Exam 7: Comparative Advantage and the Gains From International Trade

Table 7-6 Output per hour Production and Production of work Consumption without Trade with Trade Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 7-6 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade. -Refer to Table 7-6.With trade,what is the total gain in sword production?

Table 7-6 Output per hour Production and Production of work Consumption without Trade with Trade Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 7-6 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade. -Refer to Table 7-6.If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded,how many belts will Morocco consume?

The United States has developed a comparative advantage in digital computers,airliners,and many prescription drugs.The source of its comparative advantage in these products is

Dumping refers to countries exporting unwanted and inferior products to other countries.

Figure 7-5 -Refer to Figure 7-5.Fenwick currently both produces and imports pistachios.The government of Fenwick decides to restrict international trade in pistachios by imposing a quota that allows imports of only 5 million pounds each year.Figure 9-9 shows the estimated demand and supply curves for pistachios in Fenwick and the results of imposing the quota.Answer questions a-j using the figure. a.If there is no quota what is the domestic price of pistachios and what is the quantity of pistachios demanded by consumers? b.If there is no quota how many pounds of pistachios would domestic producers supply and what quantity would be imported? c.If there is no quota what is the dollar value of consumer surplus? d.If there is no quota what is the dollar value of producer surplus received by producers in Fenwick? e.If there is no quota what is the revenue received by foreign producers who supply pistachios to Fenwick? f.With a quota in place what is the price that consumers of Fenwick must now pay and what is the quantity demanded? g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off? h.With a quota in place what is the dollar value of producer surplus received by producers in Fenwick? Are domestic producers better off? i.Calculate the revenue to foreign producers who are granted permission to sell in Fenwick after the imposition of the quota. j.Calculate the deadweight loss as a result of the quota.

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.All of the following are reasons for this except

Countries gain from specializing in producing goods in which they have ________ and trading for goods in which other countries have ________.

A tax imposed by a government on imports of a good into a country is called a

Costa Rica is a leading exporter of bananas.What explains the comparative advantage of this country in banana production?

Autarky is a situation in which a country

Which of the following is an example of a trade restriction?

Since 1999,________ U.S.manufacturing jobs may have been lost to Chinese imports,and trade with China has ________ throughout the United States.

Table 7-2 Madison and Austin own Cafe Ole'.Table 7-2 lists the number of empanadas and tacos Madison and Austin can each make in one hour. -Refer to Table 7-2.Select the statement that accurately interprets the data in the table.

From 1944 to 2001,the number of workers employed in manufacturing in the United States

Table 7-2 Madison and Austin own Cafe Ole'.Table 7-2 lists the number of empanadas and tacos Madison and Austin can each make in one hour. -Refer to Table 7-2.Select the statement that accurately interprets the data in the table.

Figure 7-4 -Refer to Figure 7-4.Suppose the U.S.government imposes a $0.25 per pound tariff on rice imports.Figure 9-8 shows the demand and supply curves for rice and the impact of this tariff.Use the figure to answer questions a-i. a.Following the imposition of the tariff,what is the price that domestic consumers must now pay and what is the quantity purchased? b.Calculate the value of consumer surplus with the tariff in place. c.What is the quantity supplied by domestic rice growers with the tariff in place? d.Calculate the value of producer surplus received by U.S.rice growers with the tariff in place. e.What is the quantity of rice imported with the tariff in place? f.What is the amount of tariff revenue collected by the government? g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff. h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government? i.Calculate the deadweight loss due to the tariff.

Table 7-6 Output per hour Production and Production of work Consumption without Trade with Trade Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 7-6 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade. -Refer to Table 7-6.If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded,how many swords will Estonia consume?

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil.We can conclude that

A voluntary export restraint is an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country.

Imports are goods and services bought domestically but produced in other countries.