Exam 18: International Trade and Public Policy

Figure 18.1 -Refer to Figure 18.1. The opportunity cost of hang gliders in Canada is

An import quota is the same as an import ban.

From the perspective of consumers, a quota is preferred to a tariff.

Among the problems associated with subsidizing an industry in the hope of establishing a worldwide monopoly is that if two nations subsidize firms in the same industry, each could lose money.

Suppose Panama produces only two goods, bananas and hats. If Panama has a comparative advantage in bananas, a move toward free trade will

If we eliminated our textile tariffs, the dislocated workers could easily switch to other jobs.

The WTO and GATT promote trade by

Trade theory suggests that increased trade leads to increased wage equality.

A(n)________ is a tax on an imported good.

The example of the VCRs from Korea illustrates dumping due to

Dumping is sometimes legal under international trade agreements.

A U.S. boycott against Mexican tuna caught in nets was

The rate at which nations will exchange goods and services is known as the

To draw the consumption possibilities curve for a particular nation you need to know the output of the good for which the nation has a comparative advantage and the terms of trade.

Figure 18.2 -Refer to Figure 18.2. After trade and specialization begin, the maximum amount of fishing poles that Macadamia can consume is

A restriction on imports is likely to reduce further restrictions on trade.

________ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.

Recall the Application about why international trade may reduce measured inequality in the United States to answer the following question(s). While it is conventional wisdom now that inequality in the United States has increased in the last several decades, until recently no one has taken a careful look at the actual living standards of different income groups, taking into account the goods they purchase. Two economists from the University of Chicago, Christian Broda and John Romalis, investigated the living standards of low-income groups and high-income groups based on the goods these groups purchase. -According to this Application, while inequality has increased in the United States in the last several decades, the study done by Broda and Romalis indicates that

Suppose the nation of Alphonia was charged with dumping electric lawnmowers in the nation of Omegalon. The charge of dumping electric lawnmowers in the Omegalon market means that Alphonia was accused of

The slope of the production possibilities curve is