Question 1

Figure 9-2. The domestic country is China.
 
-Refer to Figure 9-2.With trade,China will

Accepted Answer

In a trade scenario, China would specialize in producing pencils, as they have a comparative advantage in that product. Thus, they would export pencils and import pencil sharpeners. From the graph, the world price of pencil sharpeners is 0.8 pencils, which is lower than China's domestic price of 1 pencil. Therefore, China would export 250 pencil sharpeners to take advantage of the higher world price, and import 200 pencils (the equivalent value of 250 sharpeners at the world price).

Question 2

Figure 9-2. The domestic country is China.
 
-Refer to Figure 9-2.With trade,producer surplus in China is

Accepted Answer

The answer of Figure 9-2. The domestic country is China.
...

Question 3

Figure 9-1
 
-Refer to Figure 9-1.With free trade,this country will

Accepted Answer

The answer of Figure 9-1
 
-Refer to Figure 9-1.With free...

Question 4

Within a country,the domestic price of a product will equal the world price if

Accepted Answer

If the country allows free trade, it will be able to freely import and export the product, leading to competition in the domestic market and the domestic price will eventually equal the world price. Trade restrictions, choosing to only import or only export the product, will prevent this from happening.

Question 5

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

Accepted Answer

The answer of Suppose a country abandons a no-trade policy...

Question 6

Figure 9-1
 
-Refer to Figure 9-1.The world price for baskets represents

Accepted Answer

The answer of Figure 9-1
 
-Refer to Figure 9-1.The world...

Question 7

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

Accepted Answer

When the domestic price of pistachios decreases to equal the world price of pistachios, it indicates that importing pistachios from other countries has become profitable for the domestic market. Hence, the country becomes an importer of pistachios.

Question 8

Figure 9-1
 
-Refer to Figure 9-1.With free trade,consumer surplus is

Accepted Answer

The answer of Figure 9-1
 
-Refer to Figure 9-1.With free...

Question 9

Figure 9-1
 
-Refer to Figure 9-1.Without trade,producer surplus is

Accepted Answer

Producer surplus is the difference between the price producers receive for their goods and the minimum price they are willing to accept. In Figure 9-1, the price producers receive is $10, and the minimum price they are willing to accept is $5. Therefore, producer surplus is $10 - $5 = $5.

Question 10

For any country that allows free trade,

Accepted Answer

In a country that allows free trade, the domestic price is equal to the world price. This is because there are no trade barriers or taxes that would cause the domestic price to differ from the world price. As a result, buyers and sellers in that country have access to goods and services at the world price, which ensures that domestic quantity demanded is equal to domestic quantity supplied at the world price. This leads to an efficient allocation of resources and maximizes consumer and producer surplus.

Question 11

Figure 9-1
 
-Refer to Figure 9-1.As a result of trade,total surplus increases by

Accepted Answer

Total surplus is the sum of consumer surplus and producer surplus. Before trade, consumer surplus is shown as the triangle above the price line and below the demand curve (which measures the willingness of consumers to pay), and producer surplus is shown as the triangle below the price line and above the supply curve (which measures the cost to producers). The sum of these two triangles is the total surplus before trade, which is $275 ((200-160)/2 x 15 + (160-100)/2 x 15). 
After trade, the new equilibrium price and quantity are shown as $165 and 20, respectively. The new consumer surplus is the triangle above the price line and below the demand curve up to the new quantity, which is $200 ((200-165)/2 x 20). The new producer surplus is the triangle below the price line and above the supply curve up to the new quantity, which is $77.50 ((165-100)/2 x 20). The sum of these two triangles is the new total surplus, which is $277.50 ($200 + $77.50). The increase in total surplus due to trade is the difference between the new and old total surplus, which is $2.50 ($277.50 - $275). Therefore, the correct answer is B.

Question 12

Figure 9-1
 
-Refer to Figure 9-1.With free trade,producer surplus is

Accepted Answer

The answer of Figure 9-1
 
-Refer to Figure 9-1.With free...

