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Chapter 9 Practice questions



Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

1. 

Countries usually impose restrictions on free foreign trade to protect
a.
foreign producers.
b.
foreign consumers.
c.
domestic producers.
d.
domestic consumers.
 

2. 

If a country allows trade and the domestic price of a good is higher than the world price,
a.
the country will become an exporter of the good.
b.
the country will become an importer of the good.
c.
the country will neither export nor import the good.
d.
additional information about demand is needed to determine whether the country will export or import the good.
 

3. 

If the United States exports cars to France and imports cheese from Switzerland,
a.
the United States has a comparative advantage in producing cars, and Switzerland has a comparative advantage in producing cheese.
b.
the United States has a comparative advantage in producing cheese, and Switzerland has a comparative advantage in producing cars.
c.
the United States and France would both be better off if they each produced cars and cheese.
d.
Comparative advantage cannot be determined without knowing absolute prices.
 

4. 

Trade is beneficial because it
a.
creates jobs for middlemen.
b.
creates jobs for shippers.
c.
allows each nation to apply economic pressure on other nations.
d.
allows each nation to specialize in doing what it does best.
 

5. 

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.
trade increases a country's gross domestic product (GDP).
 

6. 

When a country allows trade and becomes an exporter of a good, which of the following would NOT be true?
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 exceed the gains of domestic producers.
d.
The gains of domestic producers exceed the losses of domestic consumers.
 
 
Figure 9-1
chapter_9_practice__files/i0080000.jpg
 

7. 

Refer to Figure 9-1. With free trade, this country would
a.
import 70 baskets.
b.
export 65 baskets.
c.
export 35 baskets.
d.
import 40 baskets.
 
 
Figure 9-5
chapter_9_practice__files/i0100000.jpg
 

8. 

Refer to Figure 9-5. Without trade, the equilibrium price of carnations would be
a.
$8 and equilibrium quantity would be 300.
b.
$6 and equilibrium quantity would be 200.
c.
$6 and equilibrium quantity would be 400.
d.
$4 and equilibrium quantity would be 500.
 

9. 

Refer to Figure 9-5. With free trade
a.
the domestic price will equal the world price.
b.
carnations will be sold at $8 in this market.
c.
this country will import 200 carnations.
d.
there will be a shortage of 400 carnations in this market.
 

10. 

Refer to Figure 9-5. Imposing a tariff on carnations
a.
increases imports by 100.
b.
increases imports by 200.
c.
reduces imports by 200.
d.
reduces imports by 400.
 



 
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