Instant Download PDF Principles of Macroeconomics 7th Edition Gregory Mankiw Test Bank Full Chapter

Principles of Macroeconomics 7th
Edition Gregory Mankiw Test Bank

Go to download the full and correct content document:
https://testbankfan.com/product/principles-of-macroeconomics-7th-edition-gregory-ma
nkiw-test-bank/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
Brief Principles of Macroeconomics 7th Edition Gregory

Mankiw Test Bank
https://testbankfan.com/product/brief-principles-of-
macroeconomics-7th-edition-gregory-mankiw-test-bank/
Principles of Macroeconomics 7th Edition Gregory Mankiw

Solutions Manual
https://testbankfan.com/product/principles-of-macroeconomics-7th-
edition-gregory-mankiw-solutions-manual/
Brief Principles of Macroeconomics 7th Edition Gregory

Mankiw Solutions Manual
https://testbankfan.com/product/brief-principles-of-
macroeconomics-7th-edition-gregory-mankiw-solutions-manual/
Principles of Economics 7th Edition Gregory Mankiw Test

Bank
https://testbankfan.com/product/principles-of-economics-7th-
edition-gregory-mankiw-test-bank/
Principles of Microeconomics 7th Edition Gregory Mankiw
Test Bank
https://testbankfan.com/product/principles-of-microeconomics-7th-
Principles of Microeconomics 7th Edition Gregory Mankiw

Solutions Manual
https://testbankfan.com/product/principles-of-microeconomics-7th-
Principles of Economics 7th Edition Gregory Mankiw

Solutions Manual
https://testbankfan.com/product/principles-of-economics-7th-
Principles Of Macroeconomics Canadian 7th Edition

Mankiw Test Bank
https://testbankfan.com/product/principles-of-macroeconomics-
canadian-7th-edition-mankiw-test-bank/
Essentials of Economics 7th Edition Gregory Mankiw Test

Bank
https://testbankfan.com/product/essentials-of-economics-7th-
Application: International Trade
Multiple Choice – Section 00: Introduction
1. 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.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.39 - LO: 9-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC: Production Possibilities Model Comparative Advantage
KEYWORDS: BLOOM'S: Comprehension
2. With which of the Ten Principles of Economics is the study of international trade most closely
connected?
a. People face tradeoffs.
b. Trade can make everyone better off.
c. Governments can sometimes improve market outcomes.
d. Prices rise when the government prints too much money.
ANSWER: b
POINTS: 1
TOPICS: DISC: International Trade
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2246 Application: International Trade
3. Which of the following tools and concepts is useful in the analysis of international trade?
a. total surplus
b. domestic supply
c. equilibrium price
d. All of the above are correct.
ANSWER: d
POINTS: 1
4. A logical starting point from which the study of international trade begins is
a. the recognition that not all markets are competitive.
b. the recognition that government intervention in markets sometimes enhances the economic
welfare of the society.
c. the principle of absolute advantage.
d. the principle of comparative advantage.
ANSWER: d
POINTS: 1
Application: International Trade 2247
5. Which of the following is not an important question for economic policy raised by the experience
of the textile industry?
a. How does international trade affect consumer well-being?
b. Who gains and who loses from free trade among countries?
c. How do the gains from trade compare to the losses?
d. Which argument for restricting free trade is politically feasible?
ANSWER: d
POINTS: 1
Multiple Choice – Section 01: The Determinants of Trade
1. What is the fundamental basis for trade among nations?

a. shortages or surpluses in nations that do not trade
b. misguided economic policies
c. absolute advantage
d. comparative advantage
ANSWER: d
POINTS: 1
2. Patterns of trade among nations are primarily determined by

a. cultural considerations.
b. political considerations.
c. comparative advantage.
d. differences in the income elasticity of demand among nations.
ANSWER: c
POINTS: 1
3. The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic
sellers of soybeans if
a. consumer surplus equals producer surplus in the Canadian soybean market.
b. total surplus exceeds consumer surplus in the Canadian soybean market.
c. Canada permits international trade in soybeans.
d. Canada forbids international trade in soybeans.
ANSWER: d
POINTS: 1
TOPICS: DISC: International Trade International Trade Restrictions
NOTES: r
4. The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for
3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts
indicate that
a. Wheatland has a comparative advantage, relative to other countries, in producing corn.
b. other countries have a comparative advantage, relative to Wheatland, in producing fish.
c. the price of fish in Wheatland exceeds the world price of fish.
d. if Wheatland were to allow trade, it would import corn.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
KEYWORDS: BLOOM'S: Application
NOTES: r
5. Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick
by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball
bats. These facts indicate that
a. if Canada were to allow trade, it would export hockey sticks.
b. Canada has an absolute advantage, relative to other countries, in producing hockey sticks.
c. Canada has a comparative advantage, relative to other countries, in producing baseball bats.
ANSWER: a
POINTS: 1
NOTES: r
6. The principle of comparative advantage asserts that

a. not all countries can benefit from trade with other countries.
b. the world price of a good will prevail in all countries, regardless of whether those countries allow
international trade in that good.
c. countries can become better off by exporting goods, but they cannot become better off by
importing goods.
d. countries can become better off by specializing in what they do best.
ANSWER: d
POINTS: 1
7. A tax on an imported good is called a

a. quota.
b. tariff.
c. supply tax.
d. trade tax.
ANSWER: b
POINTS: 1
TOPICS: DISC: International Trade Tariffs
KEYWORDS: BLOOM'S: Knowledge
8. A tariff is a
a. limit on how much of a good can be exported.
b. limit on how much of a good can be imported.
c. tax on an exported good.
d. tax on an imported good.
ANSWER: d
POINTS: 1
9. The price of a good that prevails in a world market is called the

a. absolute price.
b. relative price.
c. comparative price.
d. world price.
ANSWER: d
POINTS: 1
10. The price of sugar that prevails in international markets is called the
a. export price of sugar.
b. import price of sugar.
c. comparative-advantage price of sugar.
d. world price of sugar.
ANSWER: d
POINTS: 1
11. If a country allows trade and, for a certain good, the domestic price without trade is higher than
the world price,
a. the country will be an exporter of the good.
b. the country will be an importer of the good.
c. the country will be neither an exporter nor an importer of the good.
d. Additional information is needed about demand to determine whether the country will be an
exporter of the good, an importer of the good, or neither.
ANSWER: b
POINTS: 1
TOPICS: DISC: International Trade Imports
12. If a country allows trade and, for a certain good, the domestic price without trade is lower than the
world price,
a. the country will be an exporter of the good.
b. the country will be an importer of the good.
c. the country will be neither an exporter nor an importer of the good.
d. Additional information is needed about demand to determine whether the country will be an
exporter of the good, an importer of the good, or neither.
ANSWER: a
POINTS: 1
TOPICS: DISC: International Trade Exports
13. For any country, if the world price of copper is higher than the domestic price of copper without
trade, that country should
a. export copper, since that country has a comparative advantage in copper.
b. import copper, since that country has a comparative advantage in copper.
c. neither export nor import copper, since that country cannot gain from trade.
d. neither export nor import copper, since that country already produces copper at a low cost
compared to other countries.
ANSWER: a
POINTS: 1
NOTES: r
14. For any country, if the world price of copper is lower than the domestic price of copper without
trade, that country should
a. export copper.
b. import copper.
c. neither export nor import copper, since that country cannot gain from trade.
d. neither export nor import copper, since that country already produces copper at a low cost
compared to other countries.
ANSWER: b
POINTS: 1
NOTES: n
15. If the world price of apples is higher than Argentina’s domestic price of apples without trade, then
Argentina
a. should import apples.
b. has a comparative advantage in apples.
c. should produce just enough apples to meet its domestic demand.
d. should refrain altogether from producing apples.
ANSWER: b
POINTS: 1
NOTES: r
16. Assume, for Vietnam, that the domestic price of textiles without international trade is higher than
the world price of textiles. This suggests that, in the production of textiles,
a. Vietnam has a comparative advantage over other countries and Vietnam will import textiles.
b. Vietnam has a comparative advantage over other countries and Vietnam will export textiles.
c. other countries have a comparative advantage over Vietnam and Vietnam will import textiles.
d. other countries have a comparative advantage over Vietnam and Vietnam will export textiles.
ANSWER: c
POINTS: 1
NOTES: r
17. Assume, for Vietnam, that the domestic price of textiles without international trade is lower than
the world price of textiles. This suggests that, in the production of textiles,
a. Vietnam has a comparative advantage over other countries and Vietnam will import textiles.
b. Vietnam has a comparative advantage over other countries and Vietnam will export textiles.
c. other countries have a comparative advantage over Vietnam and Vietnam will import textiles.
d. other countries have a comparative advantage over Vietnam and Vietnam will export textiles.
ANSWER: b
POINTS: 1
NOTES: n
18. Assume, for Mexico, that the domestic price of oranges without international trade is lower than
the world price of oranges. This suggests that, in the production of oranges,
a. Mexico has a comparative advantage over other countries and Mexico will export oranges.
b. Mexico has a comparative advantage over other countries and Mexico will import oranges.
c. other countries have a comparative advantage over Mexico and Mexico will export oranges.
d. other countries have a comparative advantage over Mexico and Mexico will import oranges.
ANSWER: a
POINTS: 1
NOTES: r
19. Suppose Ireland exports beer to China and imports pineapples from the United States. This
situation suggests that
a. Ireland has a comparative advantage relative to the United States in producing pineapples, and
China has a comparative advantage relative to Ireland in producing beer.
b. Ireland has a comparative advantage relative to China in producing beer, and the United States
has a comparative advantage relative to Ireland in producing pineapples.
c. Ireland has an absolute advantage relative to the United States in producing pineapples, and
China has an absolute advantage relative to Ireland in producing beer.
d. Ireland has an absolute advantage relative to China in producing beer, and the United States has
an absolute advantage relative to Ireland in producing pineapples.
ANSWER: b
POINTS: 1
NOTES: r
20. Trade among nations is ultimately based on

a. absolute advantage.
b. strategic advantage.
c. comparative advantage.
d. technical advantage.
ANSWER: c
POINTS: 1
21. A country has a comparative advantage in a product if the world price is

a. lower than that country’s domestic price without trade.
b. higher than that country’s domestic price without trade.
c. equal to that country’s domestic price without trade.
d. not subject to manipulation by organizations that govern international trade.
ANSWER: b
POINTS: 1
22. Suppose Brazil has an absolute advantage over other countries in producing almonds, but other
countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is
allowed, Brazil
a. will import almonds.
b. will export almonds.
c. will either import almonds or export almonds, but it is not clear from the given information.
d. would have nothing to gain either from exporting or importing almonds.
ANSWER: a
POINTS: 1
TOPICS: DISC: Production Possibilities Model Absolute Advantage
NOTES: r
23. Suppose Brazil has a comparative advantage over other countries in producing almonds, but other
countries have an absolute advantage over Brazil in producing almonds. If trade in almonds is
allowed, Brazil
a. will import almonds.
b. will export almonds.
c. will either import almonds or export almonds, but it is not clear from the given information.
d. would have nothing to gain either from exporting or importing almonds.
ANSWER: b
POINTS: 1
NOTES: n
24. Suppose Jamaica has an absolute advantage over other countries in producing sugar, but other
countries have a comparative advantage over Jamaica in producing sugar. If trade in sugar is
allowed, Jamaica
a. will import sugar.
b. will export sugar.
c. will either import sugar or export sugar, but it is not clear from the given information.
d. would have nothing to gain either from exporting or importing sugar.
ANSWER: a
POINTS: 1
TOPICS: DISC: Production Possibilities Model Absolute Advantage
NOTES: r
25. Assume, for Japan, that the domestic price of automobiles without international trade is lower than
the world price of automobiles. This suggests that, in the production of automobiles,
a. Japan has a comparative advantage over other countries and Japan will import automobiles.
b. Japan has a comparative advantage over other countries and Japan will export automobiles.
c. other countries have a comparative advantage over Japan and Japan will import automobiles.
d. other countries have a comparative advantage over Japan and Japan will export automobiles.
ANSWER: b
POINTS: 1
NOTES: r
26. Assume, for Mexico, that the domestic price of beets without international trade is higher than the
world price of beets. This suggests that, in the production of beets,
a. Mexico has a comparative advantage over other countries and Mexico will export beets.
b. Mexico has a comparative advantage over other countries and Mexico will import beets.
c. other countries have a comparative advantage over Mexico and Mexico will export beets.
d. other countries have a comparative advantage over Mexico and Mexico will import beets.
ANSWER: d
POINTS: 1
NOTES: r
27. Assume, for England, that the domestic price of wine without international trade is higher than the
world price of wine. This suggests that, in the production of wine,
a. England has a comparative advantage over other countries and England will export wine.
b. England has a comparative advantage over other countries and England will import wine.
c. other countries have a comparative advantage over England and England will export wine.
d. other countries have a comparative advantage over England and England will import wine.
ANSWER: d
POINTS: 1
NOTES: r
28. Assume, for England, that the domestic price of wine without international trade is lower than the
world price of wine. This suggests that, in the production of wine,
a. England has a comparative advantage over other countries and England will export wine.
b. England has a comparative advantage over other countries and England will import wine.
c. other countries have a comparative advantage over England and England will export wine.
d. other countries have a comparative advantage over England and England will import wine.
ANSWER: a
POINTS: 1
NOTES: r
29. If the world price of coffee is lower than Colombia’s domestic price of coffee without trade, then
Colombia
a. should import coffee.
b. has a comparative advantage in coffee.
c. should produce just enough coffee to satisfy domestic demand.
d. should produce no coffee domestically.
ANSWER: a
POINTS: 1
NOTES: r
30. If the world price of coffee is higher than Colombia’s domestic price of coffee without trade, then
Colombia
a. should import coffee.
b. has a comparative advantage in coffee and should export coffee.
c. should produce just enough coffee to satisfy domestic demand.
d. should produce no coffee domestically.
ANSWER: b
POINTS: 1
NOTES: n
31. If a country is an exporter of a good, then it must be the case that

a. the world price is less than its domestic price.
b. consumer surplus is higher than a no trade situation.
c. the world price is greater than its domestic price.
d. they used an infant-industry argument to protect its producers.
ANSWER: c
POINTS: 1
32. Suppose Japan exports cars to Russia and imports wine from France. This situation suggests
a. Japan has a comparative advantage relative to France in producing wine, and Russia has a
comparative advantage to Japan in producing cars.
b. Japan has a comparative advantage relative to Russia in producing cars, and France has a
comparative advantage relative to Japan in producing wine.
c. Japan has an absolute advantage relative to Russia in producing cars, and France has an
absolute advantage relative to Japan in producing wine.
d. Japan has an absolute advantage relative to France in producing wine, and Russia has an
absolute advantage relative to Japan in producing cars.
ANSWER: b
POINTS: 1
NOTES: r
33. Suppose Japan exports televisions to the United States and imports sugar from Argentina. This
situation suggests
a. Japan has a comparative advantage relative to the United States in producing televisions, and
Argentina has a comparative advantage relative to Japan in producing sugar.
b. Japan has a comparative advantage relative to the United States in producing sugar, and
Argentina has a comparative advantage relative to Japan in producing televisions.
c. Japan has an absolute advantage relative to the United States in producing televisions, and
Argentina has an absolute advantage relative to Japan in producing sugar.
d. Japan has an absolute advantage relative to Argentina in producing sugar, and the United
States has an absolute advantage relative to Japan in producing televisions.
ANSWER: a
POINTS: 1
NOTES: r
34. Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the
world price of televisions to the price of televisions in Teeveeland, we can determine whether
a. consumer surplus exceeds producer surplus in Teeveeland.
b. Teeveeland has an absolute advantage in producing televisions.
c. Teeveeland has a comparative advantage in producing televisions.
ANSWER: c
POINTS: 1
NOTES: r
35. By comparing the world price of pecans to India’s domestic price of pecans, we can determine
whether India
a. will export pecans (assuming trade is allowed).
b. will import pecans (assuming trade is allowed).
c. has a comparative advantage in producing pecans.
ANSWER: d
POINTS: 1
NOTES: r
36. Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a
comparative advantage in producing pharmaceuticals if we
a. know whether Costa Rica imports or exports pharmaceuticals.
b. compare the world price of pharmaceuticals to the price of pharmaceuticals that would prevail
in Costa Rica if trade with the rest of the world were not allowed.
c. compare the quantity of pharmaceuticals consumed in Costa Rica with the quantity of
pharmaceuticals that would be consumed in Costa Rica if trade with the rest of the world were
not allowed.
ANSWER: d
POINTS: 1
NOTES: r
37. Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in
producing olive oil if we know that
a. Spain imports olive oil.
b. the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade
with other countries were not allowed.
c. consumer surplus in Spain would exceed producer surplus in Spain if trade with other countries
were not allowed.
ANSWER: b
POINTS: 1
NOTES: r
38. The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of
beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds
of pepper. These facts indicate that
a. Farmland has a comparative advantage, relative to other countries, in producing beef.
b. other countries have an absolute advantage, relative to Farmland, in producing beef.
c. the price of beef in Farmland exceeds the world price of beef.
d. if Farmland were to allow trade, it would export pepper.
ANSWER: a
POINTS: 1
NOTES: r
39. The nation of Isolani forbids international trade. In Isolani, you can exchange 1 car for 5
motorcycles. In other countries, you can exchange 1 car for 4 motorcycles. These facts indicate
that
a. other countries have an absolute advantage, relative to Isolani, in producing cars.
b. Isolani has a comparative advantage, relative to other countries, in producing cars.
c. if Isolani were to allow trade, it would import motorcycles.
d. the world price of motorcycles exceeds the price of motorcycles in Isolani.
ANSWER: d
POINTS: 1
NOTES: r
40. Assume for Guatemala that the domestic price of coffee without international trade is higher than
the world price of coffee. This suggests that
a. Guatemala has a comparative advantage over other countries in the production of coffee, and
Guatemala will export coffee.
b. Guatemala has a comparative advantage over other countries in the production of coffee, and
Guatemala will import coffee.
c. other countries have a comparative advantage over Guatemala in the production of coffee, and
Guatemala will export coffee.
d. other countries have a comparative advantage over Guatemala in the production of coffee, and
Guatemala will import coffee.
ANSWER: d
POINTS: 1
NOTES: r
41. Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This situation
suggests
a. Russia has a comparative advantage over Brazil in producing coffee, and Ireland has a
comparative advantage over Russia in producing sunflower seeds.
b. Russia has a comparative advantage over Ireland in producing sunflower seeds, and Brazil has
a comparative advantage over Russia in producing coffee.
c. Russia has an absolute advantage over Ireland in producing sunflower seeds, and Brazil has an
absolute advantage over Russia in producing coffee.
d. Russia has an absolute advantage over Brazil in producing coffee, and Ireland has an absolute
advantage over Russia in producing sunflower seeds.
ANSWER: b
POINTS: 1
NOTES: r
Multiple Choice – Section 02a: The Winners and Losers from Trade
1. When a country that imported a particular good abandons a free-trade policy and adopts a no-trade
policy,
a. producer surplus increases and total surplus increases in the market for that good.
b. producer surplus increases and total surplus decreases in the market for that good.
c. producer surplus decreases and total surplus increases in the market for that good.
d. producer surplus decreases and total surplus decreases in the market for that good.
ANSWER: b
POINTS: 1
2. When, in our analysis of the gains and losses from international trade, we assume that a country is
small, we are in effect assuming that the country
a. cannot experience significant gains or losses by trading with other countries.
b. cannot have a significant comparative advantage over other countries.
c. cannot affect world prices by trading with other countries.
ANSWER: c
POINTS: 1
3. When, in our analysis of the gains and losses from international trade, we assume that a particular
country is small, we are
a. assuming the domestic price before trade will continue to prevail once that country is opened up
to trade with other countries.
b. assuming there is no demand for that country’s domestically-produced goods by other countries.
c. assuming international trade can benefit producers, but not consumers, in that country.
d. making an assumption that is not necessary to analyze the gains and losses from international
trade.
ANSWER: d
POINTS: 1
4. In analyzing international trade, we often focus on a country whose economy is small relative to the
rest of the world. We do so
a. because it is impossible to analyze the gains and losses from international trade without making
this assumption.
b. because then we can assume that world prices of goods are unaffected by that country’s
participation in international trade.
c. in order to rule out the possibility of tariffs or quotas.
ANSWER: b
POINTS: 1
5. In analyzing the gains and losses from international trade, to say that Moldova is a small country is
to say that
a. Moldova can only import goods; it cannot export goods.
b. Moldova’s choice of which goods to export and which goods to import is not based on the
principle of comparative advantage.
c. only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant.
d. Moldova is a price taker.
ANSWER: d
POINTS: 1
6. When a country allows trade and becomes an exporter of a good,

a. domestic producers gain and domestic consumers lose.
b. domestic producers lose and domestic consumers gain.
c. domestic producers and domestic consumers both gain.
d. domestic producers and domestic consumers both lose.
ANSWER: a
POINTS: 1
7. Trade enhances the economic well-being of a nation in the sense that

a. both domestic producers and domestic consumers of a good become better off with trade,
regardless of whether the nation imports or exports the good in question.
b. the gains of domestic producers of a good exceed the losses of domestic consumers of a good,
regardless of whether the nation imports or exports the good in question.
c. trade results in an increase in total surplus.
d. trade puts downward pressure on the prices of all goods.
ANSWER: c
POINTS: 1
TOPICS: DISC: Welfare Analysis
8. When a country allows trade and becomes an importer of a good,

