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. Under autarky, the producer surplus is

Table 9-11 Output per hour Production and Production of work Consumption without Trade with Trade Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-11 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-11. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Denmark consume?

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 value of revenue to foreign producers who are granted permission to sell in the U.S. market when there is a quota?

Automobiles and many other products are differentiated. As a result

Over the past several decades there has been rapid growth in international trade. This growth has been due to all but one of the following factors. Which factor has not contributed to the growth of international trade?

The first example of comparative advantage appeared in a book that was published in 1817. This example showed that mutually beneficial trade between two countries (England and Portugal) was possible. The example assumed that two goods (wine and cloth) could be produced by both countries. Which of the following describes the conclusion of this example?

The selling of a product for a price below its cost of production is called

In the 1980s, Japan agreed to limit the quantity of automobiles it would export to the United States. Why did the Japanese government agree to this trade restriction?

A consequence of increasing marginal costs of producing digital music players in Japan is

Table 9-5 Madison and Austin own Cafe Ole'. Table 9-5 lists the number of empanadas and tacos Madison and Austin can each make in one hour. -Refer to Table 9-5. Select the statement that accurately interprets the data in the table.

One reason a country does not specialize completely in production is that production of most goods involves increasing opportunity costs.

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

In 1930, the U.S. government attempted to help domestic firms that were harmed by the Great Depression by passing the Smoot-Hawley Tariff. In response to this tariff, other countries ________ and international trade ________.

Table 9-8 Table 9-8 shows the output per week for bows and arrows by Ahmet and MyLinh. -Refer to Table 9-8. a. Which person has an absolute advantage in the production of bows? arrows? b. Which person has a comparative advantage in the production of bows? c. Which person has a comparative advantage in the production of arrows?

Which of the following statements is false?

In 1995, the General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO).

Which of the following statements about the importance of trade to the U.S. economy is false?

Figure 9-8 -Refer to Figure 9-8. Suppose the U.S. government imposes a $0.25 per pound tariff on rice imports. Figure 9-8 shows the demand and supply curves for rice and the impact of this tariff. Use the figure 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 rice growers with the tariff in place? d. Calculate the value of producer surplus received by U.S. rice growers with the tariff in place. e. What is the quantity of rice 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.

China has developed a comparative advantage in the production of clothing. The source of this comparative advantage is

Figure 9-5 Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff. -Refer to Figure 9-5. With the tariff in place, the United States produces