Exam 18: Comparative Advantage and the Open Economy

If a country voluntarily agrees to have its companies import more goods from another country, the country has

The infant industry argument has a normative economic basis because

Consider a world of two countries producing only wheat and cloth. In one hour, residents of Country A can produce 1 unit of wheat and 0.5 unit of cloth, whereas residents of Country B can produce 0.3 unit of wheat and 0.4 unit of cloth. Country A should export

Which of the following is a TRUE statement?

In 1990, there were 50 bilateral agreements and regional trade agreements between countries. Today there are

Since World War II, world trade has

Explain the infant industry argument.

When a good is put onto the global market at a price below the cost to produce it, this is known as

It has been suggested that in order to protect U.S. jobs we need to restrict foreign competition by restricting imports.

The ability to produce a good or service at a lower opportunity cost than other producers is called

For the United States since 1950, imports as a percentage of GDP has

Suppose an industry receives protection from the government in the form of tariffs. A number of years later, it is observed that the quantity supplied by domestic firms had decreased and that the domestic price was substantially greater than the world price. We could conclude that

-Refer to the above table. If opportunity costs are constant and the two countries trade

When a tariff is imposed, the demand curve for the domestic good

"It is possible to restrict imports and still maintain a fixed level of exports." Do you agree or disagree? Why?

The ability to produce an item at a lower opportunity cost compared with other producers is known as

Why do free trade proponents dislike rules of origin in trade agreements?

Consider the opportunity costs of producing goods X and Y that are listed for the four individuals above. Which person has a comparative advantage in producing good Y?

Comparative advantage is

Which of the following is an argument against free trade?