a. both domestic producers and domestic consumers become better off.
b. domestic producers become better off, and domestic consumers become worse off.
c. domestic producers become worse off, and domestic consumers become better off.
d. both domestic producers and domestic consumers become worse off.
ANSWER: c
POINTS: 1

a. everyone in the country benefits.
b. the gains of the winners exceed the losses of the losers.
c. the losses of the losers exceed the gains of the winners.
d. everyone in the country loses.
ANSWER: b
POINTS: 1
10. When the nation of Worldova allows trade and becomes an exporter of silk,
a. residents of Worldova who produce silk become worse off; residents of Worldova who buy silk
become better off; and the economic well-being of Worldova rises.
b. residents of Worldova who produce silk become worse off; residents of Worldova who buy silk
become better off; and the economic well-being of Worldova falls.
c. residents of Worldova who produce silk become better off; residents of Worldova who buy silk
become worse off; and the economic well-being of Worldova rises.
d. residents of Worldova who produce silk become better off; residents of Worldova who buy silk
become worse off; and the economic well-being of Worldova falls.
ANSWER: c
POINTS: 1
11. When the nation of Duxembourg allows trade and becomes an importer of software,
a. residents of Duxembourg who produce software become worse off; residents of Duxembourg
who buy software become better off; and the economic well-being of Duxembourg rises.
b. residents of Duxembourg who produce software become worse off; residents of Duxembourg
who buy software become better off; and the economic well-being of Duxembourg falls.
c. residents of Duxembourg who produce software become better off; residents of Duxembourg
who buy software become worse off; and the economic well-being of Duxembourg rises.
d. residents of Duxembourg who produce software become better off; residents of Duxembourg
who buy software become worse off; and the economic well-being of Duxembourg falls.
ANSWER: a
POINTS: 1
12. When a nation first begins to trade with other countries and the nation becomes an importer of
corn,
a. this is an indication that the world price of corn exceeds the nation’s domestic price of corn in
the absence of trade.
b. this is an indication that the nation has a comparative advantage in producing corn.
c. the nation’s consumers of corn become better off and the nation’s producers of corn become
worse off.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Challenging
13. When a nation first begins to trade with other countries and the nation becomes an exporter of
soybeans,
a. this is an indication that the world price of soybeans exceeds the nation’s domestic price of
soybeans in the absence of trade.
b. this is an indication that the nation has a comparative advantage in producing soybeans.
c. the nation’s consumers of soybeans become worse off and the nation’s producers of soybeans
become better off.
ANSWER: d
POINTS: 1
14. Trade raises the economic well-being of a nation in the sense that
a. the gains of the winners exceed the losses of the losers.
b. everyone in an economy gains from trade.
c. since countries can choose what products to trade, they will pick those products that are most
beneficial to society.
d. the nation joins the international community when it begins to engage in trade.
ANSWER: a
POINTS: 1
TOPICS: DISC: Welfare Analysis

a. the gains of the domestic producers of the good exceed the losses of the domestic consumers
of the good.
b. the gains of the domestic consumers of the good exceed the losses of the domestic producers
of the good.
c. the losses of the domestic producers of the good exceed the gains of the domestic consumers
of the good.
d. the losses of the domestic consumers of the good exceed the gains of the domestic producers
of the good.
ANSWER: a
POINTS: 1
16. When a country allows trade and becomes an importer of coal,

a. the losses of the domestic producers of coal exceed the gains of the domestic consumers of
coal.
b. the losses of the domestic consumers of coal exceed the gains of the domestic producers of
coal.
c. the gains of the domestic producers of coal exceed the losses of the domestic consumers of
coal.
d. the gains of the domestic consumers of coal exceed the losses of the domestic producers of
coal.
ANSWER: d
POINTS: 1
17. When a country allows trade and becomes an exporter of a good, which of the following is not a
consequence?
a. The price paid by domestic consumers of the good increases.
b. The price received by domestic producers of the good increases.
c. The losses of domestic consumers of the good exceed the gains of domestic producers of the
good.
d. The gains of domestic producers of the good exceed the losses of domestic consumers of the
good.
ANSWER: c
POINTS: 1
18. When a country allows trade and becomes an importer of bottled water, which of the following is
not a consequence?
a. The gains of domestic consumers of bottled water exceed the losses of domestic producers of
bottled water.
b. The losses of domestic producers of bottled water exceed the gains of domestic consumers of
bottled water.
c. The price paid by domestic consumers of bottled water decreases.
d. The price received by domestic producers of bottled water decreases.
ANSWER: b
POINTS: 1

a. consumer surplus and producer surplus both increase.
b. consumer surplus and producer surplus both decrease.
c. consumer surplus increases and producer surplus decreases.
d. consumer surplus decreases and producer surplus increases.
ANSWER: d
POINTS: 1

a. consumer surplus and producer surplus both increase.
b. consumer surplus and producer surplus both decrease.
c. consumer surplus increases and producer surplus decreases.
d. consumer surplus decreases and producer surplus increases.
ANSWER: c
POINTS: 1
Figure 9-1
The figure illustrates the market for coffee in Guatemala.
21. Refer to Figure 9-1. From the figure it is apparent that

a. Guatemala will experience a shortage of coffee if trade is not allowed.
b. Guatemala will experience a surplus of coffee if trade is not allowed.
c. Guatemala has a comparative advantage in producing coffee, relative to the rest of the world.
d. foreign countries have a comparative advantage in producing coffee, relative to Guatemala.
ANSWER: c
POINTS: 1
NOTES: r

a. Guatemala will export coffee if trade is allowed.
b. Guatemala will import coffee if trade is allowed.
c. Guatemala has nothing to gain either by importing or exporting coffee.
d. the world price will fall if Guatemala begins to allow its citizens to trade with other countries.
ANSWER: a
POINTS: 1
NOTES: r
23. Refer to Figure 9-1. With trade, Guatemala will

a. export 22 units of coffee.
b. export 10 units of coffee.
c. import 30 units of coffee.
d. import 12 units of coffee.
ANSWER: a
POINTS: 1
NOTES: r
24. Refer to Figure 9-1. In the absence of trade, the equilibrium price of coffee in Guatemala is
a. $30.
b. $90.
c. $110.
d. $140.
ANSWER: b
POINTS: 1
NOTES: r
25. Refer to Figure 9-1. In the absence of trade, total surplus in Guatemala is represented by the
area
a. A + B + C.
b. A + B + C + D + F.
c. A + B + C + D + F + G.
d. A + B + C + D + F + G + H.
ANSWER: b
POINTS: 1
NOTES: r
26. Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala
a. increases by the area B + D.
b. increases by the area C + F.
c. decreases by the area B + D.
d. decreases by the area D + G.
ANSWER: c
POINTS: 1
NOTES: r
27. Refer to Figure 9-1. When trade in coffee is allowed, producer surplus in Guatemala
a. increases by the area B + D.
b. increases by the area B + D + G.
c. decreases by the area C + F.
d. decreases by the area G.
ANSWER: b
POINTS: 1
NOTES: r
28. Refer to Figure 9-1. When trade is allowed,

a. Guatemalan producers of coffee become better off and Guatemalan consumers of coffee
become worse off.
b. Guatemalan consumers of coffee become better off and Guatemalan producers of coffee
become worse off.
c. both Guatemalan producers and consumers of coffee become better off.
d. both Guatemalan producers and consumers of coffee become worse off.
ANSWER: a
POINTS: 1
NOTES: r
29. Refer to Figure 9-1. Relative to the no-trade situation, trade with the rest of the world results in
a. Guatemalan consumers paying a higher price for coffee.
b. a decrease in producer surplus in Guatemala.
c. a decrease in total surplus in Guatemala.
ANSWER: a
POINTS: 1
NOTES: r
30. Refer to Figure 9-1. In the absence of trade, total surplus in the Guatemalan coffee market
amounts to
a. 750.
b. 1,100.
c. 1,514.
d. 1,650.
ANSWER: d
POINTS: 1
NOTES: r
31. Refer to Figure 9-1. With trade, total surplus in the Guatemalan coffee market amounts to
a. 1,250.
b. 1,468.
c. 1,870.
d. 1,980.
ANSWER: c
POINTS: 1
NOTES: r
32. Which of the following statements is true?

a. Free trade benefits a country when it exports but harms it when it imports.
b. "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S. tariffs
placed on Canadian hog exports.
c. Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses,
whereas quotas do not impose deadweight losses.
d. Free trade benefits a country both when it exports and when it imports.
ANSWER: d
POINTS: 1
TOPICS: DISC: International Trade Free Trade
33. When a country allows international trade and becomes an exporter of a good,
a. domestic producers of the good become better off.
b. domestic consumers of the good become worse off.
c. the gains of the winners exceed the losses of the losers.
ANSWER: d
POINTS: 1
34. Suppose Iceland goes from being an isolated country to being an exporter of coats. As a result,
a. consumer surplus increases for consumers of coats in Iceland.
b. producer surplus increases for producers of coats in Iceland.
c. total surplus remains unchanged in the coat market in Iceland.
d. it is reasonable to infer that other countries have a comparative advantage over Iceland in coat
production.
ANSWER: b
POINTS: 1
NOTES: r
35. Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,
a. consumer surplus increases for consumers of coats in Iceland.
b. producer surplus increases for producers of coats in Iceland.
c. total surplus remains unchanged in the coat market in Iceland.
d. it is reasonable to infer that Iceland has a comparative advantage over other countries in coat
production.
ANSWER: a
POINTS: 1
NOTES: n
36. When a country allows international trade and becomes an importer of a good,
b. domestic consumers of the good become worse off.
c. the gains of the winners exceed the losses of the losers.
ANSWER: c
POINTS: 1
37. Assume, for Colombia, that the domestic price of coffee without international trade is higher than
the world price of coffee. This suggests that
a. other countries have a comparative advantage over Colombia in producing coffee.
b. Colombia has an absolute advantage over other countries in producing coffee.
c. Colombia will export coffee if international trade is allowed.
d. Colombian coffee buyers will become worse off if international trade is allowed.
ANSWER: a
POINTS: 1
NOTES: r
38. Suppose a country begins to allow international trade in steel. Which of the following outcomes
will be observed regardless of whether the country finds itself importing steel or exporting steel?
a. The sum of consumer surplus and producer surplus for domestic traders of steel increases.
b. The quantity of steel demanded by domestic consumers increases.
c. Domestic producers of steel receive a higher price for steel.
d. The losses of the losers exceed the gains of the winners.
ANSWER: a
POINTS: 1
39. After a country goes from disallowing trade in coffee with other countries to allowing trade in
coffee with other countries,
a. the domestic price of coffee will be greater than the world price of coffee.
b. the domestic price of coffee will be lower than the world price of coffee.
c. the domestic price of coffee will equal the world price of coffee.
d. The world price of coffee does not matter; the domestic price of coffee prevails.
ANSWER: c
POINTS: 1
TOPICS: DISC: International Trade Open Economy
40. Within a country, the domestic price of a product will equal the world price if
a. trade restrictions are imposed on the product.
b. the country allows free trade.
c. the country chooses to import, but not export, the product.
d. the country chooses to export, but not import, the product.
ANSWER: b
POINTS: 1
41. Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the
price of a television there was $350. Once Paraguay began allowing trade in televisions with
other countries, Paraguay began
a. importing televisions and the price of a television in Paraguay decreased to $300.
b. importing televisions and the price of a television in Paraguay remained at $350.
c. exporting televisions and the price of a television in Paraguay decreased to $300.
d. exporting televisions and the price of a television in Paraguay remained at $350.
ANSWER: a
POINTS: 1
NOTES: r
42. The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the
price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds
with other countries, Uruguay began
a. exporting almonds and the price per pound in Uruguay remained at $3.00.
b. exporting almonds and the price per pound in Uruguay increased to $4.50.
c. importing almonds and the price per pound in Uruguay remained at $3.00.
d. importing almonds and the price per pound in Uruguay increased to $4.50.
ANSWER: b
POINTS: 1
NOTES: r
43. 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.
ANSWER: d
POINTS: 1
44. 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
a. that country becomes an exporter of pistachios.
b. that country has a comparative advantage in producing pistachios.
c. at the world price, the quantity of pistachios demanded in that country exceeds the quantity of
pistachios supplied in that country.
ANSWER: c
POINTS: 1
Figure 9-2
The figure illustrates the market for calculators in a country.
45. Refer to Figure 9-2. Without trade, consumer surplus is

a. $423.
b. $845.
c. $1,690.
d. $3,380.
ANSWER: b
POINTS: 1
NOTES: r
46. Refer to Figure 9-2. Without trade, producer surplus is

a. $423.
b. $845.
c. $1,690.
d. $3,380.
ANSWER: b
POINTS: 1
NOTES: r
47. Refer to Figure 9-2. With free trade, this country will
a. import 50 calculators.
b. import 100 calculators.
c. export 50 calculators.
d. export 100 calculators.
ANSWER: d
POINTS: 1
NOTES: r
48. Refer to Figure 9-2. If this country chooses to trade, the price of calculators in this country will
be
a. $15 and 80 calculators will be sold domestically.
b. $15 and 130 calculators will be sold domestically.
c. $20 and 80 calculators will be sold domestically.
d. $20 and 130 calculators will be sold domestically.
ANSWER: c
POINTS: 1
NOTES: r
49. Refer to Figure 9-2. With free trade, consumer surplus is

a. $320.
b. $640.
c. $845.
d. $1,690.
ANSWER: a
POINTS: 1
NOTES: r
50. Refer to Figure 9-2. With free trade, producer surplus is

a. $845.
b. $1,620.
c. $1,690.
d. $3,240.
ANSWER: b
POINTS: 1
NOTES: r
51. Refer to Figure 9-2. As a result of trade, total surplus increases by

a. $50.
b. $100.
c. $250.
d. $500.
ANSWER: c
POINTS: 1
NOTES: r
52. Refer to Figure 9-2. This country

a. has a comparative advantage in calculators.
b. should export calculators.
c. is a price taker in the world economy.
ANSWER: d
POINTS: 1
NOTES: r
53. Refer to Figure 9-2. The world price for calculators represents
a. the demand for calculators from the rest of the world.
b. the supply of calculators from the rest of the world.
c. the level of inefficiency in the domestic market caused by trade.
d. the gap between domestic quantity demanded and domestic quantity supplied and the resulting
shortage.
ANSWER: a
POINTS: 1
NOTES: r
54. Refer to Figure 9-2. At the world price and with free trade,
a. the domestic quantity of calculators demanded is greater than the domestic quantity of
calculators supplied.
b. the calculator market is in equilibrium.
c. the domestic demand for calculators is perfectly inelastic.
d. both domestic producers of calculators and domestic consumers of calculators are better off
than they were without free trade.
ANSWER: b
POINTS: 1
NOTES: r
Figure 9-3. The domestic country is China.
55. Refer to Figure 9-3. With no international trade,

a. the equilibrium price is $12 and the equilibrium quantity is 300.
b. the equilibrium price is $16 and the equilibrium quantity is 200.
c. the equilibrium price is $16 and the equilibrium quantity is 300.
d. the equilibrium price is $16 and the equilibrium quantity is 450.
ANSWER: a
POINTS: 1
56. Refer to Figure 9-3. If China were to abandon a no-trade policy in favor of a free-trade policy,
a. Chinese producers of pencil sharpeners would become worse off.
b. Chinese consumers of pencil sharpeners would become better off.
c. total surplus in the Chinese economy would increase.
ANSWER: c
POINTS: 1
57. Refer to Figure 9-3. With trade, China will

a. import 100 pencil sharpeners.
b. import 250 pencil sharpeners.
c. export 150 pencil sharpeners.
d. export 250 pencil sharpeners.
ANSWER: d
POINTS: 1
58. Refer to Figure 9-3. With trade, producer surplus in China is

a. $800.
b. $1,200.
c. $1,800.
d. $2,700.
ANSWER: d
POINTS: 1
59. Refer to Figure 9-3. Relative to a no-trade situation, which of the following comes with trade?
a. Consumer surplus increases by $1,800 and producer surplus increases by $1,600.
b. Consumer surplus decreases by $1,000 and producer surplus increases by $1,500.
c. Consumer surplus decreases by $1,000 and producer surplus increases by $1,750.
d. Total surplus increases by $400.
ANSWER: b
POINTS: 1
60. Refer to Figure 9-3. The increase in total surplus in China when trade is allowed is
a. $400.
b. $500.
c. $600.
d. $750.
ANSWER: b
POINTS: 1
Figure 9-4. The domestic country is Nicaragua.
61. Refer to Figure 9-4. With trade, Nicaragua

a. imports 150 calculators.
b. imports 250 calculators.
c. exports 100 calculators.
d. exports 250 calculators.
ANSWER: b
POINTS: 1
62. Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is

a. $375.
b. $2,000.
c. $2,250.
d. $8,700.
ANSWER: c
POINTS: 1
63. Refer to Figure 9-4. The change in total surplus in Nicaragua because of trade is
a. $625, and this is an increase in total surplus.
b. $750, and this is an increase in total surplus.
c. $625, and this is a decrease in total surplus.
d. $750, and this is a decrease in total surplus.
ANSWER: a
POINTS: 1
64. Refer to Figure 9-4. Which of the following statements is accurate?

a. Consumer surplus with trade is $3,200.
b. Producer surplus with trade is $375.
c. The gains from trade amount to $800.
d. The gains from trade are represented on the graph by the area bounded by the points (0, $12),
(300, $12), (300, $7) and (0, $7).
ANSWER: b
POINTS: 1
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.
65. Refer to Scenario 9-1. If trade in peaches is allowed, the United States
a. will become an importer of peaches.
b. will become an exporter of peaches.
c. may become either an importer or an exporter of peaches, but this cannot be determined.
d. will experience increases in both consumer surplus and producer surplus.
ANSWER: b
POINTS: 1
66. Refer to Scenario 9-1. If trade in peaches is allowed, the price of peaches in the United States
a. will increase, and this will cause consumer surplus to decrease.
b. will decrease, and this will cause consumer surplus to increase.
c. will be unaffected, and consumer surplus will be unaffected as well.
d. could increase or decrease or be unaffected; this cannot be determined.
ANSWER: a
POINTS: 1
67. Refer to Scenario 9-1. If trade in peaches is allowed, the price of peaches in the United States
a. will be greater than the world price.
b. will be equal to the world price.
c. will be less than the world price.
d. could be greater than, equal to, or less than the world price; this cannot be determined.
ANSWER: b
POINTS: 1
68. Refer to Scenario 9-1. If trade in peaches is allowed, U.S. producers of peaches
a. will be better off.
b. will be worse off.
c. will be unaffected.
d. will experience a decrease in their collective producer surplus.
ANSWER: a
POINTS: 1
69. 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.
ANSWER: d
POINTS: 1
Figure 9-5
The figure illustrates the market for tricycles in a country.
70. Refer to Figure 9-5. The horizontal line at the world price of tricycles represents the
a. demand for tricycles from the rest of the world.
b. supply of tricycles from the rest of the world.
c. level of inefficiency in the domestic market caused by trade.
d. surplus in the domestic tricycle market.
ANSWER: b
POINTS: 1
NOTES: r
71. Refer to Figure 9-5. With trade, this country

a. exports 160 tricycles.
b. exports 320 tricycles.
c. imports 160 tricycles.
d. imports 320 tricycles.
ANSWER: d
POINTS: 1
NOTES: r
72. Refer to Figure 9-5. Without trade, consumer surplus amounts to

a. $810.
b. $1,620.
c. $3,240.
d. $6,480.
ANSWER: c
POINTS: 1
NOTES: r
73. Refer to Figure 9-5. Without trade, producer surplus amounts to

a. $810.
b. $1,620.
c. $3,240.
d. $6,480.
ANSWER: b
POINTS: 1
NOTES: r
74. Refer to Figure 9-5. Without trade, total surplus amounts to

a. $810.
b. $1,620.
c. $3,240.
d. $6,480.
ANSWER: d
POINTS: 1
NOTES: r
75. Refer to Figure 9-5. With trade, the price of tricycles in this country is
a. $11, with 200 tricycles produced in this country and another 320 tricycles imported.
b. $11, with 360 tricycles produced in this country and another 160 tricycles imported.
c. $19, with 200 tricycles produced in this country and another 160 tricycles imported.
d. $19, with 360 tricycles produced in this country and another 320 tricycles imported.
ANSWER: a
POINTS: 1
NOTES: r
76. Refer to Figure 9-5. With trade, consumer surplus is

a. $3,240.
b. $6,480.
c. $6,760.
d. $13,520.
ANSWER: c
POINTS: 1
NOTES: r
77. Refer to Figure 9-5. With trade, producer surplus is a. $500.

