Question 1

Use the following to answer questions: 
-(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.If the world price equals $100 and there is free trade,producer surplus:

Accepted Answer

With free trade and a world price of $100, the domestic price will also be $100. This is below the domestic equilibrium price of $125, which means that domestic producers will not be able to sell as much and some may even go out of business, causing producer surplus to fall.

Question 2

Use the following to answer questions: 
-A blockade at the border between the United States and Canada prevents the entry of all lumber products to the United States from Canada.This blockade will:

Accepted Answer

The blockade will decrease the supply of lumber products to the United States, causing the price of lumber products in the United States to increase. This will lead to a decrease in producer surplus for Canadian lumber producers since they are not able to sell their products in the United States at the higher price. However, there is not enough information to determine the effects on consumer surplus or total surplus.

Question 3

Use the following to answer questions: -(Figure: The Market for iPhones)Use Figure: The Market for iPhones.Assume that P_A is the autarky price,P_W is the world price,and D and S represent domestic demand and supply,respectively.Producer surplus in free trade equals the area:

Accepted Answer

The answer of Use the following to answer questions: 
-(Figure:...

Question 4

Canada produces lettuce but can also import it.If Canada imports some lettuce:

Accepted Answer

If Canada imports lettuce, it means that the world price is lower than the domestic price. Otherwise, it would not be economically beneficial for Canada to import lettuce. Therefore, the best choice is B. The other options are not applicable in this scenario.

Question 5

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _____ and domestic consumption will _____.

Accepted Answer

When a nation opens to trade and starts importing a good, it means that it can now buy the good at a lower price from other countries rather than producing it domestically. This increased supply of the imported good in the domestic market will lead to a fall in the domestic price of the good. As a result, domestic consumers will increase their consumption of the good since it is now cheaper. Therefore, the correct choice is C, where the domestic price falls and domestic consumption rises.

Question 6

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras)Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Consumer surplus after international trade is equal to the area:

Accepted Answer

Consumer surplus is the area above the world price and below the demand curve. After international trade at the world price, consumer surplus includes areas A, B, D, and E.

Question 7

Use the following to answer questions: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.If the world price equals $100 and there is free trade,this country:

Accepted Answer

At a world price of $100, the domestic supply curve intersects the quantity axis at 250,000 and the domestic demand curve intersects the quantity axis at 100,000. Therefore, the country will demand 100,000 Beats by Dre at the world price of $100, but its domestic suppliers will only produce 250,000 - 100,000 = 150,000 Beats by Dre. Thus, the country will have to import 150,000 Beats by Dre to meet its demand.

Question 8

Use the following to answer questions: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.If the world price equals $100 and there is free trade,what is the gain in consumer surplus?

Accepted Answer

With free trade, the domestic consumers can purchase headphones at the world price of $100 instead of the higher domestic price of $125. The gain in consumer surplus is the area of the triangle formed by the original domestic price, the new world price, and the quantity purchased. This area is (1/2)(125-100)(16)= $2.25 million.

Question 9

Use the following to answer questions: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.In the market for Beats by Dre,the autarky price equals:

Accepted Answer

The autarky price is the intersection of the domestic supply and demand curves. In this case, that intersection occurs at a price of $110.

Question 10

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras)Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Total surplus before international trade is equal to the area:

Accepted Answer

Total surplus in a market is the sum of consumer surplus and producer surplus. Before international trade (at autarky price), the total surplus includes the consumer surplus (area above the price and below the demand curve) and the producer surplus (area below the price and above the supply curve). In this case, it includes areas A (consumer surplus), B (producer surplus), and C (also part of the producer surplus).

Question 11

Use the following to answer questions: Figure: The Market for Oranges in South Africa -(Figure: The Market for Oranges in South Africa)Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P₁.When the economy is opened to trade,the price falls to P_W and the change in total surplus is area:

Accepted Answer

When the price falls from P₁ to P_W, consumer surplus increases by area O + P and producer surplus decreases by area O, resulting in a net increase in total surplus by area P. Therefore, the change in total surplus is area O + P.

