Exam 7: Comparative Advantage and the Gains From International Trade

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 value of domestic producer surplus after the imposition of a quota?

All but one of the following statements is used to justify protectionism.Which statement is not used to justify protectionism?

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1.Under autarky,the equilibrium price is ________,the consumer surplus is ________ and the producer surplus is ________.

What are terms of trade?

a.Define the term "globalization." b.Describe the benefits of globalization. c.Who is likely to oppose globalization and why?

Suppose in Vietnam a worker can produce either 16 units of cloth or 2 bicycles while in China a worker can produce either 20 units of cloth or 5 bicycles. a.Which country has an absolute advantage in cloth production? In bicycle production? b.What is the opportunity cost of 1 unit of cloth in Vietnam? In China? c.What is the opportunity cost of 1 bicycle in Vietnam? In China? d.Which country has a comparative advantage in cloth production? In bicycle production? e.Suppose each country has 1,000 workers.Currently,each country devotes 40 percent of its labor force to cloth production and 60 percent to bicycle production.What is the output of cloth and bicycles for each country and what is the total output of cloth and bicycles 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 cloth and bicycles in the two countries? g.Provide a numerical example to show how Vietnam and China can both gain from trade.Assume that the terms of trade are established at 6 units of cloth for 1 bicycle.

Under trade agreements signed with other countries,the United States is allowed to impose tariffs on imports if foreign firms are selling products in the United States at below their production cost.This is exactly what occurred when the United States raised the tariff on wire hangers imported from China.At the time the tariff was imposed,it was estimated that the tariff would save about ________ jobs in U.S factories making wire hangers at an annual cost per job saved of about ________.

China has developed a comparative advantage in the production of children's toys.The source of this comparative advantage is

A quota is

Figure 9-2 Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.As a result of the tariff,domestic producers increase their quantity supplied by

Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade.These examples are misleading because

The Smoot-Hawley Tariff

If the U.S.government implements a tariff on Chinese tire imports all of the following would be made worse off except

In 2010,________ of Caterpillar's sales were inside the United States.

Table 9-1 Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and make their own food. Rob and Bill spent one day each fishing and picking berries. The following table lists the pounds of output Rob and Bill produced. -Refer to Table 9-1.Use the table above to select the statement that accurately interprets the data in the table.

Your roommate Hansen argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States.Hansen

In the 1980s Japan agreed to limit the quantity of automobiles it would export to the United States.Why did the Japanese government agree to this trade restriction?

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 value of domestic producer surplus without a quota?

Table 9-1 Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and make their own food. Rob and Bill spent one day each fishing and picking berries. The following table lists the pounds of output Rob and Bill produced. -Refer to Table 9-1.Use the table above to select the statement that accurately interprets the data in the table.

Which of the following describes the national security argument for protectionism?