b. $1,000.
c. $1,500.
d. $2,000.
ANSWER: b
POINTS: 1
NOTES: r
78. Refer to Figure 9-5. With trade, total surplus is

a. $3,240.
b. $6,480.
c. $7,760.
d. $15,520.
ANSWER: c
POINTS: 1
NOTES: r
79. Refer to Figure 9-5. Total surplus with trade exceeds total surplus without trade by
a. $640.
b. $1,280.
c. $2,560.
d. $3,840.
ANSWER: b
POINTS: 1
NOTES: r
80. Refer to Figure 9-5. The increase in total surplus resulting from trade is
a. $640, since consumer surplus increases by $1,760 and producer surplus falls by $1,120.
b. $1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240.
c. $2,240, since consumer surplus increases by $3,240 and producer surplus falls by $1,000.
d. $2,560, since consumer surplus increases by $7,040 and producer surplus falls by $4,480.
ANSWER: b
POINTS: 1
NOTES: r
81. Refer to Figure 9-5. If this country allows free trade in tricycles,
a. consumers will gain and producers will lose.
b. consumers will lose and producers will gain.
c. both consumers and producers will gain.
d. both consumers and producers will lose.
ANSWER: a
POINTS: 1
NOTES: r
82. Refer to Figure 9-5. If this country allows free trade in tricycles,
a. consumers will gain more than producers will lose.
b. producers will gain more than consumers will lose.
c. producers and consumers will both gain equally.
d. producers and consumers will both lose equally.
ANSWER: a
POINTS: 1
NOTES: r
83. 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?
a. Incomes of domestic citizens increase, and tricycles are a normal good.
b. Within this country, the price of a substitute for tricycles decreases.
c. Within this country, the price of a complement to tricycles decreases.
d. Wages increase for domestic workers who produce tricycles.
ANSWER: b
POINTS: 1
KEYWORDS: BLOOM'S: Analysis
NOTES: r
84. 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?
a. The quantity of tricycles that this country imports would increase.
b. The quantity of tricycles that this country imports would decrease, but the country would still be
an importer of tricycles.
c. This country would switch from being an importer of tricycles to an exporter of tricycles.
d. The domestic price without trade would move closer to the world price.
ANSWER: a
POINTS: 1
NOTES: r
Figure 9-6
The figure illustrates the market for roses in a country.
85. Refer to Figure 9-6. Without trade, the equilibrium price of roses is
a. $4 and the equilibrium quantity is 300.
b. $3 and the equilibrium quantity is 200.
c. $3 and the equilibrium quantity is 400.
d. $2 and the equilibrium quantity is 500.
ANSWER: a
POINTS: 1
NOTES: r
86. Refer to Figure 9-6. With trade and without a tariff,
a. the domestic price is equal to the world price.
b. roses are sold at $4 in this market.
c. there is a shortage of 400 roses in this market.
d. this country imports 200 roses.
ANSWER: a
POINTS: 1
NOTES: r
87. Refer to Figure 9-6. Before the tariff is imposed, this country
a. imports 200 roses.
b. imports 400 roses.
c. exports 200 roses.
d. exports 400 roses.
ANSWER: b
POINTS: 1
NOTES: r
88. Refer to Figure 9-6. The size of the tariff on roses is

a. $4.
b. $2.
c. $2.
d. $1.
ANSWER: d
POINTS: 1
NOTES: r
89. Refer to Figure 9-6. The imposition of a tariff on roses

a. increases the number of roses imported by 100.
b. increases the number of roses imported by 200.
c. decreases the number of roses imported by 200.
d. decreases the number of roses imported by 400.
ANSWER: c
POINTS: 1
NOTES: r
90. Refer to Figure 9-6. The amount of revenue collected by the government from the tariff is
a. $200.
b. $400.
c. $500.
d. $600.
ANSWER: a
POINTS: 1
NOTES: r
91. Refer to Figure 9-6. When a tariff is imposed in the market, domestic producers
a. gain $100 of producer surplus.
b. gain $150 of producer surplus.
c. gain $200 of producer surplus.
d. gain $300 of producer surplus.
ANSWER: b
POINTS: 1
NOTES: r
92. Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals
a. $100.
b. $200.
c. $400.
d. $500.
ANSWER: a
POINTS: 1
NOTES: r
93. Refer to Figure 9-6. When the tariff is imposed, domestic consumers
a. lose by $200.
b. lose by $450.
c. gain by $200.
d. gain by $450.
ANSWER: b
POINTS: 1
NOTES: r
94. 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
a. importer of fish and the price of fish in Germany will be $6.00.
b. importer of fish and the price of fish in Germany will be $8.00.
c. exporter of fish and the price of fish in Germany will be $6.00.
d. exporter of fish and the price of fish in Germany will be $8.00.
ANSWER: a
POINTS: 1
95. The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00
per pound.
Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its
consumers of fish will become
a. better off, its producers of fish will become better off, and on balance the citizens of Denmark
will become better off.
b. worse off, its producers of fish will become better off, and on balance the citizens of Denmark
will become worse off.
c. worse off, its producers of fish will become better off, and on balance the citizens of Denmark
will become worse off.
d. better off, its producers of fish will become worse off, and on balance the citizens of Denmark
will become better off.
ANSWER: d
POINTS: 1
Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
96. Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales
before trade are
a. P1 and Q2.
b. P1 and Q1.
c. P0 and Q0.
d. P0 and Q1.
ANSWER: c
POINTS: 1
97. Refer to Figure 9-7. With trade, the Welsh price of cheese and the Welsh quantity of cheese
demanded are
a. P1 and Q2.
b. P1 and Q1.
c. P0 and Q0.
d. P3 and Q1.
ANSWER: b
POINTS: 1
98. Refer to Figure 9-7. With trade, Wales

a. imports Q2 - Q1 units of cheese.
b. exports Q2 - Q1 units of cheese.
c. imports Q2 - Q0 units of cheese.
d. exports Q2 - Q0 units of cheese.
ANSWER: b
POINTS: 1
99. Refer to Figure 9-7. Which of the following is a valid equation for Welsh consumer surplus
with trade?
a. Consumer surplus with trade = (1/2)(Q0)(P1 - P0).
b. Consumer surplus with trade = (1/2)(Q0)(P3 - P0).
c. Consumer surplus with trade = (1/2)(Q1)(P3 - P1).
d. None of the above is correct.
ANSWER: c
POINTS: 1
100. 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.
ANSWER: d
POINTS: 1
101. Refer to Figure 9-7. Which of the following is a valid equation for the gains from trade?
a. Gains from trade = (1/2)(P1 - P0)(Q2 - Q1).
b. Gains from trade = (1/2)(P1 - P0)(Q2 - Q0)
c. Gains from trade = (1/2)(P1 - P0)(Q1 + Q2).
d. Gains from trade = (1/2)(Q1)(P3 - P1).
ANSWER: a
POINTS: 1
Figure 9-8. On the diagram below, Q represents the quantity of cars and P represents the price
of cars.
102. 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.
ANSWER: b
POINTS: 1
103. Refer to Figure 9-8. The country for which the figure is drawn
a. has a comparative advantage relative to other countries in the production of cars and it will
export cars.
b. has a comparative advantage relative to other countries in the production of cars and it will
import cars.
c. has a comparative disadvantage relative to other countries in the production of cars and it will
export cars.
d. has a comparative disadvantage relative to other countries in the production of cars and it will
import cars.
ANSWER: d
POINTS: 1
104. Refer to Figure 9-8. When the country for which the figure is drawn allows international trade
in cars,
a. consumer surplus increases by the area B.
b. producer surplus decreases by the area B + D.
c. total surplus increases by the area D.
ANSWER: c
POINTS: 1
105. Refer to Figure 9-8. In the country for which the figure is drawn, total surplus with
international trade in cars
a. is represented by the area A + B + C.
b. is represented by the area A + B + D.
c. is smaller than producer surplus without international trade in cars.
d. is larger than total surplus without international trade in cars.
ANSWER: d
POINTS: 1
Figure 9-9
106. Refer to Figure 9-9. Consumer surplus in this market before trade is
a. A.
b. A + B.
c. A + B + D.
d. C.
ANSWER: b
POINTS: 1
107. Refer to Figure 9-9. Consumer surplus in this market after trade is
a. A.
b. A + B.
c. A + B + D.
d. C.
ANSWER: a
POINTS: 1
108. Refer to Figure 9-9. Producer surplus in this market before trade is
a. A.
b. A + B.
c. B + C + D.
d. C.
ANSWER: d
POINTS: 1
109. Refer to Figure 9-9. Producer surplus in this market after trade is
a. A.
b. A + B.
c. B + C + D.
d. C.
ANSWER: c
POINTS: 1
110. Refer to Figure 9-9. Total surplus in this market before trade is
a. A + B.
b. A + B + C.
c. A + B + C + D.
d. B + C + D.
ANSWER: b
POINTS: 1
111. Refer to Figure 9-9. Total surplus in this market after trade is
a. A + B.
b. A + B + C.
c. A + B + C + D.
d. B + C + D.
ANSWER: c
POINTS: 1
112. 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.
ANSWER: b
POINTS: 1
Figure 9-10. The figure applies to Mexico and the good is rifles.
113. Refer to Figure 9-10. The price and quantity of rifles in Mexico before trade is
a. P0 and Q0.
b. P1 and Q1.
c. P2 and Q2.
d. P1 and Q0.
ANSWER: a
POINTS: 1
114. Refer to Figure 9-10. With trade, the equilibrium price of rifles and the equilibrium quantity of
rifles demanded in Mexico are
a. P1 and Q1.
b. P1 and Q2.
c. P2 and Q2.
d. P0 and Q0.
ANSWER: b
POINTS: 1
115. Refer to Figure 9-10. When trade takes place, the quantity Q2 - Q1 is
a. the number of rifles bought and sold in Mexico.
b. the number of rifles produced in Mexico.
c. the number of rifles exported by Mexico.
d. the number of rifles imported by Mexico.
ANSWER: d
POINTS: 1
116. Refer to Figure 9-10. Mexico’s gains from trade are represented by the area that is bounded
by the points
a. (0, P0), (Q0, P0), (Q2, P1), and (0, P1).
b. (0, P1), (0, P2), (Q0, P0), and (Q1, P1).
c. (Q0, P0), (Q2, P1), and (Q1, P1).
d. (0, P0), (0, P2), and (Q0, P0).
ANSWER: c
POINTS: 1
117. Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1)
represents
a. Mexico’s gains from trade.
b. the amount by which Mexico’s gain in consumer surplus exceeds its loss in producer surplus
due to trade.
c. Mexico’s gain in total surplus due to trade.
ANSWER: d
POINTS: 1
118. Refer to Figure 9-10. The area bounded by the points (Q0, P0), (Q2, P1), and (Q1, P1)
represents
a. Mexico’s gains from trade.
b. the amount by which Mexico’s gain in producer surplus exceeds its loss in consumer surplus
due to trade.
c. Mexico’s loss in total surplus due to trade.
ANSWER: a
POINTS: 1
Figure 9-11
119. Refer to Figure 9-11. Consumer surplus in this market before trade is
a. A.
b. B + C.
c. A + B + D.
d. C.
ANSWER: a
POINTS: 1
120.
Refer to Figure 9-11. Consumer surplus in this market after trade is
a. A.
b. C + B.
c. A + B + D.
d. B + C + D.
ANSWER: c
POINTS: 1
121. Refer to Figure 9-11. Producer surplus in this market before trade is
a. C.
b. B + C.
c. A + B + D.
d. B + C + D.
ANSWER: b
POINTS: 1
122. Refer to Figure 9-11. Producer surplus in this market after trade is
a. C.
b. C + B.
c. A + B + D.
d. B + C + D.
ANSWER: a
POINTS: 1
123. Refer to Figure 9-11. Producer surplus plus consumer surplus in this market before trade is
a. A + B.
b. A + B + C.
c. A + B + C + D.
d. B + C + D.
ANSWER: b
POINTS: 1
124. Refer to Figure 9-11. Producer surplus plus consumer surplus in this market after trade is
a. A + B.
b. A + B + C.
c. B + C + D.
d. A + B + C + D.
ANSWER: d
POINTS: 1
125. Refer to Figure 9-11. The change in total surplus in this market because of trade is
a. A, and this area represents a loss of total surplus.
b. B, and this area represents a gain in total surplus.
c. C, and this area represents a loss of total surplus.
d. D, and this area represents a gain in total surplus.
ANSWER: d
POINTS: 1
Figure 9-12
126. Refer to Figure 9-12. Equilibrium price and equilibrium quantity without trade are
a. $54 and 800.
b. $54 and 1,600.
c. $42 and 800.
d. $42 and 1,200.
ANSWER: d
POINTS: 1
NOTES: r
127. Refer to Figure 9-12. With trade, the domestic price and domestic quantity demanded are
a. $54 and 800.
b. $54 and 1,600.
c. $42 and 800.
d. $42 and 1,200.
ANSWER: a
POINTS: 1
NOTES: r
128. Refer to Figure 9-12. With trade, domestic production and domestic consumption, respectively,
are
a. 1,200 and 800.
b. 1,600 and 800.
c. 800 and 1,200.
d. 800 and 1,600.
ANSWER: b
POINTS: 1
NOTES: r
129. Refer to Figure 9-12. Consumer surplus before trade is

a. $14,400.
b. $16,800.
c. $21,600.
d. $24,800.
ANSWER: c
POINTS: 1
NOTES: r
130. Refer to Figure 9-12. Consumer surplus after trade is

a. $6,400.
b. $9,600.
c. $12,800.
d. $14,400.
ANSWER: b
POINTS: 1
NOTES: r
131. Refer to Figure 9-12. Producer surplus before trade is

a. $14,400.
b. $16,800.
c. $21,600.
d. $24,800.
ANSWER: c
POINTS: 1
NOTES: r
132. Refer to Figure 9-12. Producer surplus after trade is

a. $28,000.
b. $30,000.
c. $35,200.
d. $38,400.
ANSWER: d
POINTS: 1
NOTES: r
133. Refer to Figure 9-12. With trade allowed, this country

a. exports 400 units of the good.
b. exports 800 units of the good.
c. imports 400 units of the good.
d. exports 1,600 units of the good.
ANSWER: b
POINTS: 1
NOTES: r
Figure 9-13
134. Refer to Figure 9-13. The price and domestic quantity demanded after trade are
a. $8 and 300.
b. $8 and 900.
c. $14 and 900.
d. $14 and 600.
ANSWER: b
POINTS: 1
135. Refer to Figure 9-13. With trade, domestic production and domestic consumption, respectively,
are
a. 600 and 600.
b. 600 and 300.
c. 300 and 900.
d. 600 and 900.
ANSWER: c
POINTS: 1
136. Refer to Figure 9-13. Consumer surplus before trade is

a. $1,600.
b. $2,400.
c. $3,200.
d. $3,600.
ANSWER: d
POINTS: 1
137. Refer to Figure 9-13. Consumer surplus after trade is

a. $3,600.
b. $5,400.
c. $7,200.
d. $8,100.
ANSWER: d
POINTS: 1
138. Refer to Figure 9-13. Producer surplus before trade is

a. $3,600.
b. $4,400.
c. $5,200.
d. $6,600.
ANSWER: a
POINTS: 1
139. Refer to Figure 9-13. With trade, producer surplus is

a. $900.
b. $1,100.
c. $1,500.
d. $2,000.
ANSWER: a
POINTS: 1
140. Refer to Figure 9-13. With trade, the country

d. imports 600 units of the good.
ANSWER: d
POINTS: 1
Figure 9-14. On the diagram below, Q represents the quantity of crude oil and P represents the
price of crude oil.
in crude oil,
a. consumer surplus for domestic crude-oil consumers decreases.
b. the demand for crude oil by domestic crude-oil consumers decreases.
c. the losses of the domestic losers outweigh the gains of the domestic winners.
d. domestic crude-oil producers sell less crude oil.
ANSWER: a
POINTS: 1
in crude oil,
a. consumer surplus changes from the area A + B + D to the area A.
b. producer surplus changes from the area C to the area B + C + D.
c. total surplus decreases by the area D.
ANSWER: b
POINTS: 1
143. Refer to Figure 9-14. The country for which the figure is drawn
a. has a comparative advantage relative to other countries in the production of crude oil and it
will export crude oil.
b. has a comparative advantage relative to other countries in the production of crude oil and it
will import crude oil.
c. has a comparative disadvantage relative to other countries in the production of crude oil and it
will export crude oil.
d. has a comparative disadvantage relative to other countries in the production of crude oil and it
will import crude oil.
ANSWER: a
POINTS: 1
144. Refer to Figure 9-14. A result of this country allowing international trade in crude oil is as
follows:
a. The well-being of domestic crude-oil producers is now higher in that they now sell more crude
oil at a higher price per barrel.
b. The effect on the well-being of domestic crude-oil consumers is unclear in that they now buy
more crude oil, but at a higher price per barrel.
c. The effect on the well-being of the country is unclear in that domestic producer surplus
increases, while the effect on domestic consumer surplus is unclear.
ANSWER: a
POINTS: 1
145. A tariff on a product makes

a. domestic sellers better off and domestic buyers worse off.
b. domestic sellers worse off and domestic buyers worse off.
c. domestic sellers better off and domestic buyers better off.
d. domestic sellers worse off and domestic buyers better off.
ANSWER: a
POINTS: 1
146. A tariff on a product

a. is a direct quantitative restriction on the amount of a good that can be imported.
b. increases the domestic quantity supplied.
c. increases domestic consumer surplus.
ANSWER: b
POINTS: 1
147. A tariff on a product

a. enhances the economic well-being of the domestic economy.
b. increases the domestic quantity supplied.
c. increases the domestic quantity demanded.
d. results in an increase in producer surplus that is greater than the resulting decrease in
consumer surplus.
ANSWER: b
POINTS: 1
148. If the United States imports televisions and the U.S. government imposes a tariff on televisions,
then
a. total surplus in the American television market decreases.
b. producer surplus in the American television market increases.
c. U.S. imports of foreign televisions decrease.
ANSWER: d
POINTS: 1
149. When a country that imports a particular good imposes a tariff on that good,
a. consumer surplus increases and total surplus increases in the market for that good.
b. consumer surplus increases and total surplus decreases in the market for that good.
c. consumer surplus decreases and total surplus increases in the market for that good.
d. consumer surplus decreases and total surplus decreases in the market for that good.
ANSWER: d
POINTS: 1
150. When a country that imports a particular good imposes a tariff on that good,
ANSWER: b
POINTS: 1
151. When a country that imports a particular good imposes an import quota on that good,
ANSWER: d
POINTS: 1
TOPICS: DISC: International Trade Quotas
152. When a country that imports a particular good imposes an import quota on that good,
ANSWER: b
POINTS: 1
153. A tariff is a tax placed on

a. an exported good and it lowers the domestic price of the good below the world price.
b. an exported good and it ensures that the domestic price of the good stays the same as the
world price.
c. an imported good and it lowers the domestic price of the good below the world price.
d. an imported good and it raises the domestic price of the good above the world price.
ANSWER: d
POINTS: 1
154. A tariff
a. lowers the domestic price of the exported good below the world price.
b. keeps the domestic price of the exported good the same as the world price.
c. raises the domestic price of the imported good above the world price.
d. lowers the domestic price of the imported good below the world price.
ANSWER: c
POINTS: 1
155. When a country moves away from a free trade position and imposes a tariff on imports, it
causes
a. a decrease in total surplus in the market.
b. a decrease in producer surplus in the market.
c. an increase in consumer surplus in the market.
d. a decrease in revenue to the government.
ANSWER: a
POINTS: 1
156. If the demand curve and the supply curve for a good are straight lines, then the deadweight loss
that results from a tariff is represented on the supply-and-demand graph by
a. the area of one triangle.
b. the area of one rectangle.
c. the combined areas of two different triangles.
d. the combined areas of two different rectangles.
ANSWER: c
POINTS: 1
157. Suppose Iran imposes a tariff on lumber. For the tariff to have any effect, it must be the case
that
a. Iran is an exporter of lumber.
b. the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at
the world price without the tariff.
c. the world price without the tariff is less than the price of lumber without trade.
d. the world price without the tariff is greater than the price of lumber without trade.
ANSWER: c
POINTS: 1
158. Spain is an importer of computer chips, taking the world price of $12 per chip as given. Suppose
Spain imposes a $5 tariff on chips. As a result,
a. Spanish consumers of chips and Spanish producers of chips both gain.
b. Spanish consumers of chips gain and Spanish producers of chips lose.
c. Spanish consumers of chips lose and Spanish producers of chips gain.
d. Spanish consumers of chips and Spanish producers of chips both lose.
ANSWER: c
POINTS: 1
159. Denmark is an importer of computer chips, taking the world price of $12 per chip as given.
Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?
a. More Danish-produced chips are sold in Denmark.
b. More foreign-produced chips are sold in Denmark.
c. Danish consumers of chips become better off.
d. Total surplus in the Danish chip market increases.
ANSWER: a
POINTS: 1
160. Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose
Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?
a. The price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases;
and the quantity of chips imported by Chile decreases.
b. The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases;
c. The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases;
d. The price of chips in Chile increases to $16; the quantity of Chilean-produced chips increases;
and the quantity of chips imported by Chile does not change.
ANSWER: c
POINTS: 1
161. Honduras is an importer of goose-down pillows. The world price of these pillows is $50.
Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a
result of the tariff, the price of goose-down pillows in Honduras
a. remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases.
b. increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases.
c. increases to a new price between $50 and $57 and the quantity of goose-down pillows
purchased in Honduras decreases.
d. increases to a new price above $57 and the quantity of goose-down pillows purchased in
Honduras remains the same.
ANSWER: b
POINTS: 1
162. Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a
$3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the
tariff,
a. Turkish consumers of wheat become worse off and Turkish producers of wheat become
worse off.
b. Turkish consumers of wheat become worse off and Turkish producers of wheat become
better off.
c. Turkish consumers of wheat become better off and Turkish producers of wheat become
worse off.
d. Turkish consumers of wheat become better off and Turkish producers of wheat become
better off.
ANSWER: b
POINTS: 1
163. When the nation of Brownland first permitted trade with other nations, domestic producers of
wheat experienced
an increase in producer surplus of $4 million and total surplus in Brownland’s wheat market
increased by $1 million.
We can conclude that
a. Brownland became an exporter of wheat.
b. consumer surplus in Brownland increased by $3 million.
c. the opening of trade caused the domestic supply curve for wheat in Brownland to shift to the
left.
d. this example is inconsistent with the economic theory of international trade.
ANSWER: a
POINTS: 1
164. When the nation of Mooseland first permitted trade with other nations, domestic producers of
sugar experienceda decrease in producer surplus of $5 million and total surplus in Mooseland’s
sugar market increased by $2 million We can conclude that
a. Mooseland became an exporter of sugar.
b. the overall economic well-being of participants in the sugar market in Mooseland fell because
of trade.
c. consumer surplus in Mooseland increased by $7 million.
d. the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the
right.
ANSWER: c
POINTS: 1
Figure 9-15
165. Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity
demanded are
a. P1 and Q1.
b. P1 and Q4.
c. P2 and Q2.
d. P2 and Q3.
ANSWER: b
POINTS: 1
166. Refer to Figure 9-15. With the tariff, the domestic price and domestic quantity demanded are
a. P1 and Q1.
b. P1 and Q4.
c. P2 and Q2.
d. P2 and Q3.
ANSWER: d
POINTS: 1
167. Refer to Figure 9-15. With the tariff, the quantity of saddles imported is
a. Q3 - Q1.
b. Q3 - Q2.
c. Q4 - Q1.
d. Q4 - Q2.
ANSWER: b
POINTS: 1
168. Refer to Figure 9-15. A result of the tariff is that, relative to the free-trade situation, the
quantity of saddles imported decreases by
a. Q2 - Q1.
b. Q3 - Q2.
c. Q4 - Q3.
d. Q4 - Q3 + Q2 - Q1.
ANSWER: d
POINTS: 1
169. Refer to Figure 9-15. Consumer surplus with trade and without a tariff is
a. A.
b. A + B.
c. A + C + G.
d. A + B + C + D + E + F.
ANSWER: d
POINTS: 1
170. Refer to Figure 9-15. Producer surplus with trade and without a tariff is
a. G.
b. C + G.
c. A + C + G.
d. A + B + C + G.
ANSWER: a
POINTS: 1
171. Refer to Figure 9-15. Consumer surplus with the tariff is

