Indicate the answer choice that best completes the statement or answers the question. 1. 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, d. All of the above are correct. 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. Price 45 40 35 Supply 30 25- 20 15 10 5 40 60 80 100 120 140 160 Demand + Quantity 20 2. Refer to Figure 9-25. Suppose the government imposes a tariff of $5 per unit. The deadweight loss caused by the tariff is a. $25. b. $50. c. $75. d. $100, 3. 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. 4. 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. Figure 9-1 The figure illustrates the market for coffee in Guatemala. 150 Price 140 130 120 A 110 100 B 0 D 90 H F 80 70 C 60 50 40 30 20+ 10 Domestic supply World pnce Domestic demand 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 Quantity 16. 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. 17. 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. Figure 9-17 Price Domestic Supply World price tariff World Price Domestic Demand 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 60 72 76 64 08 92 96 100 5. Refer to Figure 9-17. The deadweight loss caused by the tariff is a. $24. b. $72. c. $96. d. $144. 6. 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. d. All of the above are correct. Figure 9-4. The domestic country is Nicaragua. Price of Calculators $27 Domestic Supply 12 7 World Price Domestic Demand 150 300 400 Quantity of Calculators 2 0 7. 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, S7).