Question 12

Use the following to answer questions: -(Figure: The Market for iPhones)Use Figure: The Market for iPhones.Assume that P_A is the autarky price,P_W is the world price,and D and S represent domestic demand and supply,respectively.The loss of producer surplus when the market moves from autarky to free trade equals the area:

Accepted Answer

The answer of Use the following to answer questions: 
-(Figure:...

Question 13

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras)Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Total surplus after international trade _____ by the area _____.

Accepted Answer

When a country engages in international trade and starts importing a good, its domestic price falls to the world price. In the figure, the autarky price is P_A and the world price is P_W. After international trade, the domestic price falls from P_A to P_W, and the quantity demanded increases from Q1 to Q2. As a result, total surplus increases by the area of D + E. Therefore, the correct answer is D.

Question 14

Use the following to answer questions:
Figure: The Domestic Supply and Demand for SUVs in Canada 
-(Figure: The Domestic Supply and Demand for SUVs in Canada)Use Figure: The Domestic Supply and Demand for SUVs in Canada.Suppose that the world price equals $50 000 and there is free trade.Canada would _____ SUVs.

Accepted Answer

At a world price of $50 000, the quantity demanded in Canada exceeds the quantity supplied domestically, creating a shortage. With free trade, Canadian producers will increase supply to meet world prices, resulting in an increase in the quantity supplied to 11 million. At this level of supply, Canadian demand is satisfied, and 6 million SUVs will be exported to other countries.

Question 15

Use the following to answer questions: Figure: The Market for Oranges in South Africa -(Figure: The Market for Oranges in South Africa)Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P₁.When the economy is opened to trade,the price falls to P_W.South Africa will _____ oranges,and the volume of trade will equal _____.

Accepted Answer

When the economy opens to trade and the price falls, it indicates that the world price is lower than the domestic price in autarky, leading to imports. The volume of trade is the difference between the quantity demanded at the world price and the quantity supplied domestically at that price.

Question 16

Use the following to answer questions: -(Figure: The Market for iPhones)Use Figure: The Market for iPhones.Assume that P_A is the autarky price,P_W is the world price,and D and S represent domestic demand and supply,respectively.Consumer surplus in free trade equals the area:

Accepted Answer

In free trade, the price paid by consumers would be the world price (P_W), which is lower than the autarky price (P_A). Therefore, consumer surplus would increase by the area -A, -B, and -C. However, there would be a loss of domestic producer surplus, which would decrease by the area -D. The total gain in consumer surplus plus the loss in producer surplus is the area A + B + C - D. Therefore, choice C is correct. Choices A and B are incorrect because they only consider the gain in consumer surplus without accounting for the loss in producer surplus. Choice D is incorrect because it does not include the gain in consumer surplus from free trade.

Question 17

Canada can produce wine domestically,but it can also import wine if the world price is lower than the domestic price.If Canada imports wine,consumer surplus will _____ by _____ the _____ in producer surplus;total surplus will _____.

Accepted Answer

When Canada imports wine at a lower world price, consumer surplus increases more than the decrease in producer surplus, leading to an overall increase in total surplus.

Question 18

Use the following to answer questions: Figure: The Market for Oranges in South Africa -(Figure: The Market for Oranges in South Africa)Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P₁.When the economy is opened to trade,the price falls to P_W and consumer surplus will _____ to area _____.

Accepted Answer

When the economy opens to trade and the price falls, consumer surplus increases as consumers can buy oranges at a lower price. The consumer surplus expands to include areas M, N, O, and P.

Question 19

Use the following to answer questions: Figure: The Market for Oranges in South Africa -(Figure: The Market for Oranges in South Africa)Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P₁.When the economy is opened to trade,the price falls to P_W and producer surplus will _____ to area _____.

Accepted Answer

When the price falls from P₁ to P_W, producer surplus decreases from area M + N + O + P + Q to area M + N + O, indicating a decrease in welfare for domestic producers. Therefore, option A and C are incorrect. Option D implies that both consumer and producer surplus are increasing, which may not be true. Hence, B is the correct option.

Question 20

Use the following to answer questions: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.If the world price equals $100 and there is free trade,domestic consumer surplus _____ and domestic producer surplus _____ compared with autarky.