a. A.
b. A + B.
c. A + C + G.
d. A + B + C + D +E + F.
ANSWER: b
POINTS: 1
172. Refer to Figure 9-15. Producer surplus with the tariff is

a. G.
b. C + G.
c. A + C + G.
d. A + B + C + G.
ANSWER: b
POINTS: 1
173. Refer to Figure 9-15. The amount of government revenue created by the tariff is
a. B.
b. E.
c. D + F.
d. B + D + E + F.
ANSWER: b
POINTS: 1
174. Refer to Figure 9-15. As a result of the tariff, there is a deadweight loss that amounts to
a. B.
b. E.
c. D + F.
d. B + D + E + F.
ANSWER: c
POINTS: 1
175. Refer to Figure 9-15. For the saddle market, area B represents
a. government’s revenue from the tariff.
b. the deadweight loss of the tariff.
c. the increase in producer surplus, relative to the free-trade situation, as a result of the tariff.
ANSWER: d
POINTS: 1
176. Refer to Figure 9-15. For the saddle market, area E represents
a. government’s revenue from the tariff.
b. producer surplus after the tariff becomes effective.
c. the decrease in consumer surplus, relative to the free-trade situation, as a result of the tariff.
d. the decrease in total surplus, relative to the free-trade situation, as a result of the tariff.
ANSWER: a
POINTS: 1
Figure 9-16. The figure below illustrates a tariff. On the graph, Q represents quantity and P
represents price.
177. Refer to Figure 9-16. Government revenue raised by the tariff is represented by the area
a. E.
b. B + E.
c. D + E + F.
d. B + D + E + F.
ANSWER: a
POINTS: 1
178. Refer to Figure 9-16. The tariff

a. decreases producer surplus by the area C and decreases consumer surplus by the area C + D
+ E + F.
b. decreases producer surplus by the area C + D and decreases consumer surplus by the area D
+ E + F.
c. increases producer surplus by the area C and decreases consumer surplus by the area C + D
+ E + F.
d. increases producer surplus by the area B + C and decrease consumer surplus by the area D +
E + F.
ANSWER: c
POINTS: 1
179. Refer to Figure 9-16. The tariff

a. decreases producer surplus by the area C, decreases consumer surplus by the area C + D +
E, and decreases total surplus by the area D + F.
b. increases producer surplus by the area C, decreases consumer surplus by the area C + D + E
+ F, and decreases total surplus by the area D + F.
c. creates government revenue represented by the area B + E and decreases total surplus by the
area D + E + F.
d. increases producer surplus by the area C + G and creates government revenue represented
by the area D + E + F.
ANSWER: b
POINTS: 1
180. Refer to Figure 9-16. The deadweight loss created by the tariff is represented by the area
a. B.
b. D + F.
c. D + E + F.
d. B + D + E + F.
ANSWER: b
POINTS: 1
181. Refer to Figure 9-16. The area C + D + E + F represents

a. the decrease in consumer surplus caused by the tariff.
b. the decrease in total surplus caused by the tariff.
c. the deadweight loss of the tariff minus government revenue raised by the tariff.
d. the deadweight loss of the tariff plus government revenue raised by the tariff.
ANSWER: a
POINTS: 1
182. A quota is
a. a tax placed on imports.
b. a limit on the quantity of imports.
c. a tax on exports to other countries.
d. an excess of exports over imports.
ANSWER: b
POINTS: 1
183. Both tariffs and import quotas

a. increase the quantity of imports and raise the domestic price of the good.
b. increase the quantity of imports and lower the domestic price of the good.
c. decrease the quantity of imports and raise the domestic price of the good.
d. decrease the quantity of imports and lower the domestic price of the good.
ANSWER: c
POINTS: 1
184. A major difference between tariffs and import quotas is that

a. tariffs create deadweight losses, but import quotas do not.
b. tariffs help domestic consumers, and import quotas help domestic producers.
c. tariffs raise revenue for the government, but import quotas create surplus for those who get
the licenses to import.
ANSWER: c
POINTS: 1
185. Tariffs and quotas are different in the sense that

a. tariffs cause deadweight losses, while quotas do not cause deadweight losses.
b. tariffs raise revenue for the government, while quotas do not raise revenue for the
government.
c. tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of
domestic consumers.
d. tariffs enhance the well-being of domestic producers, while quotas diminish the well-being of
domestic producers.
ANSWER: b
POINTS: 1
186. Import quotas and tariffs produce similar results. Which of the following is not one of those
results?
a. The domestic price of the good increases.
b. Consumer surplus of domestic consumers increases.
c. Producer surplus of domestic producers increases.
d. A deadweight loss is experienced by the domestic country.
ANSWER: b
POINTS: 1
187. Import quotas and tariffs produce some common results. Which of the following is not one of
those common results?
a. Total surplus in the domestic country falls.
b. Producer surplus in the domestic country increases.
c. The domestic country experiences a deadweight loss.
d. Revenue is raised for the domestic government.
ANSWER: d
POINTS: 1
188. An import quota

a. is preferable to a tariff since an import quota does not create a deadweight loss.
b. is a tax on imported goods.
c. reduces the welfare of domestic consumers.
d. reduces the welfare of domestic producers.
ANSWER: c
POINTS: 1
189. The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.
When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and
neither importing nor exporting rugs. We can conclude that Aquilonia’s new free-trade policy
has
a. increased consumer surplus and producer surplus in the incense market.
b. increased consumer surplus in the steel market and left producer surplus in the rug market
unchanged.
c. decreased consumer surplus in both the steel and rug markets.
d. decreased consumer surplus in the steel market and increased total surplus in the incense
market.
ANSWER: d
POINTS: 1
190. The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.
When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither
importing nor exporting TVs. We can conclude that producer surplus in Aquilonia is now
a. higher in the steel market, lower in the rice market, and unchanged in the TV market.
b. higher in the rice and steel markets, and unchanged in the TV market.
c. lower in the rice and TV markets, and higher in the steel market.
d. lower in the rice and steel markets, and the same in the TV market.
ANSWER: a
POINTS: 1
191. Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its
trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing
nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade
policy?
a. producers of incense and consumers of steel
b. consumers of all three goods
c. consumers of incense and producers of rugs
d. producers of steel and consumers of incense
ANSWER: d
POINTS: 1
192. The United States has imposed taxes on some imported goods that have been sold here by
foreign countries at below their cost of production. These taxes
a. benefit the United States as a whole, because they generate revenue for the government. In
addition, because the goods are priced below cost, the taxes do not harm domestic
consumers.
b. benefit the United States as a whole, because they generate revenue for the government and
increase producer surplus.
c. harm the United States as a whole, because they reduce consumer surplus by an amount that
exceeds the gain in producer surplus and government revenue.
d. harm the United States as a whole, because they reduce producer surplus by an amount that
exceeds the gain in consumer surplus and government revenue.
ANSWER: c
POINTS: 1
193. Some goods can be produced at low cost only if they are produced in large quantities. This
phenomenon is called
a. marginal cost of production.
b. marginal benefit of size.
c. economies of scale.
d. economies of production.
ANSWER: c
POINTS: 1
194. Relative to a situation in which domestic firms do not compete with foreign firms, firms in
countries that engage in free trade
a. can realize economies of scale more fully.
b. have greater market power.
c. experience larger producer surplus.
ANSWER: a
POINTS: 1
Figure 9-17
195. Refer to Figure 9-17. Without trade, consumer surplus is

a. $400 and producer surplus is $200.
b. $400 and producer surplus is $800.
c. $1,600 and producer surplus is $200.
d. $1,600 and producer surplus is $800.
ANSWER: b
POINTS: 1

ANSWER: c
POINTS: 1
197. Refer to Figure 9-17. With trade and a tariff, consumer surplus is
ANSWER: d
POINTS: 1
198. Refer to Figure 9-17. Without trade, total surplus is

a. $600.
b. $1,200.
c. $1,800.
d. $2,250.
ANSWER: b
POINTS: 1
199. Refer to Figure 9-17. With free trade, total surplus is

a. $600.
b. $1,200.
c. $1,800.
d. $2,400.
ANSWER: c
POINTS: 1
200. Refer to Figure 9-17. With trade and a tariff, total surplus is
a. $1,224.
b. $1,416.
c. $1,512.
d. $1,704.
ANSWER: d
POINTS: 1
201. Refer to Figure 9-17. With free trade, the country imports
a. 16 units of the good.
b. 24 units of the good.
c. 60 units of the good.
d. 64 units of the good.
ANSWER: c
POINTS: 1
202. Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff
a. decreases imports of the good by 16 units and increases domestic production of the good by 8
units.
b. decreases imports of the good by 16 units and increases domestic production of the good by
16 units.
c. decreases imports of the good by 24 units and increases domestic production of the good by 8
units.
d. decreases imports of the good by 24 units and increases domestic production of the good by
24 units.
ANSWER: c
POINTS: 1
203. Refer to Figure 9-17. The amount of revenue collected by the government from the tariff is
a. $32.
b. $288.
c. $368.
d. $720.
ANSWER: b
POINTS: 1
204. Refer to Figure 9-17. The deadweight loss caused by the tariff is
a. $24.
b. $72.
c. $96.
d. $144.
ANSWER: c
POINTS: 1
205. Refer to Figure 9-17. When comparing no trade to free trade, the gains from trade amount to
a. $400.
b. $600.
c. $750.
d. $1,000.
ANSWER: b
POINTS: 1
206. Refer to Figure 9-17. When the country moves from no trade to free trade, consumer surplus
a. increases by $1,200 and producer surplus increases by $600.
b. increases by $1,200 and producer surplus decreases by $600.
c. decreases by $1,350 and producer surplus increases by $450.
d. decreases by $1,350 and producer surplus decreases by $450.
ANSWER: b
POINTS: 1
207. Refer to Figure 9-17. When the country moves from free trade to trade and a tariff, consumer
surplus
a. decreases by $576 and producer surplus does not change.
b. decreases by $576 and producer surplus increases by $192.
c. decreases by $792 and producer surplus does not change.
d. decreases by $792 and producer surplus increases by $192.
ANSWER: b
POINTS: 1
208. When a certain nation abandoned a policy of prohibiting international trade in automobiles in
favor of a free-tree policy, the result was that the country began to import automobiles. The
change in policy improved the well-being of that nation in the sense that
a. both producers of automobiles and consumers of automobiles in that nation became better off
as a result.
b. the gains to automobile producers in that nation exceeded the losses of the automobile
consumers in that nation.
c. the gains to automobile consumers in that nation exceeded the losses of the automobile
producers in that nation.
d. even though total surplus in that nation decreased, it was still true that consumer surplus and
producer surplus increased.
ANSWER: c
POINTS: 1
209. After a certain nation changed its policy from one that banned international trade in wheat to one
that allowed international trade in wheat, the nation began importing wheat. As a result, total
surplus in the wheat market increased by $10 million. Which of the following changes could
have occurred as well?
a. The price of wheat in that nation increased with the adoption of the new policy.
b. The domestic quantity of wheat supplied increased with the adoption of the new policy.
c. Consumer surplus in the wheat market increased by $7 million and producer surplus in the
wheat market increased by $3 million.
d. Consumer surplus in the wheat market increased by $15 million and producer surplus in the
wheat market decreased by $5 million.
ANSWER: d
POINTS: 1
210. When the nation of Isoland opens up its steel market to international trade, that change
a. creates winners and losers, regardless of whether Isoland ends up exporting or importing steel.
b. results in a decrease in total surplus, regardless of whether Isoland ends up exporting or
importing steel.
c. creates winners, but no losers, if Isoland ends up exporting steel.
d. creates losers, but no winners, if Isoland ends up importing steel.
ANSWER: a
POINTS: 1
211. Some time ago, the nation of Republica opened up its paper market to international trade. Which
of the following results of this policy change is consistent with the notion that Republica has a
comparative advantage over other countries in producing paper?
a. The price of paper in Republica decreased as a result of the policy change.
b. Republica began exporting paper as a result of the policy change.
c. The domestic demand curve for paper shifted to the right as a result of the policy change.
d. The domestic quantity of paper demanded increased as a result of the policy change.
ANSWER: b
POINTS: 1
212. Domestic producers of a good become better off, and domestic consumers of a good become
worse off, when a country begins allowing international trade in that good and
a. the country becomes an importer of the good as a result.
b. the world price exceeds the domestic price of the good that prevailed before international
trade was allowed.
c. other countries have a comparative advantage, relative to the country in question, in producing
the good.
d. total surplus does not change as a result.
ANSWER: b
POINTS: 1
Figure 9-18. On the diagram below, Q represents the quantity of peaches and P represents the
price of peaches. The domestic country is Isoland.
213. Refer to Figure 9-18. If Isoland allows international trade and if the world price of peaches is
$5, then
a. Isoland has a comparative advantage, relative to other countries, in producing peaches.
b. Isoland will import peaches.
c. consumer surplus with trade exceeds consumer surplus without trade.
ANSWER: a
POINTS: 1
214. Refer to Figure 9-18. If Isoland allows international trade and if the world price of peaches is
$3, then
a. Isoland has a comparative advantage, relative to other countries, in producing peaches.
b. Isoland will export peaches.
c. producer surplus with trade exceeds producer surplus without trade.
d. consumer surplus with trade exceeds consumer surplus without trade.
ANSWER: d
POINTS: 1
215. Refer to Figure 9-18. If Isoland allows international trade, then it will be an exporter of
peaches if and only if the world price of peaches is
a. above $2.
b. below $4.
c. above $4.
d. below $7.
ANSWER: c
POINTS: 1
216. Refer to Figure 9-18. If Isoland allows international trade and the world price of peaches is $5,
then
a. producer surplus will be smaller than it would be if Isoland banned trade.
b. consumer surplus will be smaller than it would be if Isoland banned trade.
c. the domestic quantity of peaches demanded will exceed the domestic quantity of peaches
supplied.
d. Isoland will be an importer of peaches.
ANSWER: b
POINTS: 1
217. Refer to Figure 9-18. Suppose Isoland changes from a no-trade policy to a policy that allows
international trade.
If the world price of peaches is $5, then the policy change results in
a. a decrease in consumer surplus.
b. an increase in producer surplus.
c. an increase in total surplus.
ANSWER: d
POINTS: 1
If the world price of peaches is $5, then the policy change results in a
a. $25 decrease in consumer surplus.
b. $20 increase in consumer surplus.
c. $25 decrease in producer surplus.
d. $20 increase in producer surplus.
ANSWER: a
POINTS: 1
If the world price of peaches is $3, then the policy change results in a
a. $15.00 decrease in producer surplus.
b. $45.00 increase in consumer surplus.
c. $20.00 increase in total surplus.
d. $12.50 increase in total surplus.
ANSWER: d
POINTS: 1
220. 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
c. Consumer surplus increases by $100; producer surplus decreases by $200; and government
d. Consumer surplus decreases by $50; producer surplus increases by $200; and government
ANSWER: b
POINTS: 1
221. Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the
tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine
producers, with the tariff, is 8 million bottles per year, then we can conclude that
a. the quantity of wine demanded by France, with the tariff, is 18 million bottles per year.
b. the quantity of wine demanded by France, without the tariff, would be 24 million bottles per
year.
c. the amount of the deadweight loss is 24 million euros per year.
d. the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay
without the tariff.
ANSWER: a
POINTS: 1
222. For a country that is considering the adoption of either a tariff or an import quota on a particular
good, an important difference is that
a. an import quota has no effect on consumer surplus, while a tariff decreases consumer surplus.
b. an import quota has no effect on producer surplus, while a tariff decreases producer surplus.
c. a tariff raises total surplus, while an import quota does not.
d. a tariff raises revenue for that country’s government, while an import quota does not.
ANSWER: d
POINTS: 1
223. 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.
ANSWER: d
POINTS: 1
Figure 9-19. On the diagram below, Q represents the quantity of textiles and P represents the
price of textiles.
224. Refer to Figure 9-19. With free trade, the country for which the figure is drawn will
a. export 30 units of textiles.
b. export 50 units of textiles.
c. import 30 units of textiles.
d. import 50 units of textiles.
ANSWER: d
POINTS: 1
225. Refer to Figure 9-19. With free trade, consumer surplus in the textile market amounts to
a. $210.
b. $320.
c. $405.
d. $910.
ANSWER: c
POINTS: 1
226. When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an
exporter of a particular good,
ANSWER: c
POINTS: 1
227. When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an
exporter of a particular good,
ANSWER: a
POINTS: 1
228. When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer
of a particular good,
ANSWER: a
POINTS: 1
229. When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer
of a particular good,
ANSWER: c
POINTS: 1
230. When a country that exported a particular good abandons a free-trade policy and adopts a no-
trade policy,
ANSWER: b
POINTS: 1
231. When a country that exported a particular good abandons a free-trade policy and adopts a no-
trade policy,
ANSWER: d
POINTS: 1
232. When a country that imported a particular good abandons a free-trade policy and adopts a no-
trade policy,
ANSWER: d
POINTS: 1
233. Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12
per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?
a. More Danish-produced chips are sold in Denmark.
b. More foreign-produced chips are sold in Denmark.
c. Danish consumers of chips become better off.
d. Total surplus in the Danish chip market increases.
ANSWER: a
POINTS: 1
234. Japan imposes a $300 per ton tariff on imported steel, raising the price charged in Japan to
$1,000. Using only this information, which of the following statements is correct?
a. The world price for steel is $300.
b. The world price for steel is $700.
c. The world price for steel is $1,000.
d. The world price for steel is $1,300.
ANSWER: b
POINTS: 1
235. When a country allows international trade and becomes an importer of a good,
b. domestic consumers of the good become better off.
c. the gains of the winners fall short of the losses of the losers.
ANSWER: b
POINTS: 1
236. The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a
ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia
began
a. exporting steel and the price per ton in Russia remained at $650.
b. exporting steel and the price per ton in Russia increased to $1,000.
c. importing steel and the price per ton in Russia remained at $650.
d. importing steel and the price per ton in Russia increased to $1,000.
ANSWER: b
POINTS: 1
237. The world price of a ton of steel is $650. Before Russia allowed trade in steel, the price of a ton
of steel there was
$1,000. Once Russia allowed trade in steel with other countries, Russia began
a. exporting steel and the price per ton in Russia decreased to $650.
b. exporting steel and the price per ton in Russia remained at $1,000.
c. importing steel and the price per ton in Russia decreased to $650.
d. importing steel and the price per ton in Russia remained at $1,000.
ANSWER: c
POINTS: 1
238. If Freedonia changes its laws to allow international trade in software and the world price is
higher than its domestic price, then it must be the case that
a. both consumer surplus and producer surplus increase.
b. consumer surplus increases and producer surplus decreases.
c. consumer surplus decreases and producer surplus increases.
d. both consumer surplus and producer surplus decrease.
ANSWER: c
POINTS: 1
239. If Freedonia changes its laws to allow international trade in software and the world price is lower
than its domestic price, then it must be the case that
a. both consumer surplus and producer surplus increase.
b. consumer surplus increases and producer surplus decreases.
c. consumer surplus decreases and producer surplus increases.
d. both consumer surplus and producer surplus decrease.
ANSWER: b
POINTS: 1
TOPICS: DISC: International trade
240. Domestic producers of a good become worse off, and domestic consumers of a good become
better off, when a country begins allowing international trade in that good and
a. the country becomes an importer of the good as a result.
b. the world price exceeds the domestic price of the good that prevailed before international
trade was allowed.
c. the country in question has a comparative advantage, relative to other countries, in producing
the good.
d. total surplus does not change as a result.
ANSWER: a
POINTS: 1

a. domestic producers become better off, and domestic consumers become worse off.
b. domestic producers become worse off, and domestic consumers become better off.
c. domestic producers become better off, but the effect on the well-being of domestic consumers
is ambiguous.
d. domestic consumers become worse off, but the effect on the well-being of domestic producers
is ambiguous.
ANSWER: a
POINTS: 1

a. domestic producers become better off, and domestic consumers become worse off.
b. domestic producers become worse off, and domestic consumers become better off.
c. domestic consumers become better off, but the effect on the well-being of domestic producers
is ambiguous.
d. domestic producers become worse off, but the effect on the well-being of domestic consumers
is ambiguous.
ANSWER: b
POINTS: 1
243. In the market for apples in a certain country, consumer surplus increases and total surplus
increases when that country
a. abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of apples.
b. abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of apples.
c. abandons a free-trade policy, adopts a no-trade policy, and becomes an importer of apples.
d. abandons a free-trade policy, adopts a no-trade policy, and becomes an exporter of apples.
ANSWER: a
POINTS: 1
Multiple Choice – Section 02b: The Winners and Losers from Trade
Figure 9-20
The figure illustrates the market for rice in Vietnam.

