Exam 9: Comparative Advantage and the Gains From International Trade

Trade between countries that is without restrictions is called

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

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.

In 2014, the largest exporter in the world was

Measuring the impact of a quota or tariff on the U.S.economy is an example of ________.Stating that a quota or tariff should be eliminated is an example of ________.

The concept of ________ explains how trade between two countries can make each better off.

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 clocks will Belize gain compared to the "without trade" numbers?

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 the market price be?

In the 1970s and 1980s, the United States lost its comparative advantage in consumer electronics goods to Japan.What factor was most responsible for the development of Japan's comparative advantage in consumer electronics goods?

Protectionism

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

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 clocks will Belize consume?

The selling of a product for a price below its cost of production is called

Table 9-4 Output Per Hour of Work Table 9-4 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand. -Refer to Table 9-4.Fill in the following table with the opportunity costs of producing handbags and jackets for Cambodia and Thailand.

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

Goods and services bought domestically but produced in other countries are referred to as

Under autarky, domestic producer surplus is represented by the area

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.

What are the four main sources of comparative advantage? Briefly explain each source and provide examples.