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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to go from autarky to free trade, which of the following statements is true? Total surplus will increase by $42,000.Consumers will purchase 2,000 units.The country will export 9,000 units. A) I only B) I and II only C) III only D) I, II, and III If this economy were to go from autarky to free trade, which of the following statements is true? Total surplus will increase by $42,000.Consumers will purchase 2,000 units.The country will export 9,000 units.


A) I only
B) I and II only
C) III only
D) I, II, and III

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. If this economy decides to open to free trade and imposes a tariff, the domestic quantity demanded will: A) decrease from 1,500 units to 1,150 units. B) increase from 1,150 units to 1,500 units. C) increase from 815 units to 1,150 units. D) decrease from 1,150 units to 815 units. If this economy decides to open to free trade and imposes a tariff, the domestic quantity demanded will:


A) decrease from 1,500 units to 1,150 units.
B) increase from 1,150 units to 1,500 units.
C) increase from 815 units to 1,150 units.
D) decrease from 1,150 units to 815 units.

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

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Exports are goods and services that are:


A) produced in other countries and consumed domestically.
B) consumed in other countries and produced domestically.
C) produced and consumed in other countries.
D) produced and consumed domestically.

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

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. Which areas represent the amount of deadweight loss that would be created by the imposition of the tariff? A) I + L B) J + K C) I + J + K + L D) F + G + J + K Which areas represent the amount of deadweight loss that would be created by the imposition of the tariff?


A) I + L
B) J + K
C) I + J + K + L
D) F + G + J + K

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

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A country that produces and consumes a large amount of cell phones comparatively has just entered the world market. If the country becomes a net-importer of cell phones, we would expect that the world _______ curve will shift to the _______ more than the world _______ curve.


A) supply; right; demand
B) supply; left; demand
C) demand; right; supply
D) demand; left; supply

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

Correct Answer

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The increase in welfare, in both countries' experience, as a result of specialization and trade is called:


A) surplus enhancement.
B) exportation surplus.
C) gains from trade.
D) deadweight gain.

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. If this economy is operating under free trade, who would be in favor of a tariff? A) Domestic producers B) Domestic consumers C) Foreign producers D) Foreign governments If this economy is operating under free trade, who would be in favor of a tariff?


A) Domestic producers
B) Domestic consumers
C) Foreign producers
D) Foreign governments

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to open to trade, which of the following would not occur? A) Surplus would increase overall. B) Producer surplus would decrease. C) Surplus would transfer from producers to consumers. D) The areas of C + E + F + G would become deadweight loss. If this economy were to open to trade, which of the following would not occur?


A) Surplus would increase overall.
B) Producer surplus would decrease.
C) Surplus would transfer from producers to consumers.
D) The areas of C + E + F + G would become deadweight loss.

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

Correct Answer

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If Japan has an absolute advantage over the United States in making TVs, then Japan:


A) likely sells TVs to the United States.
B) produces more TVs than the United States using the same resources.
C) has the ability to produce TVs at a lower opportunity cost than the United States.
D) will have no reason to trade with the United States.

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

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The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. If the economy opens itself to free trade, it will become a: A) net exporter. B) net importer. C) autarky. D) quota rent seeker. If the economy opens itself to free trade, it will become a:


A) net exporter.
B) net importer.
C) autarky.
D) quota rent seeker.

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy decides to open to trade, domestic producers will have to cut: A) production by 55 units. B) production by 90 units. C) prices by $3. D) prices by $7. If this economy decides to open to trade, domestic producers will have to cut:


A) production by 55 units.
B) production by 90 units.
C) prices by $3.
D) prices by $7.

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

Correct Answer

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A country that produces and consumes a large amount of coffee comparatively has just entered the world market. If the country becomes a net-exporter of coffee, we would expect to see:


A) an increase in both the world price and world quantity of coffee.
B) an increase in the world price of coffee and a decrease in the world quantity of coffee.
C) a decrease in both the world price and world quantity of coffee.
D) a decrease in the world price of coffee and an increase in the world quantity of coffee.

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were open to free trade, how many units of the good would be consumed domestically? A) 60 B) 115 C) 150 D) 90 If this economy were open to free trade, how many units of the good would be consumed domestically?


A) 60
B) 115
C) 150
D) 90

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to open to trade, consumers would: A) enjoy a net gain of the surplus in areas D + E + F + G. B) suffer a net loss of the surplus in areas D + E + F + G. C) lose the surplus in areas D + E + F + G to producers. D) lose the surplus in areas F + G to deadweight loss. If this economy were to open to trade, consumers would:


A) enjoy a net gain of the surplus in areas D + E + F + G.
B) suffer a net loss of the surplus in areas D + E + F + G.
C) lose the surplus in areas D + E + F + G to producers.
D) lose the surplus in areas F + G to deadweight loss.

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

Correct Answer

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Import standards on specific countries are _______ than blanket standards.


A) more common
B) more expensive
C) less common
D) easier to enforce

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

Correct Answer

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Who is likely to be in favor of a country that would be a net exporter moving from autarky to free trade?


A) Domestic producers
B) Domestic consumers
C) Foreign producers
D) Foreign governments

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

Correct Answer

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Profits earned by foreign firms or governments under a quota are called:


A) quota rents.
B) quota revenue.
C) trade costs.
D) trade rents.

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this country is an autarky, what amount of the good will be consumed domestically, and at what price? A) 45 units at $11 each B) 45 units at $23 each C) 85 units at $16 each D) 120 units at $23 each If this country is an autarky, what amount of the good will be consumed domestically, and at what price?


A) 45 units at $11 each
B) 45 units at $23 each
C) 85 units at $16 each
D) 120 units at $23 each

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

Correct Answer

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The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. The government of this economy can restrict trade by imposing a quota of: A) 350 units. B) 900 units. C) 1,150 units. D) 1,500 units. The government of this economy can restrict trade by imposing a quota of:


A) 350 units.
B) 900 units.
C) 1,150 units.
D) 1,500 units.

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

Correct Answer

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The problem of inconsistent standards across nations can be managed by:


A) policymakers making explicit laws about imports for specific countries.
B) consumers making voluntary purchasing decisions.
C) policymakers enforcing blanket standards imposed on all imports.
D) All of these are ways to manage inconsistent standards.

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

Correct Answer

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