a. Vietnam will experience a shortage of rice if trade is not allowed.
b. Vietnam will experience a surplus of rice if trade is not allowed.
c. Vietnam has a comparative advantage in producing rice, relative to the rest of the world.
d. foreign countries have a comparative advantage in producing rice, relative to Vietnam.
ANSWER: c
POINTS: 1

a. Vietnam has a comparative advantage in producing rice, relative to the rest of the world.
b. foreign countries have a comparative advantage in producing rice, relative to Vietnam.
c. Vietnam has an absolute advantage in producing rice, relative to the rest of the world.
d. foreign countries have an absolute advantage in producing rice, relative to Vietnam.
ANSWER: a
POINTS: 1
3. Refer to Figure 9-20. In the absence of trade, total surplus in the Vietnamese rice market
amounts to
a. 9,250.
b. 10,000.
c. 12,000.
d. 13,000.
ANSWER: c
POINTS: 1
4. 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.
ANSWER: a
POINTS: 1
5. Refer to Figure 9-20. With trade, Vietnam will

a. export 1,000 units of rice.
b. export 1,500 units of rice.
c. import 1,000 units of rice.
d. import 1,500 units of rice.
ANSWER: b
POINTS: 1
6. Refer to Figure 9-20. With trade, Vietnamese rice producers will produce
a. 2,000 units of rice and their producer surplus will be 4,000.
b. 2,000 units of rice and their producer surplus will be 7,500.
c. 3,000 units of rice and their producer surplus will be 7,500.
d. 3,000 units of rice and their producer surplus will be 9,000.
ANSWER: d
POINTS: 1
7. Refer to Figure 9-20. Vietnam’s gains from trade in rice amount to

a. 750.
b. 1,000.
c. 1,250.
d. 1,500.
ANSWER: d
POINTS: 1
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.
8. Refer to Scenario 9-2. If Boxland prohibits international trade in cardboard, then the equilibrium
price of a ton of cardboard is
a. $36 and the equilibrium quantity of cardboard is 74 tons.
b. $44 and the equilibrium quantity of cardboard is 88 tons.
c. $52 and the equilibrium quantity of cardboard is 96 tons.
d. $60 and the equilibrium quantity of cardboard is 100 tons.
ANSWER: c
POINTS: 1
9. 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.
ANSWER: c
POINTS: 1
10. Refer to Scenario 9-2. Suppose the world price of cardboard is $45 and international trade is
allowed. Then
Boxland’s consumers demand
a. 110 tons of cardboard and Boxland’s producers supply 75 tons of cardboard.
b. 110 tons of cardboard and Boxland’s producers supply 96 tons of cardboard.
c. 96 tons of cardboard and Boxland’s producers supply 75 tons of cardboard.
d. 96 tons of cardboard and Boxland’s producers supply 96 tons of cardboard.
ANSWER: a
POINTS: 1
11. Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then, relative to the no-
trade situation, international trade in cardboard produces which of the following results for
Boxland?
a. It increases consumer surplus, decreases producer surplus, and increases total surplus.
b. It increases consumer surplus, increases producer surplus, and increases total surplus.
c. It increases consumer surplus, decreases producer surplus, and decreases total surplus.
d. It decreases consumer surplus, increases producer surplus, and increases total surplus.
ANSWER: a
POINTS: 1
12. Refer to Scenario 9-2. Suppose the world price of cardboard is $45. Then Boxland’s gains from
international trade
in cardboard amount to
a. $88.75.
b. $102.50.
c. $122.50.
d. $135.00.
ANSWER: c
POINTS: 1
trade situation, international trade in cardboard
a. benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00.
b. benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50.
c. benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50.
d. harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00.
ANSWER: b
POINTS: 1
14. Refer to Scenario 9-2. Suppose the world price of cardboard is $60. 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.
ANSWER: b
POINTS: 1
15. Refer to Scenario 9-2. Suppose the world price of cardboard is $60 and international trade is
allowed. Then Boxland’s consumers demand
a. 110 tons of cardboard and Boxland’s producers supply 120 tons of cardboard.
b. 96 tons of cardboard and Boxland’s producers supply 96 tons of cardboard.
c. 96 tons of cardboard and Boxland’s producers supply 115 tons of cardboard.
d. 80 tons of cardboard and Boxland’s producers supply 120 tons of cardboard.
ANSWER: d
POINTS: 1
trade situation, international trade in cardboard produces which of the following results for
Boxland?
a. It decreases consumer surplus, increases producer surplus, and decreases total surplus.
b. It decreases consumer surplus, increases producer surplus, and increases total surplus.
c. It decreases consumer surplus, decreases producer surplus, and decreases total surplus.
d. It increases consumer surplus, increases producer surplus, and increases total surplus.
ANSWER: b
POINTS: 1
17. 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.
ANSWER: b
POINTS: 1
trade situation, international trade in cardboard
a. benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660.
b. harms Boxlandian consumers by $736 and harms Boxlandian producers by $598.
c. harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864.
d. harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984.
ANSWER: c
POINTS: 1
Figure 9-21
The following diagram shows the domestic demand and domestic supply for a market. In
addition, assume that the world price in this market is $40 per unit.
19. Refer to Figure 9-21. With free trade, the domestic price and domestic quantity demanded are
a. $30 and 1,200.
b. $40 and 800.
c. $30 and 800.
d. $40 and 1,600.
ANSWER: b
POINTS: 1
20. Refer to Figure 9-21. With free trade, domestic production and domestic consumption,
respectively, are
a. 1,200 and 800.
b. 1,600 and 1,200.
c. 1,600 and 800.
d. 1,200 and 1,200
ANSWER: c
POINTS: 1
21. Refer to Figure 9-21. Consumer surplus with free trade is

a. $4,000.
b. $8,000.
c. $16,000.
d. $18,000.
ANSWER: b
POINTS: 1
22. Refer to Figure 9-21. Producer surplus with free trade is

a. $14,000.
b. $18,000.
c. $24,000.
d. $32,000.
ANSWER: d
POINTS: 1
23. Refer to Figure 9-21. With free trade allowed, this country
d. exports 800 units of the good.
ANSWER: d
POINTS: 1
Figure 9-22
The following diagram shows the domestic demand and domestic supply in a market. In addition,
assume that the world price in this market is $40 per unit.

a. $48,000 and producer surplus is $48,000.
b. $18,000 and producer surplus is $12,000.
c. $108,000 and producer surplus is $12,000.
d. $18,000 and producer surplus is $48,000.
ANSWER: c
POINTS: 1
25. Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and
a tariff, consumer surplus is
a. $75,000 and producer surplus is $27,000.
b. $63,000 and producer surplus is $12,000.
c. $75,000 and producer surplus is $12,000.
d. $63,000 and producer surplus is $27,000.
ANSWER: a
POINTS: 1

a. $30,000.
b. $66,000.
c. $96,000.
d. $120,000.
ANSWER: d
POINTS: 1
a tariff, total surplus is
a. $96,000.
b. $114,000.
c. $120,000.
d. $126,000.
ANSWER: b
POINTS: 1
28. Refer to Figure 9-22. With free trade, the country imports
a. 300 units of the good.
b. 600 units of the good.
c. 900 units of the good.
d. 1,200 units of the good.
ANSWER: d
POINTS: 1
29. Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The amount of
revenue collected by the government from the tariff is
a. $6,000.
b. $9,000.
c. $12,000.
d. $15,000.
ANSWER: c
POINTS: 1
30. Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. The deadweight
loss caused by the tariff is
a. $6,000.
b. $9,000.
c. $12,000.
d. $15,000.
ANSWER: a
POINTS: 1
31. Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. Relative to the
free-trade outcome, the imposition of the tariff
a. decreases imports of the good by 300 units and increases domestic production of the good by
300 units.
b. decreases imports of the good by 300 units and increases domestic production of the good by
600 units.
c. decreases imports of the good by 600 units and increases domestic production of the good by
300 units.
d. decreases imports of the good by 600 units and increases domestic production of the good by
600 units.
ANSWER: c
POINTS: 1
32. When a country allows trade and becomes an exporter of bicycles,

a. domestic producers of bicycles are worse off, domestic consumers of bicycles are better off,
and the economic well-being of the country rises.
b. domestic producers of bicycles are worse off, domestic consumers of bicycles are better off,
and the economic well-being of the country falls.
c. domestic producers of bicycles are better off, domestic consumers of bicycles are worse off,
and the economic well-being of the country rises.
d. domestic producers of bicycles are better off, domestic consumers of bicycles are worse off,
and the economic well-being of the country falls.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficutly: Moderate
33. When a country allows trade and becomes an importer of jet skis,
a. domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and
the economic well-being of the country rises.
b. domestic producers of jet skis are worse off, domestic consumers of jet skis are better off, and
the economic well-being of the country falls.
c. domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and
the economic well-being of the country rises.
d. domestic producers of jet skis are better off, domestic consumers of jet skis are worse off, and
the economic well-being of the country falls.
ANSWER: a
POINTS: 1
Figure 9-23
The following diagram shows the domestic demand and domestic supply for a market. Assume
that the world price in this market is $120 per unit.
34. Refer to Figure 9-23. With free trade, the domestic price and domestic quantity demanded are
a. $90 and 5.
b. $90 and 10.
c. $120 and 5.
d. $120 and 18.
ANSWER: c
POINTS: 1
35. Refer to Figure 9-23. With free trade, the domestic price and domestic quantity supplied are
a. $90 and 10.
b. $90 and 18.
c. $120 and 5.
d. $120 and 18.
ANSWER: d
POINTS: 1
36. Refer to Figure 9-23. With free trade allowed, this country
b. imports 5 units of the good.
c. exports 13 units of the good.
ANSWER: c
POINTS: 1
37. Refer to Figure 9-23. Consumer surplus with free trade is

a. $75.
b. $150.
c. $200.
d. $300.
ANSWER: a
POINTS: 1
TOPICS DISC: International Trade
KEYWORDS BLOOM'S: Application
38. Refer to Figure 9-23. Producer surplus with free trade is

a. $200.
b. $450.
c. $630.
d. $1,080
ANSWER c
POINTS: 1
DIFFICULTY Difficutly: Moderate
Figure 9-24
The following diagram shows the domestic demand and supply in a market. Assume that the
world price in this market is $20 per unit.
39. Refer to Figure 9-24. With free trade, the country

ANSWER: b
POINTS: 1

c. $900 and producer surplus is $100.
d. $900 and producer surplus is $400.
ANSWER: c
POINTS: 1

a. $500.
b. $800.
c. $1,000.
d. $1,300.
ANSWER: c
POINTS: 1
a tariff, consumer surplus is
ANSWER: b
POINTS: 1
a. $50.
b. $100.
c. $150.
d. $200.
ANSWER: b
POINTS: 1
a tariff, total surplus is
a. $750.
b. $900.
c. $950.
d. $1,550.
ANSWER: c
POINTS: 1
a. $25.
b. $50.
c. $75.
d. d. $100.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficutly: Challenging
Figure 9-25
The following diagram shows the domestic demand and supply in a market. Assume that the
world price in this market is $10 per unit.

a. $800.
b. $1,200.
c. $1,600.
d. $2,000.
ANSWER: d
POINTS: 1
NOTES: n
47. Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. With trade and a
tariff, total surplus is
a. $1,700.
b. $1,800.
c. $1,900.
d. $2,000.
ANSWER: c
POINTS: 1
NOTES: n
a. $50.
b. $100.
c. $150.
d. $200.
ANSWER: d
POINTS: 1
NOTES: n
a. $25.
b. $50.
c. $75.
d. $100.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficutly: Challenging
NOTES: n
50. Refer to Figure 9-25. With free trade and a $5 per unit tariff, the country
ANSWER: d
POINTS: 1
NOTES: n
Multiple Choice – Section 03: The Arguments for Restricting Trade
1. Congressman Smith cites the “jobs argument” when he argues in favor of restrictions on trade; he
argues that everything can be produced at lower cost in other countries. The likely flaw in
Congressman Smith’s reasoning is that he ignores the fact that
a. there is no evidence that any worker ever lost his or her job because of free trade.
b. unemployment of labor is not a serious problem relative to other economic problems.
c. the gains from trade are based on comparative advantage.
d. the gains from trade are based on absolute advantage.
ANSWER: c
POINTS: 1
2. “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.
ANSWER: b
POINTS: 1
3. One should be especially wary of the national-security argument for restricting trade when that
argument is made by
a. representatives of industry.
b. representatives of the defense establishment.
c. members of households.
d. foreign government officials.
ANSWER: a
POINTS: 1
4. The “unfaircompetition” argument might be cited by an American who believes that

a. almost every country has a comparative advantage, relative to the United States, in producing
almost all goods.
b. young industries should be protected against foreign competition until they become profitable.
c. the American automobile industry should be protected against Japanese firms that are able to
produce automobiles at relatively low cost.
d. the French government’s subsidies to French farmers justify restrictions on American imports of
French
agricultural products.
ANSWER: d
POINTS: 1
5. 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.
ANSWER: c
POINTS: 1
6. Which of the following arguments for trade restrictions is often advanced?

a. Trade restrictions make all Americans better off.
b. Trade restrictions increase economic efficiency.
c. Trade restrictions are necessary for economic growth.
d. Trade restrictions are sometimes necessary for national security.
ANSWER: d
POINTS: 1
7. 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
ANSWER: d
POINTS: 1
8. At present, the United States uses a system of quotas to limit the amount of sugar imported into the
country. Which of the following statements is most likely true?
a. The quotas are probably the result of lobbying from U.S. consumers of sugar. The quotas
increase consumer surplus for the United States, reduce producer surplus for the United States,
and harm foreign sugar producers.
b. The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas
increase producer surplus for the United States, reduce consumer surplus for the United States,
and harm foreign sugar producers.
c. The quotas are probably the result of lobbying from foreign producers of sugar. The quotas
reduce producer surplus for the United States, increase consumer surplus for the United States,
and benefit foreign sugar producers.
d. U.S. lawmakers did not need to be lobbied to impose the quotas because total surplus for the
United States is higher with the quotas than without them.
ANSWER: b
POINTS: 1
9. Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to German
wheat farmers. As a result of the French subsidy, sales of French wheat to Germany
a. may prompt German farmers to invoke the unfair-competition argument.
b. increase the consumer surplus of German buyers of wheat.
c. increase the total surplus of the German people.
ANSWER: d
POINTS: 1
10. Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants
to impose tariffs on all imported furniture. Which of the following is the least likely consequence
of such tariffs?
a. Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher
prices.
b. Domestic furniture producers will gain producer surplus.
c. Domestic furniture producers will have a higher rate of technological advance.
d. Domestic furniture producers will have more market power.
ANSWER: c
POINTS: 1
11. Countries that restrict foreign trade are likely to

a. forgo the additional surplus that trade allows, but will probably enjoy economies of scale.
b. forgo the additional surplus that trade allows, but will be compensated by a higher rate of
technological change.
c. forgo the additional surplus that trade allows, but will have a lower rate of unemployment.
d. have more firms with domestic market power.
ANSWER: d
POINTS: 1
12. Opponents of free trade often want the United States to prohibit the import of goods made in
overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely
to
a. cause these factories to pay the U.S. minimum wage.
b. increase the rate of technological advance in poor countries so that they can afford to pay
higher wages.
c. increase poverty in poor countries and benefit U.S. firms which compete with these imports.
d. harm U.S. firms which compete with these imports.
ANSWER: c
POINTS: 1
13. Several arguments for restricting trade have been advanced. Those arguments do not include
a. the jobs argument.
b. the protection-as-a-bargaining-chip argument.
c. the no-deadweight-loss argument.
d. the infant-industry argument.
ANSWER: c
POINTS: 1
14. Critics of free trade sometimes argue that allowing imports from foreign countries causes a
reduction in the number of domestic jobs. An economist would argue that
a. foreign competition may cause unemployment in import-competing industries, but the effect is
temporary because other industries, especially exporting industries, will be expanding.
b. foreign competition may cause unemployment in import-competing industries, but the increase
in consumer surplus due to free trade is more valuable than the lost jobs.
c. the critics are correct, so countries must protect their industries with tariffs or quotas.
d. foreign competition may cause unemployment in import-competing industries, but the increase
in the variety of goods consumers can choose from is more valuable than the lost jobs.
ANSWER: a
POINTS: 1
15. 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
ANSWER: d
POINTS: 1
16. Workers displaced by trade eventually find jobs in

a. another country.
b. the government sector.
c. the industries in which the country has a comparative advantage.
d. a different company in the same industry.
ANSWER: c
POINTS: 1
17. The infant-industry argument

a. is based on the belief that protecting industries when they are young will pay off later.
b. is based on the belief that protecting industries producing goods and services for infants is
necessary if a country is to have healthy children.
c. has the support of most economists.
d. is an argument that is advanced by advocates of free trade.
ANSWER: a
POINTS: 1
18. Which of the following is the most accurate statement?

a. Protection is necessary in order for young industries to grow up and be successful.
b. Protection is not necessary for an industry to grow.
c. Protection is necessary because if young industries are not protected, they may suffer losses.
d. Protection may not always be necessary for infant industries, but it has proven to be useful in
most cases.
ANSWER: b
POINTS: 1
19. If the Korean steel industry subsidizes the steel that it sells to the United States, the
a. United States should protect its domestic steel industry from this unfair competition.
b. harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S.
consumers of cheap Korean steel.
c. harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of
steel.
d. United States should subsidize the products it sells to Korea.
ANSWER: c
POINTS: 1
20. The two basic approaches that a country can take as a means to achieve free trade are the
a. unilateral approach and the multilateral approach.
b. short-run approach and the long-run approach.
c. continental approach and the global approach.
d. industry approach and the security approach.
ANSWER: a
POINTS: 1
21. When a country takes a multilateral approach to free trade, it

a. removes trade restrictions on its own.
b. reduces its trade restrictions while other countries do the same.
c. does not remove trade restrictions no matter what other countries do.
d. is willing to trade with multiple countries at once.
ANSWER: b
POINTS: 1
22. Which of the following is not an advantage of a multilateral approach to free trade over a
unilateral approach?
a. A multilateral approach can reduce trade restrictions abroad as well as at home.
b. A multilateral approach has the potential to result in freer trade.
c. A multilateral approach requires the agreement of two or more nations.
d. A multilateral approach may have political advantages.
ANSWER: c
POINTS: 1
23. When a country takes a unilateral approach to free trade, it

a. removes trade restrictions on its own.
b. reduces its trade restrictions while other countries do the same.
c. does not remove trade restrictions no matter what other countries do.
d. is willing to trade with multiple countries at once.
ANSWER: a
POINTS: 1
24. A possible outcome of the multilateral approach to free trade is that such an approach can
a. win political support when a unilateral approach cannot.
b. result in more restricted trade than under a unilateral approach, when international negotiations
fail.
c. result in drastic reductions in tariffs for many countries.
ANSWER: d
POINTS: 1
25. Which of the following assertions is not correct about the multilateral approach to free trade?
a. The multilateral approach has the potential to result in freer trade than does the unilateral
approach.
b. The multilateral approach may have a political advantage over the unilateral approach.
c. The multilateral approach is simpler than the unilateral approach.
d. NAFTA and GATT both represent multilateral approaches to free trade.
ANSWER: c
POINTS: 1
26. The North American Free Trade Agreement

a. is an example of the unilateral approach to free trade.
b. eliminated tariffs on imports to North America from the rest of the world.
c. reduced trade restrictions among Canada, Mexico and the United States.
ANSWER: c
POINTS: 1
27. Since World War II, GATT has been responsible for reducing the average tariff among member
countries from about
a. 40 percent to about 5 percent.
b. 40 percent to about 20 percent.
c. 80 percent to about 20 percent.
d. 20 percent to about 10 percent.
ANSWER: a
POINTS: 1
28. The General Agreement on Tariffs and Trade (GATT) was initiated in response to
a. in increase in exports of low-priced goods from developing countries to developed countries.
b. the replacement of manufacturing jobs with service jobs in developed countries.
c. economic dislocations caused by the North American Free Trade Agreement (NAFTA) in the
1990s.
d. high tariffs imposed during the Great Depression of the 1930s.
ANSWER: d
POINTS: 1
29. The rules established under GATT are enforced by the

a. governments of the nations that are involved in GATT.
b. North American Free Trade Association.
c. World Trade Organization.
d. European Union.
ANSWER: c
POINTS: 1
30. President Bush imposed temporary tariffs on imported steel in 2002. The reasons for this trade
restriction is most consistent with the
a. national-security argument.
b. infant-industry argument.
c. unfair competition argument.
d. protection-as-a-bargaining chip-argument.
ANSWER: b
POINTS: 1
31. The problem with the protection-as-a-bargaining-chip argument for trade restrictions is
a. if it works consumer surplus will decline.
b. if it works producer surplus falls.
c. if it fails the country faces a choice between two bad options.
d. if it fails total surplus will increase.
ANSWER: c
POINTS: 1
32. In a 2007 New York Times article Paul Krugman wrote that
a. the infant-industry argument works well as an argument in favor of protection for the U.S. steel
industry.
b. the negative effects of third world exports on U.S. wages may be increasing.
c. there are social gains to the U.S. from free trade.
d. high wage countries account for a growing share of U.S. imports of manufactured goods.
ANSWER: b
POINTS: 1
33. In a December 2007 New York Times column Paul Krugman argued in favor of
a. protectionism based on the national-security argument.
b. protectionism based on the infant-industry argument.
c. protectionism based on the unfair-competition argument.
d. keeping world markets relatively open.
ANSWER: d
POINTS: 1
TOPICS: DISC: International Trade Open Economy
34. In a December 2007 New York Times column, Paul Krugman noted that
a. it is difficult to find instances of trade between high-wage countries in the modern era.
b. it is difficult to find instances of trade between high-wage countries and low-wage countries in
the modern era.
c. the United States now imports more oil and other raw materials from other advanced countries
than from the third world.
d. the United States now imports more manufactured goods from the third world than from other
advanced countries.
ANSWER: d
POINTS: 1
35. In recent years, which countries have taken a unilateral approach to the removal of trade
restrictions?
a. China and North Korea
b. Chile and South Korea
c. Russia and Japan
d. the United States and Mexico
ANSWER: b
POINTS: 1
36. Which of the following is the most accurate statement?

