Exam 32: The Gains From International Trade

Ireland and Japan are assumed to produce only wool and steel,to have full employment and complete mobility of resources between industries.Their production possibilities boundaries before trade are drawn in solid lines.It is assumed that the two countries have the same amount of resources.Their consumption possibilities after trade are shown by the dotted lines.The outputs of wool and steel are given in physical units. FIGURE 32-1 Refer to Figure 32-1.At the "terms of trade" shown by the dotted lines,

Trade,whether between individuals or nations,generally promotes

Consider the possibility of trade between countries.When opportunity costs differ between countries,

The principle of comparative advantage was first formulated in the 18th century by

One region is said to have an absolute advantage over another region in the production of good X when

Consider Canada's terms of trade.Canada is a net importer of citrus fruit.If severe weather in Florida wipes out the fruit crop for one season,Canada's terms of trade will likely

If Canada's index of export prices is 250 and the index of import prices is 200,then the index of the terms of trade is

Suppose Canada could produce all goods and services more cheaply than all other countries.In that case,

The concept of comparative advantage in international trade is based on ________ as opposed to absolute costs.

This table shows how much cotton and cocoa can each be produced in Peru and Brazil with one unit of equivalent resources. TABLE 32-4 Refer to Table 32-4.The opportunity cost of a bushel of cocoa beans in Peru is

The diagram below shows the domestic demand and supply curves in the market for newsprint in Paperland. FIGURE 32-5 Refer to Figure 32-5.If Paperland engages in international trade and the world price is P_A,the amount of newsprint ________ will be ________.

If Country A has a comparative advantage in the production of good X relative to Country B,

Consider the following information about the production of two goods,X and Y,in two countries,A and B: • In Country A it takes X_a units of resources to produce one unit of X and Y_a units of resources To produce one unit of Y. • In Country B it takes X_b units of resources to produce one unit of X and Y_b units of resources To produce one unit of Y. • Assume the amount of resources used to produce the goods in the two countries can be Compared unambiguously. TABLE 32-1 Refer to Table 32-1.If is less than ,we can conclude with certainty that

This table shows how much cotton and cocoa can each be produced in Peru and Brazil with one unit of equivalent resources. TABLE 32-4 Refer to Table 32-4.Compared with Peru,Brazil has

Ireland and Japan are assumed to produce only wool and steel,to have full employment and complete mobility of resources between industries.Their production possibilities boundaries before trade are drawn in solid lines.It is assumed that the two countries have the same amount of resources.Their consumption possibilities after trade are shown by the dotted lines.The outputs of wool and steel are given in physical units. FIGURE 32-1 Refer to Figure 32-1.Before any trade takes place,the opportunity cost of a unit of steel is

The diagram below shows the (hypothetical)demand and supply curves for regional jets in Canada.Assume that the market is competitive,all jets are identical,and that Canada engages in international trade. FIGURE 32-6 Refer to Figure 32-6.If the world price of a regional jet is $20 million,Canada will

Consider the following information about the production of two goods,X and Y,in two countries,A and B: • In Country A it takes X_a units of resources to produce one unit of X and Y_a units of resources To produce one unit of Y. • In Country B it takes X_b units of resources to produce one unit of X and Y_b units of resources To produce one unit of Y. • Assume the amount of resources used to produce the goods in the two countries can be Compared unambiguously. TABLE 32-1 Refer to Table 32-1.If the ratio / is less than the ratio / ,then we can say with certainty that

With regard to international trade,what is the "law of one price"?

The diagram below shows Robinson Crusoe's annual production possibilities boundary for the production of bananas and coconuts. FIGURE 32-3 Refer to Figure 32-3.What is Robinson Crusoe's opportunity cost of bananas in terms of coconuts?

The following production possibilities schedule shows the quantities of wheat and rice that can each be produced in Canada and India with one unit of equivalent resources. TABLE 32-2 Refer to Table 32-2.If Canada were to transfer one unit of resources from rice to wheat production and if one unit of Indian resources were switched from wheat to rice production,