Exam 9: Comparative Advantage and the Gains From International Trade

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will the market price be?

The terms of trade refers to

When BMW, an German company, purchases a welding machine that was made in Toronto, the purchase is

A tariff is a tax imposed by a government on its own exports.

As a percentage of GDP, exports are greater than imports for which of the following countries?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3. What is the area of domestic producer surplus after the imposition of a quota?

A tax imposed by a government on imports of a good into a country is called a

A quota

Figure 9-6 Suppose the U.S. government imposes a $0.50 per pound tariff on sugar imports. Figure 9-6 shows the demand and supply curves for sugar and the impact of this tariff. -Use Figure 9-6 to answer questions a-i. a. Following the imposition of the tariff, what is the price that domestic consumers must now pay and what is the quantity purchased? b. Calculate the value of consumer surplus with the tariff in place. c. What is the quantity supplied by domestic sugar producers with the tariff in place? d. Calculate the value of producer surplus received by U.S. sugar producers with the tariff in place. e. What is the quantity of sugar imported with the tariff in place? f. What is the amount of tariff revenue collected by the government? g. The tariff has reduced consumer surplus. Calculate the loss in consumer surplus due to the tariff. h. What portion of the consumer surplus loss is redistributed to domestic producers? To the government? i. Calculate the deadweight loss due to the tariff.

Figure 9-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2. With the tariff in place, the United States consumes

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries. This protectionism will cause the greatest harm to

Today, the United States charges an average tariff rate

Measuring the impact of a quota or tariff on the U.S. economy is an example of ________. Stating that a quota or tariff should be eliminated is an example of ________.

________ is the ability to produce more of a good or service than competitors when using the same amount of resources.

What does it mean for a country to have an absolute advantage in producing a product?

Assume that China has a comparative advantage in producing corn and exports corn to Japan. We can conclude that

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3. Without the quota, the domestic price of peanuts equals the world price which is $2.00 per pound. What is the quantity of peanuts supplied by domestic producers in the absence of a quota?

The main purpose of most tariffs and quotas is to

Table 9-12 Output per hour Production and Production of work Consumption without Trade with Trade Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 9-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-12. If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Estonia consume?

Domestically produced goods and services sold to other countries are referred to as