Exam 9: Comparative Advantage and the Gains From International Trade

Figure 9-9 Bragabong currently both produces and imports almonds. The government of Bragabong decides to restrict international trade in almonds by imposing a quota that allows imports of only 10 million kilos each year. Figure 9-9 shows the estimated demand and supply curves for almonds in Bragabong and the results of imposing the quota. -Use Figure 9-9 to answer questions a-j . a. If there is no quota what is the domestic price of almonds and what is the quantity of almonds demanded by consumers? b. If there is no quota how many kilos of almonds 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 Bragabong? e. If there is no quota what is the revenue received by foreign producers who supply almonds to Bragabong? f. With a quota in place what is the price that consumers of Bragabong 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 Bragabong? Are domestic producers better off? i. Calculate the revenue to foreign producers who are granted permission to sell in Bragabong after the imposition of the quota. j. Calculate the deadweight loss as a result of the quota.

Table 9-6 Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

Table 9-12 Production and Consumption Production Without Trade With Trade Estonia and Morocco can produce both swords and belts. Table 9-12 shows the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-12. All of the following are terms of trade that could possibly benefit both countries except

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Table 9-10 Table 9-10 shows the output per week for pens and pencils by Tran and Farah. -Refer to Table 9-10. a. Which person has an absolute advantage in the production of pens? pencils? b. Which person has a comparative advantage in the production of pens? c. Which person has a comparative advantage in the production of pencils?

Figure 9-4 Figure 9-4 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. What will be the quantity of imports?

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. As a result of the tariff, domestic producers increase their quantity supplied by

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. The "Buy American" provision would ________ consumer surplus and ________ producer surplus for industries that produced protected products in the United States.

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?

Which of the following statements is true?

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 tariff revenue collected by the government equals the area

What is a tariff?

The World Trade Organization (WTO) promotes foreign trade and investment, or globalization. In recent years opposition to globalization has led to violent protests at meetings of the WTO. All of the following are reasons for these anti-globalization protests except

Table 9-12 Production and Consumption Production Without Trade With Trade Estonia and Morocco can produce both swords and belts. Table 9-12 shows the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-12. All of the following are terms of trade that could possibly benefit both countries except

If Estonia has an absolute advantage in the production of two goods compared to Norway, Estonia cannot benefit from trade with Norway.

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. The market price falls to $18. What is the value of domestic producer surplus?

A tariff is a tax imposed by a government on its own exports.

An economic principle that explains why countries produce different goods and services is

Table 9-11 Production and Consumption Production Without Trade With Trade Denmark and Belize can produce both clocks and hats. Table 9-11 shows the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-11. All of the following are terms of trade that could possibly benefit both countries except

Table 9-3 Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. -Refer to Table 9-3. Select the statement that accurately interprets the data in the table.