a. The one argument for restricting trade that almost all economists accept as valid is the infant-
industry argument.
b. Almost all economists insist that it is never appropriate to protect “key” industries, even when
there are legitimate concerns about national security.
c. The idea that one nation might want to threaten another nation with a trade restriction is
associated with the protection-as-a-bargaining-chip argument for restricting trade.
d. The protection-as-a-bargaining-chip argument for restricting trade is also known as the infant-
industry argument.
ANSWER: c
POINTS: 1
37. Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian
wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia
a. may prompt Russian farmers to invoke the infant-industry argument.
b. increase the consumer surplus of Russian buyers of wheat.
c. decrease the total surplus of the Russian people.
ANSWER: b
POINTS: 1
38. A common argument in favor of restricting trade

a. concerns the strategy of bargaining.
b. is that efforts should be made to get new industries started.
c. emphasizes the belief that all countries should play by the same rules.
ANSWER: d
POINTS: 1
39. A common argument in favor of restricting international trade in good x is based on the premise
that
a. international trade reduces total surplus in countries that export good x.
b. international trade reduces total surplus in countries that import good x.
c. international trade is desirable only when countries with different domestic supplies of natural
resources play by different rules when trading with one another.
d. trade restrictions can be useful when one country bargains with its trading partners.
ANSWER: d
POINTS: 1
40. If the United States threatens to impose a tariff on Colombian coffee if Colombia does not
remove agricultural subsidies, the United States will be
a. better off regardless of how Colombia responds.
b. better off if Colombia removes the subsidies, and will be no worse off if it doesn't.
c. worse off if Colombia doesn't remove the subsidies in response to the threat.
d. worse off regardless of how Colombia responds.
ANSWER: c
POINTS: 1
Multiple Choice – Section 04: Conclusion
1. In 2008, the Los Angeles Times asked members of the American public whether free international
trade has helped or hurt the economy. Of those surveyed,
a. 57 percent said free international trade helped the economy.
b. 26 percent said free international trade helped the economy.
c. 30 percent said free international trade hurt the economy.
d. 16 percent said free international trade hurt the economy.
ANSWER: b
POINTS: 1
2. Most economists view the United States’ experience with trade as

a. one from which no firm conclusions about the virtues of free trade can be reached, due to the
relatively short history of international trade in the U.S.
b. one from which no firm conclusions about the virtues of free trade can be reached, due to the
lack of trade within the U.S. throughout most of the early history of the U.S.
c. an ongoing experiment that confirms the virtues of free trade.
d. an ongoing experiment that calls into serious question the notion that free trade enhances the
economic well- being of a nation.
ANSWER: c
POINTS: 1
3. Economists view the fact that Florida grows oranges, Texas pumps oil, and California makes wine
as
a. confirmation of the virtues of free trade.
b. confirmation of the infant-industry argument.
c. confirmation that free trade agreements are not necessary.
d. confirmation that specialization in absolute advantage works.
ANSWER: a
POINTS: 1
True/False and Short Answer

1. The history of the textile industry raises important questions for economic policy.
a. True
b. False
ANSWER: False
POINTS: 1
2. Trade decisions are based on the principle of absolute advantage.

a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: DISC: Thinking Like an Economist
3. The sum of consumer and producer surplus measures the total benefits that buyers and sellers
receive from participating in a market.
a. True
b. False
ANSWER: True
POINTS: 1
4. According to the principle of comparative advantage, all countries can benefit from trading with
one another because trade allows each country to specialize in doing what it does best.
a. True
b. False
ANSWER: True
POINTS: 1
5. The world price of cotton is the highest price of cotton observed anywhere in the world.
a. True
b. False
ANSWER: False
POINTS: 1
6. If the world price of a good is greater than the domestic price in a country that can engage in
international trade, then that country becomes an importer of that good.
a. True
b. False
ANSWER: False
POINTS: 1
7. Without free trade, the domestic price of a good must be equal to the world price of a good.
a. True
b. False
ANSWER: False
POINTS: 1
8. The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy. If the
world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2
per pound, then Aviana should export goose meat.
a. True
b. False
ANSWER: True
POINTS: 1
9. If a country allows free trade and its domestic price for a given good is lower than the world price,
then it will import that good.
a. True
b. False
ANSWER: False
POINTS: 1
10. “Trade raises the economic well-being of a nation in the sense that the gains of the winners
exceed the losses of the losers.” This statement is correct for a nation that exports manufactured
goods, but it is not correct for a nation that imports manufactured goods.
a. True
b. False
ANSWER: False
POINTS: 1
11. The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of
beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds
of cheese. If Loneland were to allow free trade, it would export cheese.
a. True
b. False
ANSWER: True
POINTS: 1
12. If Argentina exports oranges to the rest of the world, Argentina's producers of oranges are worse
off, and Argentina's consumers of oranges are better off, as a result of trade.
a. True
b. False
ANSWER: False
POINTS: 1
13. If a country’s domestic price of a good is lower than the world price, then that country has a
comparative advantage in producing that good.
a. True
b. False
ANSWER: True
POINTS: 1
14. When a country allows international trade and becomes an importer of a good, domestic
producers of the good are better off, and domestic consumers of the good are worse off.
a. True
b. False
ANSWER: False
POINTS: 1
15. If the United Kingdom imports tea cups from other countries, then U.K. producers of tea cups
are better off, and U.K. consumers of tea cups are worse off, as a result of trade.
a. True
b. False
ANSWER: False
POINTS: 1
16. If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit
from higher producer surplus, Belgian chocolate consumers are worse off because of lower
consumer surplus, and total surplus in Belgium increases because of the exports of chocolate.
a. True
b. False
ANSWER: True
POINTS: 1
17. In principle, trade can make a nation better off, because the gains to the winners exceed the
losses to the losers.
a. True
b. False
ANSWER: True
POINTS: 1
18. Suppose the Ivory Coast, a small country, imports wheat at the world price of $4 per bushel. If the
Ivory Coast imposes a tariff of $1 per bushel on imported wheat, then, other things equal, the price
of wheat in Ivory Coast will increase, but by less than $1.
a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: DISC: International trade Tariffs
19. The small-economy assumption is necessary to analyze the gains and losses from international
trade.
a. True
b. False
ANSWER: False
POINTS: 1
20. The greater the elasticities of supply and demand, the smaller are the gains from trade.
a. True
b. False
ANSWER: False
POINTS: 1
21. If a tariff is placed on watches, the price of both domestic and imported watches will rise by the
amount of the tariff.
a. True
b. False
ANSWER: True
POINTS: 1
22. When a government imposes a tariff on a product, the domestic price will equal the world price.
a. True
b. False
ANSWER: False
POINTS: 1
23. A tariff increases the quantity of imports and moves the market farther from its equilibrium
without trade.
a. True
b. False
ANSWER: False
POINTS: 1
24. When a country abandons no-trade policies in favor of free-trade policies and becomes an
importer of steel, then the domestic price of steel will increase as a result.
a. True
b. False
ANSWER: False
POINTS: 1
25. When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country
become worse off.
a. True
b. False
ANSWER: True
POINTS: 1
26. When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country
become worse off and sellers of shoes in that country become better off.
a. True
b. False
ANSWER: True
POINTS: 1
27. Deadweight loss measures the decrease in total surplus that results from a tariff or quota.
a. True
b. False
ANSWER: True
POINTS: 1
28. If a small country imposes a tariff on an imported good, domestic sellers will gain producer
surplus, the government will gain tariff revenue, and domestic consumers will gain consumer
surplus.
a. True
b. False
ANSWER: False
POINTS: 1
29. Domestic consumers gain and domestic producers lose when the government imposes a tariff on
imports.
a. True
b. False
ANSWER: False
POINTS: 1
30. The imposition of a tariff on imported wine will increase the domestic price of wine, decrease the
quantity of wine imported, and increase the quantity of wine produced domestically.
a. True
b. False
ANSWER: True
POINTS: 1
31. Suppose that Australia imposes a tariff on imported beef. If the increase in producer surplus is
$100 million, the increase in tariff revenue is $200 million, and the reduction in consumer surplus is
$500 million, the deadweight loss of the tariff is $300 million.
a. True
b. False
ANSWER: False
POINTS: 1
32. Suppose Ecuador imposes a tariff on imported bananas. If the increase in producer surplus is $50
million, the reduction in consumer surplus is $150 million, and the deadweight loss of the tariff is
$30 million, then the tariff generates $130 million in revenue for the government.
a. True
b. False
ANSWER: False
POINTS: 1
33. Tariffs cause deadweight loss because they move the price of an imported product closer to the
equilibrium without trade, thus reducing the gains from trade.
a. True
b. False
ANSWER: True
POINTS: 1
34. Import quotas and tariffs both cause the quantity of imports to fall.
a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: DISC: International Trade International trade Restrictions
35. Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.
a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: DISC: International trade International trade Restrictions
36. If a country allows free trade and imports cars, then it is the case that the gains to domestic
producers outweigh the losses to domestic consumers.
a. True
b. False
ANSWER: False
POINTS: 1
37. The nation of Cranolia used to prohibit international trade, but now trade is allowed, and Cranolia
is exporting furniture. Relative to the previous no-trade situation, buyers of furniture in Cranolia
are now better off.
a. True
b. False
ANSWER: False
POINTS: 1
38. The nation of Spritzland used to prohibit international trade, but now trade is allowed, and
Spritzland is exporting wristwatches. Relative to the previous no-trade situation, total surplus in the
market for wristwatches in Spritzland has increased.
a. True
b. False
ANSWER: True
POINTS: 1
39. Free trade allows firms to realize economies of scale, resulting in higher costs of production.
a. True
b. False
ANSWER: False
POINTS: 1
40. For a given country, comparing the world price of aluminum and the domestic price of aluminum
before trade indicates whether that country’s demand for aluminum exceeds the demand for
aluminum in other countries.
a. True
b. False
ANSWER: False
POINTS: 1
41. For Country A, the world price of soybeans exceeds the domestic equilibrium price of soybeans.
As a result, international trade allows buyers of soybeans in Country A to experience greater
consumer surplus than they otherwise would experience.
a. True
b. False
ANSWER: False
POINTS: 1
42. For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a
result, international trade allows sellers of textiles in Country A to experience greater producer
surplus than they otherwise would experience.
a. True
b. False
ANSWER: True
POINTS: 1
43. William and Jamal live in the country of Dumexia. As a result of Dumexia’s legalization of
international trade in bananas, William becomes better off and Jamal becomes worse off. It
follows that William is a seller, and Jamal is a buyer, of bananas.
a. True
b. False
ANSWER: False
POINTS: 1
44. William and Jamal live in the country of Dumexia. When Dumexia legalized international trade in
bananas, the price of bananas in Dumexia increased. As a result, William became better off and
Jamal became worse off. It follows that William is a seller, and Jamal is a buyer, of bananas.
a. True
b. False
ANSWER: True
POINTS: 1
45. Economists agree that trade ought to be restricted if free trade means that domestic jobs might be
lost because of foreign competition.
a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: DISC: International Trade International trade Restrictions
46. Free trade causes job losses in industries in which a country does not have a comparative
advantage, but it also causes job gains in industries in which the country has a comparative
advantage.
a. True
b. False
ANSWER: True
POINTS: 1
47. Most economists support the infant-industry argument because it is so easy to implement in
practice.
a. True
b. False
ANSWER: False
POINTS: 1
48. 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
ANSWER: False
POINTS: 1
49. Policymakers often consider trade restrictions in order to protect domestic producers from foreign
competitors.
a. True
b. False
ANSWER: True
POINTS: 1
50. GATT is an example of a successful unilateral approach to achieving free trade.

a. True
b. False
ANSWER: False
POINTS: 1
51. NAFTA is an example of a multilateral approach to achieving free trade.

a. True
b. False
ANSWER: True
POINTS: 1
52. The rules established under the General Agreement on Tariffs and Trade (GATT) are enforced
by an international body called the World Trade Organization (WTO).
a. True
b. False
ANSWER: True
POINTS: 1
53. A multilateral approach to free trade has greater potential to increase the gains from trade than a
unilateral approach, because the multilateral approach can reduce trade restrictions abroad as well
as at home.
a. True
b. False
ANSWER: True
POINTS: 1
54. Economists feel that national security concerns never provide a legitimate rationale for trade
restrictions.
a. True
b. False
ANSWER: False
POINTS: 1
55. Economists view free trade as a way to raise living standards both at home and abroad.
a. True
b. False
ANSWER: True
POINTS: 1
56. The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans
believe that free international trade helps the American economy.
a. True
b. False
ANSWER: False
POINTS: 1
57. 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
ANSWER: True
POINTS: 1
58. Most economists view the United States as an ongoing experiment that raises serious doubts about
the virtues of free trade.
a. True
b. False
ANSWER: False
POINTS: 1
59. Use the graph to answer the following questions about CDs.
a. What is the equilibrium price of CDs before trade?

b. What is the equilibrium quantity of CDs before trade?
c. What is the price of CDs after trade is allowed?
d. What is the quantity of CDs exported after trade is allowed?
e. What is the amount of consumer surplus before trade?
f. What is the amount of consumer surplus after trade?
g. What is the amount of producer surplus before trade?
h. What is the amount of producer surplus after trade?
i. What is the amount of total surplus before trade?
j. What is the amount of total surplus after trade?
k. What is the change in total surplus because of trade?
ANSWER: a. $12
b. $50
c. $15
d. $30
e. $250
f. $122.50
g. $250
h. $422.50
i. $500
j. $545
k. $45
POINTS: 1
60. Using the graph below, answer the following questions about hammers.
a. What is the equilibrium price of hammers before trade?

b. What is the equilibrium quantity of hammers before trade?
c. What is the price of hammers after trade is allowed?
d. What is the quantity of hammers imported after trade is allowed?
e. What is the amount of consumer surplus before trade?
f. What is the amount of consumer surplus after trade?
g. What is the amount of producer surplus before trade?
h. What is the amount of producer surplus after trade?
i. What is the amount of total surplus before trade?
j. What is the amount of total surplus after trade?
k. What is the change in total surplus because of trade?
ANSWER:
a. $14
b. 90
c. $10
d. 85
e. $360
f. $810
g. $405
h. $125
i. $765
j. $935
k. $170
POINTS: 1
61. Using the graph, assume that the government imposes a $1 tariff on hammers. Answer the
following questions given this information.
a. What is the domestic price and quantity demanded of hammers after the tariff is imposed?
b. What is the quantity of hammers imported before the tariff?
c. What is the quantity of hammers imported after the tariff?
d. What would be the amount of consumer surplus before the tariff?
e. What would be the amount of consumer surplus after the tariff?
f. What would be the amount of producer surplus before the tariff?
g. What would be the amount of producer surplus after the tariff?
h. What would be the amount of government revenue because of the tariff?
i. What would be the total amount of deadweight loss due to the tariff?
ANSWER: a. $6, 84
b. 66
c. 44
d. $384
e. $294
f. $45
g. $80
h. $44
i. $11
POINTS: 1
62. How does an import quota differ from an equivalent tariff?
ANSWER: Both the import quota and the tariff raise the domestic price of the
good, reduce the welfare of domestic consumers, increase the
welfare of domestic producers, and cause deadweight losses. The
only difference for the economy is that the tariff raises revenue for
the government, while the import quota creates surplus for license
holders.
POINTS: 1
63. Characterize the two different approaches a nation can take to achieve free trade. Does one
approach have an advantage over the other?
ANSWER: A unilateral approach is when a country removes its trade

restrictions on its own. A multilateral approach is when a country
removes its trade restrictions while other countries do the same. A
multilateral approach has two advantages. The first is that it has the
potential to result in freer trade because it can reduce trade
restrictions abroad as well as at home. If international negotiations
fail, however, the result could be more restricted trade than under a
unilateral approach. Also, the multilateral approach may have a
political advantage and can sometimes win political support when a
unilateral reduction cannot.
POINTS: 1
64. What are the arguments in favor of trade restrictions, and what are the counterarguments?
According to most economists, do any of these arguments really justify trade restrictions?
Explain.
ANSWER: Arguments mentioned in the text include the jobs argument, the
national security argument, the infant industry argument, the unfair
competition argument, and the protection-as-a-bargaining-chip
argument. These arguments and counter-arguments are outlined in
section 9-3 of the text. Most economists would dismiss the jobs
argument, the infant industry argument, and the unfair competition
argument on strictly economic grounds. The bargaining-chip
argument carries high risks of economic harm if the threat doesn't
work. The national-security argument balances economic loss from
trade restriction against the benefit of long-term national survival,
and is probably the argument that economists would most likely buy
if it were clear that the industry being protected was clearly crucial
to national security.
POINTS: 1
Problems
1. Suppose in the country of Jumanji that the price of coffee with no trade allowed is below the world
price of coffee. If Jumanji allows free trade, will Jumanji be an importer or an exporter of coffee?
ANSWER: Jumanji will be an exporter of coffee.

POINTS: 1
2. Suppose in the country of Jumanji that the price of wheat with no trade allowed is above the world
price of wheat. If Jumanji allows free trade, will Jumanji be an importer or an exporter of wheat?
ANSWER: Jumanji will be an importer of wheat.

POINTS: 1
3. Suppose in the country of Nash that the price of corn is $4 per bushel with no trade allowed. If the
world price of corn is $3 per bushel and if Nash allows free trade, will Nash be an importer or an
exporter of corn?
ANSWER: Nash will be an importer of corn.

POINTS: 1
4. Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed. If
the world price of oranges is $10 per bushel and if Nash allows free trade, will Nash be an
importer or an exporter of oranges?
ANSWER: Nash will be an exporter of oranges.

POINTS: 1
5. A tax on an imported good is called a .
ANSWER: tariff
POINTS: 1
DIFFICULTY: Difficutly: Easy
6. A country has a comparative advantage in a product if the world price is than that country’s
domestic price without trade.
ANSWER: higher
POINTS: 1
DIFFICULTY: Difficutly: Easy
7. Suppose the world price of coffee is $3 per pound and Brazil’s domestic price of coffee without
trade is $2 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of
coffee?
ANSWER: Brazil will be an exporter of coffee.

POINTS: 1
8. Suppose the world price of coffee is $2 per pound and Brazil’s domestic price of coffee without
trade is $3 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of
coffee?
ANSWER: Brazil will be an importer of coffee.

POINTS: 1
Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market.
9. Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium
quantity in this market?
ANSWER: The equilibrium price is $5 and the equilibrium quantity is 25 units.

POINTS: 1
10. Refer to Figure 9-26. With no trade allowed, how much are consumer surplus, producer surplus,
and total surplus in this market?
ANSWER: Consumer surplus is $62.50, producer surplus is $62.50, and total

surplus is $125.
POINTS: 1
11. Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free
trade, how many units will domestic consumers demand, and how many units will domestic
producers produce?
ANSWER: Domestic consumers will demand 15 units and domestic producers

will produce 35 units.
POINTS: 1
trade, will the country import or export this good, and how many units will be imported/exported?
ANSWER: The country will export 20 units.

