Exam 9: Comparative Advantage and the Gains From International Trade

Article Summary In a September 2017 ruling, the U.S. International Trade Commission (ITC) found that imports of solar panels harmed U.S. manufacturers, opening the door for the Trump administration to impose tariffs on foreign solar panels and modules. The initial complaint to the ITC was filed in early 2017 by bankrupt solar panel manufacturer Suniva, who argued that a rapid increase in imports of inexpensive foreign product put U.S. manufacturers at risk. The decision was opposed by many in the solar panel industry, arguing that tariffs will hurt the industry as a whole. While Suniva commissioned a report that showed devastating job losses without industry protection, an independent analysis by Bloomberg New Energy Finance found a ruling for Suniva would, at most, only create 6,400 jobs and "downstream job losses would almost certainly exceed any manufacturing gains." Source: Tom DiChristopher, "US trade agency rules imports harmed solar panel makers, setting up Trump tariff decision," cnbc.com, September 22, 2017. -Refer to the Article Summary.All else equal, if the Trump administration decides to enact protectionist measures, such as a tariff, against foreign solar panels, the price of solar panels in the United States will ________ and the quantity of solar panels demanded in the United States will ________.

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Table 9-3 Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. -Refer to Table 9-3.Select the statement that accurately interprets the data in the table.

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.Without the tariff in place, the United States consumes

Free trade ________ living standards by ________ economic efficiency.

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

If Canada imports fishing poles from Mexico, and Mexico imports bacon from Canada, which of the following would explain this pattern of trade?

Which of the following is not a source of comparative advantage?

The trade model described in the text demonstrates that countries can expand consumption by specializing in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialization in production.State three reasons why this is case.

Under autarky, consumer surplus is represented by the area

What is dumping? Who benefits and who loses from dumping?

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

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.If there was no quota, how many pounds of peanuts would domestic consumers purchase?

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

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

Table 9-5 Table 9-5 shows the output per week for bows and arrows by Ahmet and MyLinh. -Refer to Table 9-5. 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?

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent.In the market for steel, the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

Table 9-6 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 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-6.With trade, what is the total gain in clock production?

In reaction to the passage of the Smoot-Hawley Tariff, Canada as well as many other U.S.trading partners

Table 9-6 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 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats will Denmark gain compared to the "without trade" numbers?