Exam 21: International Trade and Comparative Advantage

What would be the output combination for two products A and B on the production possibility frontier, if a country uses its entire resources for producing A?

Mercantilism is a doctrine that holds that exports are good for a country, whereas imports are harmful.

The United States has relatively low tariffs.

If a nation has an absolute advantage in the production of a good,

Figure 34-5 ​ From the graph in Figure 34-5 (curves show output per unit of labor input), one can infer that

Figure 34-9 ​ In Figure 34-9, Pestoland exports pasta to Pastaland. Equilibrium will occur when

One of the main reasons that people want to limit imports is the

Ideally, a free trade policy should be accompanied by

If a country's productivity doubles for everything it produces, this will not alter its prior pattern of specialization because it has not altered its comparative advantage.

In a situation of free trade,

As a result of pure free trade in a commodity, the

Comparative advantage, not absolute advantage, determines the decision to specialize in production.

Trade between nations usually means that

A program of protection that results in preserving jobs in certain industries

When a country removes a specific import restriction, it always benefits every worker in that country.

Both tariffs and quotas will restrict supplies coming into the country from abroad.

An essential point, among many, in the refutation of the "cheap foreign labor" argument is that

Imports are goods produced abroad and sold domestically.

Discuss national defense, infant industry, and strategic trade as arguments for protection.

Political factors influence international trade because