Practice Questions Chapter 1 1. People respond to incentives ...

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Chapter 91. Use Exhibit 3 to answer the following questions.Exhibit 3a. If trade is not allowed, what is the equilibrium price and quantity in thismarket?b. If trade is allowed, will this country import or export this commodity?Why?c. If trade is allowed, what is the price at which the good is sold, thedomestic quantity supplied and demanded, and the quantity importedor exported?d. What area corresponds to consumer surplus if no trade is allowed?e. What area corresponds to consumer surplus if trade is allowed?f. What area corresponds to producer surplus if no trade is allowed?g. What area corresponds to producer surplus if trade is allowed?h. If free trade is allowed, who gains and who loses, the consumers or theproducers, and what area corresponds to their gain or loss?i. What area corresponds to the gains from trade?Practice Questions to accompany Mankiw & Taylor: Economics 22
2. Use Exhibit 4 to answer the following questions.Exhibit 4a. If trade is not allowed, what is the equilibrium price and quantity in thismarket?b. If trade is allowed, will this country import or export this commodity?Why?c. If trade is allowed, what is the price at which the good is sold, thedomestic quantity supplied and demanded, and the quantity importedor exported?d. What area corresponds to consumer surplus if no trade is allowed?e. What area corresponds to consumer surplus if trade is allowed?f. What area corresponds to producer surplus if no trade is allowed?g. What area corresponds to producer surplus if trade is allowed?h. If free trade is allowed, who gains and who loses, the consumers or theproducers, and what area corresponds to their gain or loss?i. What area corresponds to the gains from trade?Practice Questions to accompany Mankiw & Taylor: Economics 23
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