Accepted Answer

With free trade, the domestic market will consume at the world price of $100, which is lower than the autarky price of $120. As a result, domestic consumer surplus increases, while domestic producer surplus decreases.

Quiz 5: International Trade

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.If the world price equals $100 and there is free trade,producer surplus:

Use the following to answer questions: -A blockade at the border between the United States and Canada prevents the entry of all lumber products to the United States from Canada.This blockade will:

Use the following to answer questions: -(Figure: The Market for iPhones) Use Figure: The Market for iPhones.Assume that P_A is the autarky price,P_W is the world price,and D and S represent domestic demand and supply,respectively.Producer surplus in free trade equals the area:

Canada produces lettuce but can also import it.If Canada imports some lettuce:

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _ and domestic consumption will _.

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Consumer surplus after international trade is equal to the area:

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.If the world price equals $100 and there is free trade,this country:

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.In the market for Beats by Dre,the autarky price equals:

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Total surplus before international trade is equal to the area:

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Total surplus after international trade _ by the area _.

Use the following to answer questions: -(Figure: The Market for iPhones) Use Figure: The Market for iPhones.Assume that P_A is the autarky price,P_W is the world price,and D and S represent domestic demand and supply,respectively.Consumer surplus in free trade equals the area:

Canada can produce wine domestically,but it can also import wine if the world price is lower than the domestic price.If Canada imports wine,consumer surplus will ___ by _ the _ in producer surplus;total surplus will ___.

Quiz 5: International Trade

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.If the world price equals $100 and there is free trade,producer surplus:

Use the following to answer questions: -A blockade at the border between the United States and Canada prevents the entry of all lumber products to the United States from Canada.This blockade will:

Use the following to answer questions: -(Figure: The Market for iPhones) Use Figure: The Market for iPhones.Assume that PA is the autarky price,PW is the world price,and D and S represent domestic demand and supply,respectively.Producer surplus in free trade equals the area:

Canada produces lettuce but can also import it.If Canada imports some lettuce:

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _____ and domestic consumption will _____.

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that PA is the autarky price and PW is the world price.Consumer surplus after international trade is equal to the area:

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.Assume that Sd represents the domestic supply curve and Dd represents the domestic demand curve.If the world price equals $100 and there is free trade,this country:

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.Assume that Sd represents the domestic supply curve and Dd represents the domestic demand curve.In the market for Beats by Dre,the autarky price equals:

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that PA is the autarky price and PW is the world price.Total surplus before international trade is equal to the area:

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that PA is the autarky price and PW is the world price.Total surplus after international trade _____ by the area _____.

Use the following to answer questions: -(Figure: The Market for iPhones) Use Figure: The Market for iPhones.Assume that PA is the autarky price,PW is the world price,and D and S represent domestic demand and supply,respectively.Consumer surplus in free trade equals the area:

Canada can produce wine domestically,but it can also import wine if the world price is lower than the domestic price.If Canada imports wine,consumer surplus will _____ by _____ the _____ in producer surplus;total surplus will _____.

Use the following to answer questions: -(Figure: The Market for iPhones) Use Figure: The Market for iPhones.Assume that P_A is the autarky price,P_W is the world price,and D and S represent domestic demand and supply,respectively.Producer surplus in free trade equals the area:

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _ and domestic consumption will _.

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Consumer surplus after international trade is equal to the area:

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.If the world price equals $100 and there is free trade,this country:

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.In the market for Beats by Dre,the autarky price equals:

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Total surplus before international trade is equal to the area:

Use the following to answer questions: -(Figure: Domestic Market for Digital Cameras) Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Total surplus after international trade _ by the area _.

Use the following to answer questions: -(Figure: The Market for iPhones) Use Figure: The Market for iPhones.Assume that P_A is the autarky price,P_W is the world price,and D and S represent domestic demand and supply,respectively.Consumer surplus in free trade equals the area:

Canada can produce wine domestically,but it can also import wine if the world price is lower than the domestic price.If Canada imports wine,consumer surplus will ___ by _ the _ in producer surplus;total surplus will ___.