POINTS: 1
trade, how much are consumer surplus, producer surplus, and total surplus with trade?
ANSWER: With trade, consumer surplus is $22.50, producer surplus is $122.50,

and total surplus is $145.
POINTS: 1
trade, by how much do consumer surplus, producer surplus, and total surplus change with trade?
ANSWER: With trade, consumer surplus falls by $40, producer surplus rises by
$60, and total surplus increases by $20.
POINTS: 1
Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that
the world price in this market is $20 per unit.
POINTS: 1
16. Refer to Figure 9-27. With no trade allowed, how much are consumer surplus, producer
surplus, and total surplus?
ANSWER: Without trade, consumer surplus is $4,000, producer surplus is

$4,000, and total surplus is $8,000.
POINTS: 1
17. Refer to Figure 9-27. If the country allows free trade, how many units will domestic consumers
demand and how many units will domestic producers produce?
ANSWER: With trade, domestic consumers will demand 600 units and domestic
producers will produce 200 units.
POINTS: 1
18. Refer to Figure 9-27. If the country allows free trade, will the country import or export this
good, and how many units will be imported/exported?
ANSWER: With trade, the country will import 400 units.

POINTS: 1
19. Refer to Figure 9-27. If the country allows free trade, how much are consumer surplus,
producer surplus, and total surplus with trade?
ANSWER: With trade, consumer surplus is $9,000, producer surplus is $1,000,

and total surplus is$10,000.
POINTS: 1
20. Refer to Figure 9-27. If the country allows free trade, by how much do consumer surplus,
producer surplus, and total surplus change with trade?
ANSWER: With trade, consumer surplus increases by $5,000, producer surplus

falls by $3,000, and total surplus rises by $2,000.
POINTS: 1
TOPICS: DISC: International trade
21. Refer to Figure 9-27. Suppose the country imposes a $5 per unit tariff. If the country allows
trade with a tariff, how much are consumer surplus, producer surplus, tariff revenue, and total
surplus?
ANSWER: With trade and a tariff, consumer surplus is $6,250, producer surplus
is $2,250, tariff revenue is $1,000, and total surplus is $9,500.
POINTS: 1
trade with a tariff, how much is the deadweight loss caused by the tariff?
ANSWER: The deadweight loss of the tariff is $500.

POINTS: 1
TOPICS: DISC: International trade Tariffs
Scenario 9-3
Suppose domestic demand and domestic supply in a market are given by the following equations:
23. Refer to Scenario 9-3. With no trade allowed, what are the equilibrium price and quantity in this
market?
POINTS: 1
24. Refer to Scenario 9-3. With no trade allowed, how much are consumer surplus, producer
surplus, and total surplus in this market?
ANSWER: Without trade, consumer surplus is $50, producer surplus is $50, and
total surplus is$100.
POINTS: 1
25. Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country
allows free trade, will the country import or export this good, and how many units will be
imported/exported?
ANSWER: The country will import 4 units.

POINTS: 1
allows free trade, how much are consumer surplus, producer surplus, and producer surplus with
trade?
ANSWER: With trade, consumer surplus is $72, producer surplus is $32, and
total surplus is $104.
POINTS: 1
allows free trade, by how much do consumer surplus, producer surplus, and producer surplus
change?
ANSWER: With trade, consumer surplus increases by $22, producer surplus

falls by $18, and total surplus increases by $4.
POINTS: 1
28. Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit, and suppose the
country imposes a $1 per unit tariff. If the country allows trade with a tariff, how much are
consumer surplus, producer surplus, tariff revenue, and total surplus?
ANSWER: With trade and a tariff, consumer surplus is $60.50, producer surplus
is $40.50, tariff revenue is $2, and total surplus is $103.
POINTS: 1
29. Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit, and suppose the
country imposes a $1 per unit tariff. If the country allows trade with a tariff, how much is the
deadweight loss caused by the tariff?
ANSWER: The deadweight loss caused by the tariff is $1.

POINTS: 1
Figure 9-28

POINTS: 1
31. Refer to Figure 9-28. With no trade allowed, how much are consumer surplus, producer surplus,
and total surplus in this market?
ANSWER: Consumer surplus is $40, producer surplus is $40, and total surplus is
$80.
POINTS: 1
trade, how many units will domestic consumers demand, and how many units will domestic
producers supply?
ANSWER: Domestic consumers will demand 10 units and domestic producers

will supply 30 units.
POINTS: 1
trade, will the country import or export this good, and how many units will be imported/exported?
ANSWER: The country will export 20 units.

POINTS: 1
trade, how much is consumer surplus?
ANSWER: With trade, consumer surplus is $10.

POINTS: 1
trade, how much is producer surplus?
ANSWER: With trade, producer surplus is $90.

POINTS: 1
trade, how much is total surplus?
ANSWER: With trade, total surplus is $100.

POINTS: 1
Figure 9-29
Assume that the world price in this market is $1 per unit.
POINTS: 1
38. Refer to Figure 9-29. With no trade allowed, how much are consumer surplus, producer
surplus, and total surplus?
ANSWER: Without trade, consumer surplus is $450, producer surplus is $450,

and total surplus is$900.
POINTS: 1
39. Refer to Figure 9-29. If the country allows free trade, how many units will domestic consumers
demand and how many units will domestic producers supply?
ANSWER: With trade, domestic consumers will demand 500 units and domestic
producers will supply 100 units.
POINTS: 1
40. Refer to Figure 9-29. If the country allows free trade, will the country import or export this
good, and how many units will be imported/exported?
ANSWER: With trade, the country will import 400 units.

POINTS: 1
41. Refer to Figure 9-29. If the country allows free trade, how much are consumer surplus,
producer surplus, and total surplus with trade?
ANSWER: With trade, consumer surplus is $1,250, producer surplus is $50, and
total surplus is$1,300.
POINTS: 1
trade with a tariff, what will be the domestic price in this market?
ANSWER: With trade and a tariff, the domestic price wil be $2.
POINTS: 1
trade with a tariff, how many units will domestic consumers demand and how many units will
domestic producers supply?
ANSWER: With trade and a tariff, domestic consumers will demand 400 units
and domestic producers will supply 200 units.
POINTS: 1
trade with a tariff, how many units will be imported?
ANSWER: With trade and a tariff, 200 units will be imported.

POINTS: 1
trade with a tariff, how much are consumer surplus and producer surplus?
ANSWER: With trade and a tariff, consumer surplus is $800 and producer
surplus is $200.
POINTS: 1
trade with a tariff, how much is tariff revenue?
ANSWER: With trade and a tariff, tariff revenue is $200.

POINTS: 1
trade with a tariff, how much is total surplus?
ANSWER: With trade and a tariff, total surplus is $1,200.

POINTS: 1
trade with a tariff, how much is the deadweight loss caused by the tariff?
ANSWER: The deadweight loss of the tariff is $100.

POINTS: 1
49. List four benefits of international trade.
ANSWER: Increased variety of goods; lower costs through economies of scale;

increased competition; and enhanced flow of ideas
POINTS: 1
50. List five arguments given to support trade restrictions.
ANSWER: The jobs argument; the national security argument; the infant
industry argument; the unfair competition argument; and the
protection-as-a-bargaining-chip argument.
POINTS: 1
Another random document with
no related content on Scribd:
consenting to excuse her in view of a letter which he had received
from her, and which read as follows:
Dear Master:
I answered to the call of my name at Tuesday’s hearing, in spite
of my great agitation. I made the effort because I hoped to
express to the court and the jury my deep gratitude to, and my
admiration for, M. Zola, who, obeying the voice of his conscience,
has sacrificed himself for justice and truth with a sublime disdain
of the insults and threats which he has drawn upon himself. I
hoped also to declare my absolute faith in my husband’s
innocence,—an innocence which, I am convinced, will be
established before long,—and also my sincere gratitude to you,
dear master, who display so much courage and talent to secure
the triumph of the truth. The anguish of these three days, added
to all that I have suffered for three years, has put me in a
condition in which I could not endure a fresh trial. Permit me,
then, to absent myself from the court and accept, I beg of you,
the expression of my most distinguished sentiments.
L. Dreyfus.
February 10, 1898.
Testimony of M. Trarieux.
M. Trarieux was recalled to the witness-stand.

M. Labori.—“Will M. Trarieux tell us what he knows about the way in
which Colonel Picquart’s mission was executed?”
The Judge.—“In other words, you ask M. Trarieux if he is familiar
with the mission entrusted to Colonel Picquart.”
M. Labori.—“I do not ask the object of the mission. I simply wish to
know if the circumstances surrounding it are familiar to the witness,
in which case I should like to have him tell us what they were.”
The Judge.—“General de Boisdeffre told us yesterday that it was a
secret mission.”
M. Labori.—“I do not ask the witness the object of the mission. It is
secret, like everything else in this case, but those in a position to
know the details of the mission know that their declarations would
compromise no higher interest. It is a secret, because it is a secret;
there is no other reason.”
The Judge.—“It may involve secrets concerning the national
defence. That is why I will put no question on the point.”
M. Labori.—“It is so said, I know, but I should like to find out whether
M. Trarieux is familiar with the circumstances under which Colonel
Picquart was asked to undertake his mission, and whether there was
anything extraordinary about these circumstances.”
The Judge.—“Witness, you understand the question. I will ask you to
say what you think it is your duty to say.”
M. Trarieux.—“I saw nothing in General Gonse’s letters in the nature
of a secret concerning the national defence. All that I can say is that I
got an impression from the letters that Colonel Picquart was in most
affectionate and cordial relations with his superiors, and seemed to
command their entire confidence. The reading of this
correspondence gave me the idea—though this is but an
interpretation—that Colonel Picquart was sent away from Paris for a
certain reason. At first he was sent to the east; then to the south.
Frequently new orders came to him, taking him ever a little farther
from Paris, and finally he had to cross the Mediterranean and go to
Algeria and Tunis. These letters gave me the impression that, after
having sent him away from Paris on the eve of the Castelin
interpellation, they were determined that he should not come back.”
M. Labori.—“Could M. Trarieux tell us whether, while he was minister
of justice, he received a visit from a lawyer especially interested in
the matters in question here?”
M. Trarieux.—“I suppose you refer to the visit of M. Demange?”
M. Labori.—“Yes.”
The Judge.—“Is this in relation to the Dreyfus case?”
M. Labori.—“It is in relation to a document involved in the Dreyfus
trial.”
The Judge.—“I ask you to say nothing about it.”
M. Labori.—“Yesterday General Mercier thought it his duty to refer to
the Dreyfus case in words which, like all those that come from a
certain direction here, are incomplete. They were received with very
violent manifestations, but I have not been able to obtain anything
additional, because it is an understood thing here that in this matter
anyone can say anything that will injure us, but no one has a right to
say anything that can help us.”
The Judge.—“Pardon me, M. Labori, I believe that I preside here
with all the independence desirable. If I prevent M. Trarieux from
speaking of the Dreyfus case, it is because there has been a decree
of the court. You remind me of what General Mercier said yesterday.
Permit me to add that, if the general said it, it was because I did not
have time to stop him. He spoke too quickly; otherwise I would have
prevented him. You ask questions that violate the decree which we
have rendered.”
M. Labori.—“I shall ask all the questions that I think useful to my
offence, whatever your opinion of them may be. You will pass upon
them, Monsieur le Président,—and the court with you, for you are not
the sole master,—as you see fit.”
M. Clemenceau.—“I think that the court misunderstands. None of us
intend to violate its decrees. What we wish to point out is that, in
spite of you, Monsieur le Président,—you yourself have said it,—
General Mercier made a certain declaration yesterday. We desired to
bring out today either a contradiction or a confirmation of the words
uttered by General Mercier, and, by virtue of a decree of the court,
you say to us: ‘That is not possible.’ The jurors will observe that for a
court of justice this is a singular situation. The charge may be made,
but it may not be contradicted.”
M. Trarieux.—“The charge, whether against M. Scheurer-Kestner or
against M. Mathieu Dreyfus, that they are responsible for the existing
agitation and disorder is quite erroneous and ill-founded. In fact,
there are two ways of obtaining the revision of a judicial error, and
Article 443 of the code of criminal examination defines them. The
first is this: once a condemnation has been pronounced, if it be
discovered that the facts on which this condemnation rest were
committed by some other person than the person condemned, this
other person may be prosecuted, and, if a condemnation is secured,
this condemnation being contradictory of the previous condemnation
of an innocent man, a revision of the judicial error becomes
imperative. Thus these two condemnations necessarily bring about,
ipso facto, a revision of the trial. The second method is provided by a
law passed by the present legislature on June 6, 1895, under the
government to which I had the honor to belong. It provides that, if,
after a condemnation, a new fact be discovered which was unknown
at the time of the condemnation, and which is of a nature to establish
the innocence of the party condemned, the matter may be laid
before the minister of justice to induce him to procure a revision of
the case. The minister of justice is asked to lay the matter before the
court of appeals, which is judge in such a matter. Now, it is
indisputable that M. Mathieu Dreyfus took the first method, for, by
preferring a formal complaint against Major Esterhazy, he hoped to
secure a condemnation of him, the immediate consequence of which
would have been a revision of his brother’s case. The question is
whether he would not have done better to take the second method. It
seems to be the opinion that he should have applied to the minister
of justice and asked him to lay the matter before the court. I think
that this is a mistaken opinion. Suppose, instead of making the
complaint against Major Esterhazy, M. Mathieu Dreyfus had applied
to the minister of justice for a revision, what new fact could he have
pointed out to induce the minister of justice to lay the matter before
the court of appeals? There was only one,—the similarity of Major
Esterhazy’s handwriting to that of the bordereau attributed by the
verdict of 1894 to Captain Dreyfus. If this had been pointed out to the
minister of justice, it would have been necessary to draw the
immediate conclusion that the author of this handwriting, M.
Esterhazy, was the guilty party. It would have been impossible to lay
the demand for revision before the court of appeals prior to a
decision upon this question after a confrontation with M. Esterhazy.
No revision of the judicial error of which Dreyfus was the victim could
have been ordered, until it had been established in the presence of
the party directly interested, M. Esterhazy, that this error was
committed by him, or that it was the result of his crime, and that he
was the author of the bordereau unjustly attributed to Dreyfus.
Therefore the minister of justice would have had to prosecute M.
Esterhazy. But this he could not have done himself, for the simple
reason that M. Esterhazy, being a soldier, is responsible only to the
military courts, and consequently the minister of justice would have
had to hand the matter over to the minister of war, who would have
been charged with the prosecution. If, then, M. Mathieu Dreyfus had
chosen the method of appealing to the minister of justice, not only
would nothing have been gained, but time would have been lost, for
the same result would have been reached by a circuitous route.”
A group of witnesses was then called, consisting of M. Forzinetti, M.
Lebrun-Renault, and others who had heard M. Lebrun-Renault
declare that Dreyfus had never made a confession to him. But, the
court declining to hear any of them, on the ground that their
testimony concerned the Dreyfus case, they were all obliged to
retire.
Testimony of Doctor Socquet.
Dr. Socquet was then recalled to the stand.

M. Clemenceau.—“I forgot to ask Dr. Socquet whether he found
Mme. de Boulancy at No. 22, Boulevard des Batignolles.”
Dr. Socquet.—“No.”
M. Clemenceau.—“Will he tell the court how he succeeded in finding
her, since that was the only address that he knew?”
Dr. Socquet.—“Through the letter handed to me by Monsieur le
Président. He gave me a doctor’s certificate establishing her
sickness, which was accompanied by a letter that gave the address.”
M. Clemenceau.—“I remind the court of an incident that occurred at
the last hearing. I informed the court that Mme. de Boulancy did not
live in the Boulevard des Batignolles, and the court answered: ‘She
does live there, for the doctor’s certificate designates that address.’
Therefore I am at a loss to understand. Does Monsieur le Président
recall the incident?”
The Judge.—“Perfectly. I am looking for the address in the letter.”
Dr. Socquet.—“It is on the third page.”
M. Zola.—“From whom is this letter?”
The judge then read the letter from Mme. de Boulancy which he had
read at a previous hearing, but including this time the following
sentence, which before he had omitted: “I am with my family, at No.
54, Avenue de Neuilly.”
M. Clemenceau.—“The court will remember that this information had
not been previously furnished me. Therefore I have no further
occasion to ask the doctor how he found Mme. de Boulancy, but I
should like to ask him another question.”
M. Zola.—“Reference to the stenographic report will show that Mme.
de Boulancy’s present address was not given at the hearing.”
The Judge.—“That is a matter of no importance.”
M. Clemenceau.—“I make a reservation, and pass on. In the course
of Dr. Socquet’s visit to Mme. de Boulancy was there any
conversation between them about matters other than his sickness?”
Dr. Socquet [after some hesitation].—“Yes, we talked of something
else.”
M. Clemenceau.—“Something that did not concern her health?”
Dr. Socquet.—“Yes.”
M. Clemenceau.—“Did Dr. Socquet ask Mme. de Boulancy the
following question: ‘Is it true that you have other letters from Major
Esterhazy than those that have been published?’”
M. Clemenceau.—“Did the witness say to Mme. de Boulancy: ‘Is it
true that you have three telegrams from Major Esterhazy?’”
M. Clemenceau.—“Did Mme. de Boulancy declare spontaneously: ‘I
have letters from Major Esterhazy which are much more serious than
those that have been published?’ And did she also declare, of her
own initiative: ‘It has been incorrectly stated that I had three
telegrams from Major Esterhazy; I have only two’?”
M. Clemenceau.—“Was the name Esterhazy uttered at all in the
course of the conversation?”
Dr. Socquet [after reflection].—“Yes.”
M. Clemenceau.—“Under what circumstances was this name
uttered, and by whom?”
Dr. Socquet.—“By Mme. de Boulancy.”
M. Clemenceau.—“As Mme. de Boulancy would not have uttered
this word singly, will the witness tell us what other words she
added?”
The Judge.—“I call M. Clemenceau’s attention to the fact that he is
entering into the domain of a private conversation.”
M. Clemenceau.—“The defence attaches the greatest importance to
the testimony of Mme. de Boulancy and to the production of the
letters which are still in her possession, as well as of the two
telegrams which she also possesses. Under these circumstances we
shall do all that we possibly can, and shall talk as long as the court
does not prevent us, to secure the appearance of Mme. de Boulancy
that she may enlighten this court and this jury regarding Major
Esterhazy’s letters. I ask the witness what other words Mme. de
Boulancy added to the word Esterhazy.”
Dr. Socquet.—“I am entirely ready to answer, but it is a matter
outside of the mission that the court entrusted to me. Still, if it be not
inappropriate, I will say that, when I examined Mme. de Boulancy,
she talked to me of sundry matters,—among others of the way in
which she had reached her present condition, and the annoyance
that she felt. I let her talk, for I wanted to form an opinion as to the
state of her health. She spoke of Major Esterhazy’s letters, and told
me that she had complained at the office of the public prosecutor,
who was looking into her charge, that a person had abused her
letters. She said that she had entrusted these letters to a person who
had found them interesting, and who had used them in a way of
which she did not learn until later. She told me especially that this
person had entrusted them to ‘Le Figaro,’ and that, an hour after he
brought them back, M. Hadamard, sub-chief of police, came to seize
them. She added that all these letters were from Major Esterhazy.
That is all that she said to me on that subject.”
M. Clemenceau.—“By ‘all these letters’ did she mean those
published by ‘Le Figaro,’ or the other letters that she had in her
possession, or had deposited with one of her lawyers?”
Dr. Socquet.—“She said: ‘All his letters.’ Six letters, plus a seventh,
which contains the word ‘Uhlans.’”
M. Clemenceau.—“Did she say that they were genuine?”
Dr. Socquet.—“That is what she said. I did not question her. I
allowed her to talk, seeing no objection to it.”
Testimony of M. du Paty de Clam.
M. Socquet then stepped down, and M. du Paty de Clam took his

place.
“Monsieur le Président,” said he, “I am called here to testify
concerning the Esterhazy case. I am ready to answer all questions,
except those that involve professional secrecy. But it is with deep
sadness that I call attention to the fact that matters of my private life
have been raised here. It does not embarrass me personally, for I
have always behaved as a gallant man should. I have the esteem of
my superiors, and that is enough for me. But I can not admit that it is
allowable to reflect upon the honor of a young girl who has always
been respected. I ask the court, in the name of French honor, to
eliminate such questions from the discussion, and I will answer all
others.”
The Judge.—“But here there has been no question” ...
M. Labori.—“I have referred here to but one woman, Mlle. Blanche
de Comminges. It seems to be the opinion of the newspapers that I
insinuated, or meant to say, that there had been between Mlle. de
Comminges and Colonel du Paty de Clam private relations
susceptible of an annoying interpretation. Nothing of the kind has
been in my thoughts. Mlle. Blanche de Comminges is a young girl of
fifty-five years; she is a friend of Colonel Picquart; her name has
been used in telegrams which Colonel Picquart considers forgeries,
and in regard to which he has complained. It is only of this that I
have spoken. Now I come to different questions. In the first place,
was M. du Paty de Clam ever acquainted with the father of Mlle. de
Comminges?”
M. du Paty de Clam.—“Yes.”
M. Labori.—“Did he have a correspondence with one or more
members of his family?”
M. du Paty de Clam.—“It is on this point, Monsieur le Président, that
I ask permission to keep silent. I can reveal nothing. This concerns
the honor of a family, the memory of a dead person, and I will not do
it. It is private ground. It is my domain, and no one has a right to
infringe upon it. It has no relation with the Esterhazy case, and I will
say nothing about it.”
The Judge.—“You understand the answer?”
M. Labori.—“Yes, Monsieur le Président, I understand the answer,
and I understand also that, though you consider it good, I do not.”
The Judge.—“Exactly.”
M. Labori.—“I do not, and I will tell you why, if you will permit me.”
The Judge.—“Go ahead.”
M. Labori.—“I never before saw an assize court like this. All means
are sought here to prevent the light from being thrown on any point.”
The Judge.—“These are your witnesses.”
M. Labori.—“Pardon me, these are not our witnesses; they are
witnesses. M. du Paty de Clam is called because we wanted a
complete investigation, and, whenever we put a question, in the
absence of a good reason why it should not be answered, we are
offered two bad ones. When there has been a consideration of the
matter behind closed doors, they say: ‘We will not answer, because
this occurred behind closed doors.’ I say this to the jurors: Are you
not as worthy to keep a secret as French military officers? If closed
doors are necessary, let the doors be closed. We do not distrust you.
Then they appeal to professional secrecy. When that will not do, they
invoke secrets of State. And when they can invoke neither
professional secrecy or secrets of State or closed doors, they invoke
private secrets. Consequently I have no further questions to put to
M. du Paty de Clam.”
Testimony of Colonel Henry.
The next witness was Colonel Henry.

