CHAPTER 9: APPLICATION: INTERNATIONAL TRADEOnline version Chapter Quick Quiz by Shawniqua Forbes 1 If a nation that does not allow international trade in steel has a domestic price of steel lower than the world price, then a the nation has a comparative advantage in producing steel and would become a steel exporter if it opened up trade. b the nation has a comparative advantage in producing steel and would become a steel importer if it opened up trade. c the nation does not have a comparative advantage in producing steel and would become a steel exporter if it opened up trade d the nation does not have a comparative advantage in producing steel and would become a steel importer if it opened up trade. 2 When the nation of Ectenia opens itself to world trade in coffee beans, the domestic price of coffee beans falls. Which of the following describes the situation? a Domestic production of coffee rises, and Ectenia becomes a coffee importer. b Domestic production of coffee rises, and Ectenia becomes a coffee exporter. c Domestic production of coffee falls, and Ectenia becomes a coffee importer. d Domestic production of coffee falls, and Ectenia becomes a coffee exporter. 3 When a nation opens itself to trade in a good and becomes an importer, a producer surplus decreases, consumer surplus increases, and so the impact on total surplus is ambiguous. b producer surplus decreases, but consumer surplus and total surplus both increase. c producer surplus and total surplus increase, but consumer surplus decreases. d producer surplus, consumer surplus, and total surplus all increase. 4 If a nation that imports a good imposes a tariff, it will increase a the domestic quantity supplied. b the domestic quantity demanded. c the quantity imported from abroad. d all of the above. 5 Which of the following trade policies would benefit producers, hurt consumers, and increase the amount of trade? a the increase of a tariff in an importing country. b the reduction of a tariff in an importing country. c starting to allow trade when the world price is less than the domestic price. d starting to allow trade when the world price is greater than the domestic price. 6 The main difference between imposing a tariff and handing out licenses under an import quota is that a tariff increases a consumer surplus. b producer surplus. c government revenue. d international trade.
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