Question 1

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

Accepted Answer

Without a tariff, the domestic price will be equal to the world price, which is shown as $4 in the graph. Therefore, option A is correct. Option B is incorrect because $4 is the world price, not the price at which roses are sold in the domestic market. Option C is incorrect because there is no shortage or surplus indicated in the graph. Option D is incorrect because without a tariff, there is no need for the country to import or export roses as the domestic price is equal to the world price.

Question 2

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

Accepted Answer

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

Question 3

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

Accepted Answer

When the tariff is imposed, the domestic price of roses increases from $5 to $8. As a result, domestic consumers lose by $450 (calculated as 150 units multiplied by the $3 increase in price per unit). Domestic producers gain by $450 (calculated as 150 units sold at the new higher price of $8 per unit). The government collects revenue of $450 (calculated as 150 units multiplied by the $3 tariff per unit).

Question 4

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

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good and the price actually paid. With trade, the price of tricycles in the country will fall from $16 to $8, which increases consumer surplus. To find the new consumer surplus, we need to calculate the area of the triangle formed by the new equilibrium price ($8), the vertical axis (quantity axis), and the original demand curve.

The height of the triangle is $16 (the original price) - $8 (the new price) = $8.

The base of the triangle is the difference between the quantity demanded at the new price and the quantity demanded at the original price:

(300-100)/2 = 100.

Therefore, the area of the triangle and the new consumer surplus is:

(0.5)($8)(100) = $400.

Since there are 17 million potential consumers in the country, the total consumer surplus is:

$400 x 17,000,000 = $6,800,000,000 ($6.8 billion).

Therefore, the answer is C) $6,760.

Question 5

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

Accepted Answer

When a tariff is imposed, the price increases from $10 to $13. Domestic producers gain $3 per rose, which leads to an increase in quantity supplied from 100 to 150. The area of the triangle between the new supply curve and the new price ($13) represents the additional producer surplus gained, which is ($13-$10)*150/2 = $225. However, domestic producers lose $75 in consumer surplus due to the decrease in quantity demanded from 250 to 200. Therefore, the net gain in producer surplus is $225 - $75 = $150.

Question 6

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

Accepted Answer

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

Question 7

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

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. With trade, the price of tricycles in this country is

Accepted Answer

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

Question 9

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

Accepted Answer

To find the total surplus with trade, we need to calculate the area of the rectangle formed by the intersection of the demand and supply curves, which is $12 × 80 = $960. To find the total surplus without trade, we need to calculate the total surplus when the country is closed to trade, which is the area of the triangle formed by the intersection of the demand curve and the vertical axis plus the area of the triangle formed by the intersection of the supply curve and the horizontal axis, which is ($12 × 40)/2 + ($8 × 40)/2 = $320 + $160 = $480. Therefore, total surplus with trade exceeds total surplus without trade by ($960 - $480) = $480. However, since the country is both importing and exporting tricycles, we need to double this amount to get the total gain from trade, which is $480 × 2 = $960. Thus, the increase in total surplus with trade over total surplus without trade is $960 - $0 = $960. Therefore, the best choice is B.

Question 10

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an

Accepted Answer

Since the world price of fish is lower than the before-trade price of fish in Germany, Germany will import fish from other countries at the lower world price. The new price in Germany will be the same as the world price of $6.00 per pound. Therefore, Germany will become an importer of fish and the price of fish in Germany will be $6.00.

Question 11

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

Accepted Answer

Before the tariff is imposed, the country imports 400 roses, as shown by the difference between domestic quantity supplied (200 roses) and domestic quantity demanded (600 roses).

Question 12

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,

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

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. Using the data from the graph, the increase in consumer surplus is the difference between the maximum price consumers are willing to pay ($4,000) and the price they actually pay ($1,680), multiplied by the quantity imported (4,000 tricycles): (4,000-1,680) x 4,000 = $10,480, or $3,520 per year. The decrease in producer surplus is the difference between the minimum price producers are willing to accept ($3,120) and the price they actually receive ($1,680), multiplied by the quantity imported (4,000 tricycles): (3,120-1,680) x 4,000 = $5,360, or $2,240 per year. Adding these amounts together gives a total surplus increase of $1,280 per year.

Question 14

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?

Accepted Answer

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

Question 15

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

Accepted Answer

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

Question 16

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

Accepted Answer

With trade, the total surplus is the sum of consumer surplus and producer surplus. Consumer surplus is the area above the world price and below the demand curve, which is (14-9) x 280 = $1,400. Producer surplus is the area below the world price and above the supply curve, which is (9-4) x 280 = $1,400. Therefore, total surplus is $1,400 + $6,360 = $7,760.

Question 17

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

Accepted Answer

The imposition of a tariff on roses will increase their price in the domestic market, making domestic producers more competitive. As a result, the quantity of roses imported will decrease by 200, as shown by the shift in the red line to the left.

Question 18

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?

Accepted Answer

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

Question 19

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

Accepted Answer

The answer of Figure 9-6
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. If this country allows free trade in tricycles,

Accepted Answer

When the country allows free trade in tricycles, the price of tricycles will decrease from Pw to Pf due to increased competition from foreign producers. This will result in a gain for consumers, as they will be able to purchase tricycles at a lower price. However, domestic producers will lose as they will have to lower their prices in order to compete with foreign tricycle producers. The gain for consumers will be greater than the loss for producers. Therefore, consumers will gain more than producers will lose.

Quiz 9: Application: International Trade

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. The amount of revenue collected by the government from the tariff 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 9-5 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. 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 9-6 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, 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. Total surplus with trade exceeds total surplus without trade by

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an

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 9-5 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. 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 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. With trade, total surplus is

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 9-5 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 9-6 The figure illustrates the market for roses in a country. -Refer to Figure 9-6. The size of the tariff on roses is

Figure 9-5 The figure illustrates the market for tricycles in a country. -Refer to Figure 9-5. If this country allows free trade in tricycles,