat.
D) worse off no matter how Honduras responds.

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

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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.Given that Vietnam is a small country,it is apparent from the figure that A) Vietnam will export rice if trade is allowed. B) Vietnam will import rice if trade is allowed. C) Vietnam has nothing to gain either by importing or exporting rice. D) the world price will fall if Vietnam begins to allow its citizens to trade with other countries. -Refer to Figure 9-20.Given that Vietnam is a small country,it is apparent from the figure that


A) Vietnam will export rice if trade is allowed.
B) Vietnam will import rice if trade is allowed.
C) Vietnam has nothing to gain either by importing or exporting rice.
D) the world price will fall if Vietnam begins to allow its citizens to trade with other countries.

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

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For any country that allows free trade,


A) domestic quantity demanded is equal to domestic quantity supplied at the world price.
B) domestic quantity demanded is greater than domestic quantity supplied at the world price.
C) both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported.
D) the domestic price is equal to the world price.

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

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A tax on an imported good is called a


A) quota.
B) tariff.
C) supply tax.
D) trade tax.

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

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"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the


A) national-security argument.
B) infant-industry argument.
C) unfair-competition argument.
D) jobs argument.

E) B) and D)
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 Welsh producer surplus with trade? A) Producer surplus with trade = (1/2) P0Q0. B) Producer surplus with trade = (1/2) P1Q1. C) Producer surplus with trade = (1/2) P1Q2. D) None of the above is correct. -Refer to Figure 9-7.Which of the following is a valid equation for Welsh producer surplus with trade?


A) Producer surplus with trade = (1/2) P0Q0.
B) Producer surplus with trade = (1/2) P1Q1.
C) Producer surplus with trade = (1/2) P1Q2.
D) None of the above is correct.

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

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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,the


A) price paid by American consumers of peaches is unchanged relative to the no-trade situation.
B) total well-being of American producers of peaches is diminished relative to the no-trade situation.
C) total well-being of American consumers of peaches is enhanced relative to the no-trade situation.
D) total well-being of the United States is enhanced relative to the no-trade situation.

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

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