Exam 21: Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

If there is no comparative advantage in the production of either of the two goods produced by countries 1 and 2,then

In contrast to a tariff,a quota does not

The answer is: "There is a net loss to society." What is the question?

Exhibit 34-6 -Refer to Exhibit 34-6.Which of the following is true?

A quota raises the price of the product on which the quota has been placed,decreases consumers' surplus,increases producers' surplus,and generates tariff revenue for the government.

Tariffs raise the price of imported goods,but quotas rarely do.

"Dumping" refers to

Exhibit 34-11 -Refer to Exhibit 34-11.P_W is the price that exists in the market before a tariff is imposed and P_{W + T} is the price that exists in the market after a tariff is imposed.Because of the tariff,consumers' surplus falls and producers' surplus rises by the area

Which of the following statements is false?

The effects of tariffs and quotas are: a(n)__________ in consumers' surplus,and a(n)__________ in producers' surplus.

Exhibit 34-2 -Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is P_W.If there is a policy change such that imports are prohibited,the price becomes P_N, U.S.consumers are worse off if imports are __________;specifically,their consumers' surplus changes by area __________.

International trade policies are largely advocated,argued,and lobbied for based more on their distributional effects than on their aggregate or overall effects.What does this imply?

How do countries know when they have a comparative advantage in the production of a good?

The difference between the amount a seller receives for a good and the lowest amount for which he would sell the good is called

Producers' surplus is

Dumping occurs when a firm sells goods abroad at a price below their cost and below the price charged in their domestic market.

Suppose that a tariff is imposed on imported cheese.This will have the effect of __________ the price of cheese,__________ consumers' surplus,and __________ producers' surplus.

Exhibit 34-6 -Refer to Exhibit 34-6.The opportunity cost of 1 unit of cheese in terms of units of wine is __________ for country B.

The infant industry argument for trade protectionism holds that

If a U.S.company operates within a competitive environment and chooses to offshore part of its production process,the resulting change in the firm's costs should shift the ______________ curve for its product ___________________,thus _____________ the price of the product being produced.