Exam 9: Comparative Advantage and the Gains From International Trade

Many economists criticize protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products.Why, then, do some people support protectionism?

One of the main sources of comparative advantage is internal economies.

In the real world, we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.One reasons for this is

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.With a quota in place, what is the quantity supplied by domestic producers?

A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is

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 of domestic producer surplus after the imposition of a quota?

Once a country has lost its comparative advantage in producing a good, its income will be ________ and its economy will be ________ if it switches from producing the good to importing it.

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.What will be the domestic quantity supplied?

Which of the following is the best example of a quota?

Which of the following is the best example of a tariff?

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.The loss in domestic consumer surplus as a result of the tariff is equal to the area

In 2016, the largest exporter in the world was

Suppose in Finland, a worker can produce either 32 cell phones or 4 kayaks while in Canada, a worker can produce either 40 cell phones or 10 kayaks. a.Which country has an absolute advantage in cell phone production? In kayak production? b.What is the opportunity cost of 1 cell phone in Finland? In Canada? c.What is the opportunity cost of 1 kayak in Finland? In Canada? d.Which country has a comparative advantage in cell phone production? In kayak production? e.Suppose each country has 1,000 workers.Currently, each country devotes 40 percent of its labor force to cell phone production and 60 percent to kayak production.What is the output of cell phones and kayaks for each country and what is the total output of cell phones and kayaks between the two countries? f.Suppose each country specializes in the production of the good in which it has a comparative advantage.What is the total output of cell phones and kayaks in the two countries? g.Provide a numerical example to show how Finland and Canada can both gain from trade.Assume that the terms of trade are established at 6 cell phones for 1 kayak.

Selling a product at a price below its cost is known as dumping.

Tastes for products such as beer differ.As a result

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.The increase in domestic producer surplus as a result of the tariff is equal to the area

Countries that engage in trade will tend to specialize in the production of goods and services in which they have ________ and will ________ these goods and services.

An economic principle that explains why countries produce different goods and services is

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries with a "Buy Canadian" provision.This policy, similar to the original "Buy American" provision in the 2009 U.S.stimulus bill, is likely to cause

What does it mean for a country to have an absolute advantage in producing a product?