1. Suppose the US is exporting medical equipment. What can we say is true for the domestic market for medical equipment?

a. World price exceeds the domestic equilibrium price

b. US consumers are better off due to trade

c. Total surplus is lower with trade than if trade was banned

d. Less is sold by domestic producers when there is trade than if trade was banned

e. US consumers are better off due to trade and less is sold by domestic producers when there is trade than if trade was banned

2. Consider the following information:

Price Quantity domestically supplied Quantity domestically demanded

$40 4,000 0

$35 3,500 500

$30 3,000 1,000

$25 2,500 1,500

$20 2,000 2,000

$15 1,500 2,500

$10 1,000 3,000

$5 500 3,500

$0 0 4,000

If there is no trade, what is the total surplus?

a. $10,000

b. $20,000

c. $40,000

d. $62,500

e. Not enough information

3. Consider the numbers from the previous problem. If the world price is $5, what is the total surplus from no tariff?

a. $1,250

b. $25,000

c. $62,500

d. $85,000

e. $102,500

4. Again, consider the numbers from question 7. Suppose a tariff is then applied of $10. What is the change in total surplus from the tariff?

a Decrease of $2,500

b. Decrease of $10,000

c. Decrease of $20,000

d. Decrease of $32,500

e. Not enough information

Which of the following about international trade is true? (Hint: See the arguments for restricting trade.)

The trade protections implemented by Presidents Bush and Obama destroyed more jobs than they created

Most jobs losses in the US are due to international trade rather than some other factor like automation

International trade has decreased income inequality in the US

Trade protections imposed on another country does not lead to retaliation by that other country

All of the above are false