Exam 9: Comparative Advantage and the Gains From International Trade

The U.S.economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Figure 9-4 Suppose the U.S. government imposes a $0.50 per pound tariff on sugar imports. Figure 9-4 shows the demand and supply curves for sugar and the impact of this tariff. -Use Figure 9-4 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 sugar producers with the tariff in place? d.Calculate the value of producer surplus received by U.S.sugar producers with the tariff in place. e.What is the quantity of sugar 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.

Which of the following statements is used to justify protectionism?

In 1930,the U.S.government attempted to help domestic firms that were harmed by the Great Depression by

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.This tariff

________ refers to reductions in a firm's costs that result from an increase in the size of an industry.

The first example used to explain comparative advantage used two countries (England and Portugal)and two goods (wine and cloth)to show that

Goods and services bought domestically but produced in other countries are referred to as

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

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 causes domestic consumption of rice

One reason a country does not specialize completely in production is that not all goods and services are traded internationally.

Wall Street,in the borough of Manhattan in New York City,is the heart of the U.S.financial system,where banks,brokerage houses,other financial firms,and the New York Stock Exchange are all located.What is the reason for New York City's comparative advantage in the financial market?

The main purpose of most tariffs and quotas is to

Which of the following is the best example of a quota?

When Roxanne,a U.S.citizen,purchases a designer dress from Barneys of New York that was made in Milan,the purchase is

Countries that engage in trade will tend to specialize in the production of goods and services in which they have ________ and will ________ these goods and services.

Anti-globalization and protectionism are both arguments against free trade.How do these two arguments differ?

Exports are domestically produced goods and services

The ratio at which a country can trade its exports for imports from other countries is called

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