Use the following information to answer questions 9 thru 16:

04 Jun Use the following information to answer questions 9 thru 16:

Question
Week 1 & 2 Study Problems Suggested completion date: Sat. 8/31

Terms to Know

Autarky price

Producer Surplus

Consumer Surplus

International Price

World Price

Import Demand

Export Supply

Net National Gains from Trade

Basic Supply & Demand Model

Producer surplus is:
found on a graph as the area under the equilibrium price and above the supply curve.
The net gain in economic well-being associated with producing and selling a quantity of a good.
Used to measure the impact of a price change on producers’ economic well-being.
All of the above.
ANSWER:

Figure 2.1 CAUTION: For consumer and producer surplus calculations, you may need to redraw the graph to scale.

Referring to figure 2.1, at a price of $70, the amount of consumer surplus is:
$6,000
$8,000
$15,000
$30,000
Referring to figure 2.1, at a price of $70, the amount of producer surplus is:
$6,000
$8,000
$15,000
$30,000
Referring to figure 2.1, at a price of $120, the amount of consumer surplus is ____ and the amount of producer surplus is _____. (Assume that consumers and producers are able to transact at their desired quantities.)
$9,500; $1,500
$1,500; $1,500
$1,500; $16,500
$1,500; $9,500
The opening up of free trade brings gains to:
All producers.
Producers in export industries.
Producers in import-competing industries.
Workers in import-competing industries.
An increase in the imports of clothing into the United States will benefit _____ and hurt ____.
U.S clothing producers; foreign clothing producers
foreign clothing producers; foreign clothing consumers
U.S clothing consumers; foreign clothing producers
U.S clothing consumers; U.S. clothing producers
Which of the following says that any dollar of gain or loss will be equally valued, regardless of who experiences it?
Consumer surplus
Producer surplus
Arbitrage
One-dollar, one-vote metric
Consider a typical two-country model. In the exporting country, consumers will be ____ and producers will be _____ with the opening of international trade.
Happy; happy
Unhappy; happy
Unhappy; unhappy
Happy; unhappy
Use the following information to answer questions 9 thru 16:

Suppose the domestic supply and demand curves for skateboards in the United States are given by the following set of equations:

QS = -60 + 3P

QD = 390 – 2P

In the absence of international trade in skateboards, what will the domestic price in the United States be for skateboards?
$66
$90
$45
$150
In the absence of international trade in skateboards how many skateboards will be sold in the United States?
138
258
210
930
If the United States could trade skateboards freely with the rest of the world at a price of $75, how many skateboards would be produced in the United States?
165
240
285
It depends on foreign demand skateboards.
If the United States could trade skateboards freely with the rest of the world at a price of $75, how many skateboards will be purchased in the United States?
165
240
285
It depends on foreign supplies of skateboards.
If the United States could trade skateboards freely with the rest of the world at a price of $75, the United States would import ____ skateboards and export ______ skateboards.
240; 165
0; 165
75; 0
240; 0
In the absence of trade with the rest of the world, the amount of consumer surplus in the United States skateboard market is _____ and the amount of producer surplus in the United States skateboard market is______.
$7,350; $11,025
$11,025; $9,450
$20,474; $7,350
$11,025, $7,350
The opening of free trade with an international price for skateboards of $75 will lead to a change in consumer surplus of ____.
+$2,812.50
-$2,812.50
+$3,375
-$3,375
The opening of free trade with an international price for skateboards of $75 will lead to a change in producer surplus of ____.
+$2,812.50
-$2,812.50
+$3,375
-$3,375
Use the following information to answer questions 17 thru 23:

Suppose the domestic supply and demand curves for MP3 players in the United States are given by the following set of equations:

QS = -50 + 10P

QD = 925 – 5P

In the absence of international trade in MP3 players, what will the domestic price in the United States be for MP3 players?
$65
$63.33
$90
$180
In the absence of international trade in MP3 players, how many MP3 players will be sold in the United States?
1825
600
608
925
If the United States could trade MP3 players freely with the rest of the world at a price of $90, how many MP3 players would be produced in the United States?
625
475
850
It depends on foreign demand MP3 players.
If the United States could trade MP3 players freely with the rest of the world at a price of $90, how many MP3 players will be purchased in the United States?
625
475
925
It depends on foreign supplies of MP3 players.
If the United States could trade MP3 players freely with the rest of the world at a price of $90 the United States would import ____ MP3 players and export ______ MP3 players.
0; 375
375; 0
475; 925
0; 925
In the absence of trade with the rest of the world, the amount of consumer surplus in the United States MP3 player market is _____ and the amount of producer surplus in the United States MP3 player market is______.
$30,000.50; $22,000.50
$22,000.00; $30,000.00
$10,000.50; $39,000.50
$36,000.00; $18,000.00
The opening of free trade with an international price for MP3 players of $90 will lead to a ____ to the United States in the amount of ____.
Gain; $16,250.00
Gain: $4,687.50
Loss; $3,125.00
Loss; $13,500.50
Use the following information to answer questions 24 thru 23:

Suppose the domestic supply and demand curves for android phones the United States are given by the following set of equations:

QS = 30 + 2P

QD = 60 – P

In the absence of international trade in android phones, what will the domestic price in the United States for android phones?
$60
$3.33
$10
$18
In the absence of international trade in MP3 players, how many MP3 players will be sold in the United States?
18
50
68
90
Use the figure below to answer questions 26-29

El Salvador’s Home Coffee Market El Salvador’s Import Demand and Export Supply

Price in $ Price in $

16 S 16

14 14 Export Supply

12 12

10 10

8 8

6 6

4 4

2 D 2 Import Demand

2 4 6 8 10 2 4 6 8 10

The equilibrium price of coffee in El Salvador is:
$16
$8
$10
$12
$14.
If the price of El Salvadoran coffee in the international market is $10, El Salvador will export _____ pound(s) of coffee.
two
zero
six
eight
ten
If the price of coffee in the international market is $14:
There will be an excess demand of 10 pounds in the El Salvadoran home market.
El Salvador’s domestic market for coffee will be in equilibrium.
There will be an excess demand for El Salvadoran coffee in the international market.
The international market for coffee will be in equilibrium.
El Salvador will export 4 pounds of coffee.
ANSWER: E

If the price of El Salvadoran coffee falls to $6 in the international market:
There will be an excess supply of 8 pounds of El Salvadoran coffee in the international market.
El Salvador’s domestic market for coffee will be in equilibrium.
The international market for coffee will be in equilibrium.
There will be an excess demand of 4 pounds for coffee in El Salvador’s home market.
There will be an excess supply of coffee in El Salvador’s home market.
Answer questions 30 and 31 using the data presented in the table. The below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in Guatemala and Honduras at different prices. Guatemala and Honduras are the only countries in the world.

Guatemala

El Salvador

Price

Quantity Demanded

Quantity Supplied

Quantity Demanded

Quantity Supplied

$1,200

50

10

60

10

$1,400

45

30

50

20

$1,600

40

50

40

30

$1,800

35

70

30

40

$2,000

30

90

20

50

According to the table above, the international equilibrium price of computers is:
$2,000
$1,600
$1,800
$1,400
$1,200
According to the data in the table, the equilibrium quantity of computers traded in the world market is:
20,000 computers.
30,000 computers.
10,000 computers.
15,000 computers.
40,000 computers.