1. If a country closes off to trade and prices remain unchanged, what does that mean?

A. Autarky prices and free trade prices are the same.

B. Autarky prices are larger than free trade prices.

C. Autarky prices are smaller than free trade prices.

D. The absolute value of autarky prices are negatively correlated with free trade prices.

Explain your answer along with a diagram

2. If a country closes off to trade and notices that the number of firms in an industry doubles in size, what economic theory would help us explain this phenomenon?

A.Stolper-Samuelson.

B.Melitz.

C.Ricardian.

D.Cournot.

Explain your answer along with a diagram

3. In the Pure Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then

A.Both owners of K and owners of A will benefit.

B.Owners of A will benefit.

C.Owners of K will benefit.

D.Neither owners of K nor owners of A will benefit.

Explain your answer along with a diagram

4. In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then

A.Both owners of K and owners of A will benefit.

B.Owners of A will benefit.

C.Owners of K will benefit.

D.Neither owners of K nor owners of A will benefit.

Explain your answer along with a diagram

5. A country imposing a tariff can benefit in terms of social welfare if

A.The terms-of-trade benefit exceeds the sum of production and consumption distortion loss.

B.The tariff revenue exceeds the sum of production and consumption distortion loss.

C.The consumer surplus loss is less than the producer surplus gain.

D.The terms-of-trade benefit exceeds the consumer surplus loss.

Explain your answer along with a diagram