M. Labori.—“Will Colonel Henry tell us how far the facts related in
Major Ravary’s report are correct, and what documents Colonel
Picquart took from the files? Will Colonel Henry tell us whether that
report described correctly the scene that took place in his presence
in Colonel Picquart’s private office between M. Leblois and Colonel
Picquart, and what that scene really was?”
Colonel Henry.—“I was absent when the file was taken by Colonel
Picquart. I was on leave of absence, in August or September, 1896.
Colonel Picquart asked M. Gribelin for the file, and he gave it to him.”
The Judge.—“M. Gribelin made the same answer.”
Colonel Henry.—“M. Gribelin, the keeper of the archives, to whom I
had given the key of my closet,” ...
M. Labori.—“Thus it results from the testimony of the witness” ...
The Judge.—“M. Gribelin was under Colonel Picquart’s orders.”
M. Labori.—“But what was Colonel Henry’s position?”
Colonel Henry.—“Major.”
M. Labori.—“Under whose orders?”
Colonel Henry.—“Under the orders of Colonel Picquart.”
M. Labori.—“The chief of the service was M. Picquart. Consequently,
if I rightly understand, Colonel Picquart, who was at the head of the
service, asked M. Gribelin, who was under his orders, like Major
Henry himself, to give him, by opening the closet with the key,—that
is, under the most natural conditions,—a file that was a part of
Colonel Picquart’s service. Is that it?”
Colonel Henry.—“Exactly. If I had been present, I would have pointed
out to Colonel Picquart that my instructions, given me by Colonel
Sandherr, were to give this file to nobody, except in the presence of
the sub-chief of staff, the chief of staff, and myself.”
The Judge.—“It was Colonel Sandherr who gave those orders. He is
dead, I believe.”
Colonel Henry.—“He was sick and unconscious.”
M. Labori.—“Under these circumstances Colonel Sandherr had been
replaced by Colonel Picquart. Does Colonel Henry invoke against
Colonel Picquart, then his chief, instructions given him by a previous
chief? Will Colonel Henry tell us who succeeded Colonel Picquart in
the war offices?”
Colonel Henry.—“Colonel Picquart’s successor is General Gonse,
sub-chief of staff, for it was to General Gonse that Colonel Picquart
handed over his service when in November, 1897, he started on a
mission.”
M. Labori.—“Who is now in the service under General Gonse’s
orders?”
Colonel Henry.—“I am.”
M. Labori.—“Thank you.”
M. Clemenceau.—“Did not Colonel Henry confer concerning a
certain matter directly with M. Leblois? I ask no details.”
Colonel Henry.—“You refer to the Bouleau affair? One day there
was,—that is to say, I talked to Colonel Picquart in presence of M.
Leblois. Colonel Picquart said: ‘When we are embarrassed
concerning any question of spying, you can refer to M. Leblois, who
is a lawyer, and will be able’” ...
M. Clemenceau.—“When you wanted to send an envelope
containing no matter what to another office, and did not want this
envelope to be opened, had you not a method of assuring yourself
that it would not be opened? Was it not your habit to place your
signature on envelopes that you did not wish to be opened?”
Colonel Henry.—“No.”
M. Clemenceau.—“Was it not the habit of the witness to do that?”
Colonel Henry.—“No.”
The Judge.—“But one of the witnesses yesterday said that it was?”
M. Labori.—“Pardon me. Permit me to interrupt to ask that the
question be put as we frame it. I protest; there has been already too
much said. I ask that the question be thus put: Did Colonel Henry
once do this?”
Colonel Henry then admitted that he placed his signature on the
secret file. The witness was then confronted with M. Leblois, whom
Colonel Henry said that he had never seen, except in Colonel
Picquart’s presence.
M. Leblois.—“I had a long discussion with Colonel Henry concerning
a matter that had been under examination in the office of the public
prosecutor at Nancy.”
The Judge.—“In the absence of Colonel Picquart?”
Colonel Henry.—“We talked once in the presence of Colonel
Picquart. The latter said to me: ‘When we shall have need of
additional information concerning some matter of spying, here is M.
Leblois, who will be able to lend us his aid.’ Well, I have never
conferred with M. Leblois.”
M. Leblois.—“This conference lasted several hours in your own
private office. You admitted it before the council of war.”
Testimony of M. de la Batut.
The next witness was M. de la Batut, who testified as follows:

“At the time of which I speak Lieutenant du Paty de Clam was giving
a course of instruction to the conditional volunteers of a year. When
the conditional volunteers came to the regiment, they were given, as
a subject of historical composition, ‘The Wars of the First Empire.’ I
wrote such a composition as I was able to from my recollections of
the matter, and I finished by saying that it was to be hoped that
henceforth intelligence, and not cannons, would govern the world.
The next day the lieutenant-colonel sent for me, and said: ‘You are
from the south; you shall have a fortnight in prison.’ I answered: ‘My
colonel, I am not exactly from the south, I am from Dordogne.’ ‘Yes,
yes, you are from the south. You shall have a fortnight in prison for
your composition.’ And I was taken to prison. The colonel, who was
absent, returned the next morning, and, probably finding my
punishment excessive, hastened to relieve me of it.”
M. Clemenceau.—“After he had thus relieved you, was the
punishment replaced by another of a more general character?”
M. de la Batut.—“Yes; the colonel said to me: ‘I relieve you of your
punishment, because it was a little too severe, and you have not yet
the military spirit. But you and all your comrades will get no leave of
absence for a month.’”
Then the following witnesses were successively called and
dismissed, because their testimony was to relate to the Dreyfus
case: Major Besson d’Ormescheville, M. Maurel, M. Vallecalle, M.
Eichmann, M. Gallet, and M. Roche. Then came Major Ravary.
Testimony of Major Ravary.
M. Labori.—“I find the following in Major Ravary’s report: ‘One

evening, when Lieutenant-Colonel Henry, on returning to Paris,
suddenly entered M. Picquart’s office, he found M. Leblois, the
lawyer, who paid the colonel long and frequent visits, sitting near the
desk and searching with him the secret file. A photograph bearing
the words, “That scoundrel D...” had been taken from the file and
spread upon the desk.’”
M. Ravary.—“There is an error. It is a secret file, not the secret file.”
M. Labori.—“I ask first not what this file contained, since it is secret,
but to what it related?”
M. Ravary.—“I do not exactly understand. A witness said that there
was a document spread between M. Leblois and Colonel Picquart. I
know nothing more.”
M. Labori.—“Unless it is understood that there is always to be some
method of evasion, I insist on a reply from M. Ravary. Here we are
squarely in the Esterhazy matter. We have Major Ravary’s report. He
was the official reporter. It is not possible that he accepted testimony
that has been contradicted here by the evidence of M. Gribelin and
M. Henry. It is not possible that M. Ravary accepted evidence
without pressing the witnesses. It is not possible that a matter so
serious as a secret file should have been referred to in a report read
to the council of war without resulting in an examination of its
contents. I do not ask what its contents were, but to what it related. If
the witness cannot answer, I shall infer that judicial examinations
before a council of war are carried on as we have never seen them
carried on in trials in which we take part.”
M. Ravary—“I protest that all our examinations are carried on with
the greatest honesty and conscientiousness. As to the document of
which M. Labori speaks, it did not interest me, and for this reason. I
had an accused man before me, Major Esterhazy. I was to seek
proof either of his innocence or of his guilt, and this document had
nothing to do with Major Esterhazy.”
M. Labori.—“This document was a part of the Esterhazy file. I ask
the court to ask M. Ravary, who conducted the examination, what
this document was.”
M. Ravary.—“As to that, I am completely ignorant.”
M. Labori.—“That is enough; I am satisfied.”
M. Clemenceau.—“The witness said in his report that there was a file
of documents open on Colonel Picquart’s desk. I should like to know
if he maintains that declaration.”
M. Ravary—“It was so stated in the testimony of either Colonel
Henry or M. Gribelin.”
M. Clemenceau.—“I remind the court that M. Gribelin said that there
was a file of documents in an envelope. Colonel Henry said the
same thing, and so I ask the court to recall M. Gribelin.”
M. Ravary.—“I said either M. Gribelin or Colonel Henry.”
M. Gribelin, being recalled testified as follows: “What I said was that
the documents were contained in a yellow envelope; they were not
scattered; I even specified, in my written deposition, that they were
not searching the documents.”
M. Ravary.—“My report is a sincere expression of the file of
documents. Let the file be called for.”
M. Clemenceau.—“M. Gribelin says that the file was in an envelope.”
M. Ravary.—“The envelope was cut lengthwise.”
M. Clemenceau.—“The documents were in an envelope, and the
side of the envelope was cut; so it was impossible to know what was
in the envelope.”
M. Ravary.—“But there was not one visit simply; there were several.
M. Leblois has been seen several times at the office of Lieutenant-
Colonel Picquart.”
The Judge.—“We know it.”
M. Clemenceau.—“Let us not depart from the question. M. Gribelin
says that on the day that he entered there was a file of documents
on the desk relating to carrier pigeons,—documents in an envelope.”
The Judge.—“Exactly.”
M. Clemenceau.—“The report says that there was an open file of
documents from which had been taken a document containing these
words, ‘That scoundrel D....’”
M. Ravary.—“But I wrote that in my report on the strength, not of M.
Gribelin’s testimony, but of the testimony of another. Send for the
Esterhazy file, and you will see.”
M. Labori.—“But we ask nothing better.”
M. Ravary.—“That does not concern me. My conduct was that of an
honest man; that is all.”
Testimony of General de Pellieux.
The next witness to take the stand was General de Pellieux. “I feel,”
he began, “that it is necessary that the whole truth should be known,
and I shall tell it.”
M. Clemenceau.—“We shall remember this promise.”
General de Pellieux.—“On the 14th of last November, M. Mathieu
Dreyfus lodged with the minister of war a complaint against Major
Esterhazy. He formally accused him of being the author of the
bordereau that had led to the condemnation of his brother, basing his
accusation upon an absolute similarity of handwriting. On the 16th I
received from the military governor of Paris an order to make a
military investigation. I was instructed to give M. Mathieu Dreyfus an
opportunity of proving his charge. I sent for him. He brought me no
proof of any sort,—nothing but allegations. In reality, my investigation
was virtually over, but, in view of the public feeling that the charge
had created, I felt that I could not stop. I received from M. Scheurer-
Kestner the names of M. Leblois and Colonel Picquart. M. Leblois
came. He had a file of documents, composed of letters, fac-similes
of Major Esterhazy’s writing, a telegram in characters similar to those
used in print, which had been addressed to M. Scheurer-Kestner,
and of which I do not recall the terms, and fourteen letters from
General Gonse. He showed me these fourteen letters, and I read
them. I read likewise the drafts of the letters addressed by Colonel
Picquart to M. Leblois. The latter told me that he had been long in
relationship with Colonel Picquart, and had often been to see him at
the war department, and he gave me a history of his relations with
Colonel Picquart. These relations, then, are admitted. M. Leblois has
been at the office of the minister of war, and he has in his hands
letters from Colonel Picquart. For some days there has been talk of
the communication of a secret file. It is admitted that Lieutenant-
Colonel Picquart placed General Gonse’s letters in the hands of M.
Leblois. It is admitted that he said to M. Leblois, who repeated it to
M. Scheurer-Kestner, that a file in a war office contained a document
formally accusing Major Esterhazy of treason. Here I will point out
that, in my opinion, there is nothing more secret, nothing more
sacred, in the world than an examination begun against an officer for
the crime of treason. There is nothing in the world so sacred as a
man’s honor, as long as he remains unconvicted of the crime with
which he is charged. Well, Colonel Picquart told M. Leblois that in
the office of the minister of war there was a file containing a
document that formally accused Major Esterhazy of treason. I defy
anyone to contradict me. There you have communication of a secret
file, proved and patent.
“Now I can explain General Gonse’s letters. They do not relate to the
Dreyfus case, but solely to the Esterhazy case. General Gonse
recommends his subordinate to act with the greatest prudence. He
tells him that he does not wish to stop him in his inquiries,—naturally,
for they never stop an inquiry, once it is begun,—but at the same
time he cautions him against taking irreparable steps, such a step as
the immediate arrest of Colonel Esterhazy would have been. I
reported to the military governor of Paris that there was no proof
against Major Esterhazy, but that Colonel Picquart had made a
serious blunder from a military standpoint. As a result of this first
report, it appeared that there had been some confusion, and that it
was the intention of the minister that my investigation should be a
judicial one. The governor did not so understand it, nor did I.
“I immediately began a new investigation, with a clerk, and acting as
a magistrate. I summoned the accused, and confronted him with the
charges against him. But first I had a search made of Colonel
Picquart’s premises. Because of this search I have been bitterly
attacked. Let me say that it was my absolute right, given me by the
code of military justice as a judicial officer of police. Moreover, it was
my duty. This search had been demanded of me, and I could not
refuse without being suspected of an indisposition to get at the truth.
So I instituted a regular search through M. Aymard, a police
commissioner connected with the government of Paris. The results
of the search were brought to me under seal, and I broke the seal in
presence of Colonel Picquart. Of the documents taken I kept but a
single letter, to which I will refer directly. All of the other letters I
returned to Colonel Picquart, after a cursory glance at them. There
were numerous letters from his mother, which I have perfectly
respected, and numerous letters from Mlle. Blanche de Comminges,
one of which was the only document that I retained as being possibly
of interest. Then I summoned the various witnesses whom I had
seen in my first investigation, and examined them on two points.
First, concerning the bordereau. M. Mathieu Dreyfus had accused
Major Esterhazy of being the author of the bordereau. About this
bordereau much has been said. Few people have seen it; I believe
that it would be easy to count them. But many have seen fac-similes,
and I, who have seen it, must say that these fac-similes singularly
resemble forgeries, and that to pretend to base an expert opinion of
handwriting on fac-similes that have appeared in the newspapers is,
it seems to me, to go a long way. Nothing less resembles the
newspaper fac-simile than the original bordereau; consequently all
the expert testimony made so lightly is of no value.
“I listened to Major Esterhazy’s defence concerning the bordereau.
As it is well known, I will not repeat it. He tried to demonstrate that it
would have been impossible for him to produce the documents of
which the bordereau speaks. The council of war has judged that
matter, and I will not insist. But in the course of Colonel Picquart’s
examination an incident occurred. He spoke to me of the document
of which M. Leblois and M. Scheurer-Kestner had spoken to me, a
card-telegram which, according to Colonel Picquart, was of the same
origin as the bordereau. This document was torn,—had been torn
and pasted together. It contained writing which seemed to prove,
according to Colonel Picquart, that Major Esterhazy was in
suspicious relations with an agent of a foreign power. The first thing
to be done was to establish the genuineness of this document,
Lieutenant-Colonel Picquart being the only one who had any
knowledge of it. It was very certain that this card-telegram had not
been sent to the person for whom it was intended, and consequently
had not reached him. That in itself was sufficient to invalidate the
authenticity of the document; it had not been deposited in the post-
office, and bore no post-office stamp. In examining other witnesses, I
spoke of this document, and learned that attempts had been made to
give it the appearance of authenticity that it lacked. It was desired to
have it so photographed as to cause all traces of tear to disappear,
that it might be said: ‘It was torn afterwards; when it came, it was
intact.’ An effort was made also to have a post-office stamp placed
upon it, in order that it could be said that it had been seized in the
mails. To me this document had no appearance of genuineness. I
am astonished that Colonel Picquart, chief of the bureau of
information of a great power,—we have not yet fallen to the level of
the republic of Andorra or of St. Marin,—an officer who ought to be
intelligent, should be naive enough to believe that a military attaché
of a great foreign power would have corresponded with one of its
agents by a card-telegram. A card-telegram left with a janitor, and
liable to be opened by a janitor, or any other servant,—is it thus that
they would have corresponded with Esterhazy? I confess that I did
not believe it. I said to Colonel Picquart: ‘You have sought other
proofs against Esterhazy; what means have you employed of finding
them?’ And I come now to a very serious matter. He confessed that
for months, without the order or the authorization of his superiors,
General Gonse and General de Boisdeffre, he had been seizing in
the mails all of Esterhazy’s correspondence. For eight months he
opened that officer’s letters, and was obliged to admit that he had
found nothing. He admitted that without orders he had had that
officer’s premises searched, overturning his furniture, disarranging
his wife’s effects, and ransacking the apartments; and proof exists—
at first he admitted it—that a piece of furniture was forced open, and,
being unable to lock it again, they had a key made for that purpose,
so that today, instead of two keys for this piece of furniture, there are
three. It seemed to me that this was proof of inadmissible
manœuvres, and I confess that, when a council of war acquitted
Esterhazy, I was not astonished. Of my participation in that acquittal I
am proud. I succeeded in showing that there were not two traitors
among the officers, but only one, and that he had been justly
condemned. General de Boisdeffre and General Mercier were
allowed to say a word of Dreyfus; I ask to be similarly authorized.”
The judge refused to allow the request.

Instant Download PDF Principles of Macroeconomics 7th Edition Gregory Mankiw Test Bank Full Chapter

Uploaded by

Copyright:

Available Formats

Instant Download PDF Principles of Macroeconomics 7th Edition Gregory Mankiw Test Bank Full Chapter

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Instant Download PDF Principles of Macroeconomics 7th Edition Gregory Mankiw Test Bank Full Chapter

Uploaded by

Copyright:

Available Formats

Principles of Macroeconomics 7th

Edition Gregory Mankiw Test Bank

Brief Principles of Macroeconomics 7th Edition Gregory

Principles of Macroeconomics 7th Edition Gregory Mankiw

Brief Principles of Macroeconomics 7th Edition Gregory

Principles of Economics 7th Edition Gregory Mankiw Test

Principles of Microeconomics 7th Edition Gregory Mankiw

Principles of Economics 7th Edition Gregory Mankiw

Principles Of Macroeconomics Canadian 7th Edition

Essentials of Economics 7th Edition Gregory Mankiw Test

Multiple Choice – Section 00: Introduction

Multiple Choice – Section 01: The Determinants of Trade

1. What is the fundamental basis for trade among nations?

2. Patterns of trade among nations are primarily determined by

6. The principle of comparative advantage asserts that

7. A tax on an imported good is called a

9. The price of a good that prevails in a world market is called the

20. Trade among nations is ultimately based on

21. A country has a comparative advantage in a product if the world price is

31. If a country is an exporter of a good, then it must be the case that

6. When a country allows trade and becomes an exporter of a good,

7. Trade enhances the economic well-being of a nation in the sense that

8. When a country allows trade and becomes an importer of a good,

9. When a country allows trade and becomes an importer of a good,

15. When a country allows trade and becomes an exporter of a good,

16. When a country allows trade and becomes an importer of coal,

19. When a country allows trade and becomes an exporter of a good,

20. When a country allows trade and becomes an importer of a good,

The figure illustrates the market for coffee in Guatemala.

21. Refer to Figure 9-1. From the figure it is apparent that

22. Refer to Figure 9-1. From the figure it is apparent that

23. Refer to Figure 9-1. With trade, Guatemala will

28. Refer to Figure 9-1. When trade is allowed,

32. Which of the following statements is true?

The figure illustrates the market for calculators in a country.

45. Refer to Figure 9-2. Without trade, consumer surplus is

46. Refer to Figure 9-2. Without trade, producer surplus is

49. Refer to Figure 9-2. With free trade, consumer surplus is

50. Refer to Figure 9-2. With free trade, producer surplus is

51. Refer to Figure 9-2. As a result of trade, total surplus increases by

52. Refer to Figure 9-2. This country

Figure 9-3. The domestic country is China.

55. Refer to Figure 9-3. With no international trade,

57. Refer to Figure 9-3. With trade, China will

58. Refer to Figure 9-3. With trade, producer surplus in China is

Figure 9-4. The domestic country is Nicaragua.

61. Refer to Figure 9-4. With trade, Nicaragua

62. Refer to Figure 9-4. Consumer surplus in Nicaragua without trade is

64. Refer to Figure 9-4. Which of the following statements is accurate?

69. Refer to Scenario 9-1. If trade in peaches is allowed, the

The figure illustrates the market for tricycles in a country.

71. Refer to Figure 9-5. With trade, this country

72. Refer to Figure 9-5. Without trade, consumer surplus amounts to

73. Refer to Figure 9-5. Without trade, producer surplus amounts to

74. Refer to Figure 9-5. Without trade, total surplus amounts to

76. Refer to Figure 9-5. With trade, consumer surplus is

77. Refer to Figure 9-5. With trade, producer surplus is a. $500.

78. Refer to Figure 9-5. With trade, total surplus is

The figure illustrates the market for roses in a country.

4. The “unfaircompetition” argument might be cited by an American who believes that