Exam 32: Comparative Advantage and the Open Economy

Given two economic systems, A and B, if economy A has a absolute advantage in the production of widgets, then

If a good sells for $10 domestically and the same good sells for $7 abroad, then this firm is engaging in

Suppose an industry receives protection from the government in the form of tariffs. A number of years later, it is observed that the quantity supplied by domestic firms had decreased and that the domestic price was substantially greater than the world price. We could conclude that

During the 1960s, U.S. steel firms argued they needed tariff protection because Germany and Japan were using new mills to make steel since their old mills were destroyed in World War II. Essentially, this argument is a form of the

Maximum Feasible Hourly Production Rates (in Tons)of Either Wine or Beef Using All Available Resources Product Argentina France Wine (gallons)30 60 Beef (pounds)10 30 -Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Fred's opportunity cost to produce one cake is

Maximum Feasible Hourly Production Rates (in Tons)of Either Knives or Forks Using All Available Resources Product Country Alpha Country Beta Knives 9 3 Forks 6 12 -Use the above table. Assuming constant opportunity costs, the opportunity cost of producing knives in country Alpha is ________, and the opportunity cost of producing knives in country Beta is ________.

A rationale used for tariff protection by some is that

Which of the following is NOT a true statement regarding free trade?

Specialization and international trade lead to

The Number of Worker Days to Produce One Cuckoo Clock or Movie Using All Available Resources U.S. Switzerland Product (Worker-Days)(Worker-Days) Cuckoo Clocks 8 6 Movies 12 4 -Refer to the above table. Assuming constant opportunity costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.

Dumping is defined as

The two groups that benefit the most from quotas are

When one country "dumps" some of its products in another country, it

According to the infant-industry argument, protection should be withdrawn from an infant industry when the companies in the industry

Since the 1930s, overall tariff rates in the United States have

To avoid trade restrictions, a U.S. firm moves its final production process to Ireland and then ships the final products to Germany. This is an example of

All of the following are arguments against free trade EXCEPT

If a country voluntarily agrees to have its companies import more goods from another country, the country has

Maximum Feasible Hourly Production Rates of Either Product A or Product B Using All Available Resources Product Country X Country Y A 4 8 B 4 4 -Refer to the above table. If opportunity costs are constant and both countries produce only the goods for which they have comparative advantages and then trade, hourly world output would equal

A VRA is an example of