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1.For this question, please refer to the following graph,Suppose the world price of the product is $2. The producer surplus in this market, when there is free international trade and no government intervention, equals

a.Not enough information

b.$9

c.$4.50

d.$18

e.$0

2.For this question, continue to refer to the previous graph,The world price is still $2 and there is still free international trade with no government intervention. Suppose now the government in Econland wants to intervene in this market and bring widget prices back to the pre-trade free market price of $5. What could they do achieve this?

a.The government cannot do anything to bring widget prices back to $5

b.Tax imports by $0

c.Set a quota on imports of 0 units

d.Tax imports by $2

e.Set a quota on imports of 2 units

3.Continue to refer to the previous graph,Suppose currently, there is free international trade (at the world price of $2) with no government intervention. Now, the government imposes a quota of 2 units. What is the change in consumer surplus after a quota of 2 units is imposed on imports?

a.+$9

b.+$3.50

c.+$4.50

d.-$3.50

e.-$4.50

4.Continue to refer to the previous graph,Suppose currently, there is free international trade (at the world price of $2) with no government intervention. Now, the government imposes a quota of 2 units. What is the deadweight loss caused by there being too many domestic producers producing?

a.$1

b.$0

c.Not enough information

d.$2

e.$4

5.Continue to refer to the previous diagram,Which of the following statements is true about Econland when it goes from not participating in international trade to participating in international trade? Suppose there is no government policy, and that the world price is $2.

a.Overall, Econland is better off with international trade, but consumers are worse off and producers are better off than when they were not trading with another country.

b.Overall, Econland is worse off with international trade, but consumers are better off and producers are worse off than when they were not trading with another country.

c.Overall, Econland is better off with international trade, but consumers are better off and producers are worse off than when they were not trading with another country.

d.Overall, Econland is worse off with international trade because total surplus is lower than when they were not trading with another country.

e.Overall, Econland is better off with international trade because consumers and producers are both better off than when they were not trading with another country

S 15 14 13 12 11 10 9 8 7 6 ONW+ura 4 3 2 1 D 0 1 2 3 4 5 6 7 8 9 10

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