Question 13

The world price of a pound of T-bone steak is $9.00.Before Guatemala allowed trade in beef,the price of a pound of T-bone steak there was $12.00.Once Guatemala began allowing trade in beef with other countries,Guatemala began

Accepted Answer

When Guatemala allows trade in beef with other countries, it opens up the market and allows for competition. As a result, the price of T-bone steak in Guatemala will ultimately be determined by the global market price, which is $9.00 per pound. If Guatemala imports T-bone steaks, it will have to pay the world price of $9.00 per pound. This will cause the price per pound in Guatemala to decrease to $9.00. Therefore, the correct choice is D.

Question 14

Figure 9-1
 
-Refer to Figure 9-1.This country

Accepted Answer

The country represented in Figure 9-1 has a lower opportunity cost of producing baskets compared to chairs, indicating a comparative advantage in basket production. Therefore, it should export baskets and import chairs to maximize economic efficiency. Additionally, since the country is small relative to the world economy and cannot affect the world price of baskets, it is a price taker.

Question 15

The world price of a simple electronic calculator is $5.00.Before Singapore allowed trade in calculators,the price of a calculator there was $4.00.Once Singapore began allowing trade in calculators with other countries,Singapore began

Accepted Answer

The answer of The world price of a simple electronic...

Question 16

Figure 9-1
 
-Refer to Figure 9-1.If this country chooses to trade,the price of baskets in this country will be

Accepted Answer

The country will specialize in producing cloth and will export cloth to the other country. In return, it will import baskets from the other country. The price of baskets in this country will be $10, and 40 baskets will be sold domestically.

Question 17

Figure 9-2. The domestic country is China.
 
-Refer to Figure 9-2.With no international trade,

Accepted Answer

The answer of Figure 9-2. The domestic country is China.
...

Question 18

Figure 9-1
 
-Refer to Figure 9-1.Without trade,consumer surplus is

Accepted Answer

The answer of Figure 9-1
 
-Refer to Figure 9-1.Without trade,consumer...

Question 19

Figure 9-2. The domestic country is China.
 
-Refer to Figure 9-2.If China were to abandon a no-trade policy in favor of a free-trade policy,

Accepted Answer

The answer of Figure 9-2. The domestic country is China.
...

Question 20

Figure 9-1
 
-Refer to Figure 9-1.At the world price and with free trade,

Accepted Answer

At the world price, the domestic quantity of baskets supplied is equal to the domestic quantity of baskets demanded, indicating that the basket market is in equilibrium. Option A is incorrect because there is no indication that the quantity demanded is greater than the quantity supplied. Option C is incorrect because there is no information provided to determine the elasticity of demand. Option D may not be true for all producers and consumers, as some may be negatively affected by free trade.

Quiz 9: Application: International Trade

Figure 9-2. The domestic country is China. -Refer to Figure 9-2.With trade,China will

Figure 9-2. The domestic country is China. -Refer to Figure 9-2.With trade,producer surplus in China is

Figure 9-1 -Refer to Figure 9-1.With free trade,this country will

Within a country,the domestic price of a product will equal the world price if

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

Figure 9-1 -Refer to Figure 9-1.The world price for baskets represents

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

Figure 9-1 -Refer to Figure 9-1.With free trade,consumer surplus is

Figure 9-1 -Refer to Figure 9-1.Without trade,producer surplus is

For any country that allows free trade,

Figure 9-1 -Refer to Figure 9-1.As a result of trade,total surplus increases by

Figure 9-1 -Refer to Figure 9-1.With free trade,producer surplus is

The world price of a pound of T-bone steak is $9.00.Before Guatemala allowed trade in beef,the price of a pound of T-bone steak there was $12.00.Once Guatemala began allowing trade in beef with other countries,Guatemala began

Figure 9-1 -Refer to Figure 9-1.This country

The world price of a simple electronic calculator is $5.00.Before Singapore allowed trade in calculators,the price of a calculator there was $4.00.Once Singapore began allowing trade in calculators with other countries,Singapore began

Figure 9-1 -Refer to Figure 9-1.If this country chooses to trade,the price of baskets in this country will be

Figure 9-2. The domestic country is China. -Refer to Figure 9-2.With no international trade,

Figure 9-1 -Refer to Figure 9-1.Without trade,consumer surplus is

Figure 9-2. The domestic country is China. -Refer to Figure 9-2.If China were to abandon a no-trade policy in favor of a free-trade policy,

Figure 9-1 -Refer to Figure 9-1.At the world price and with free trade,