Exam 9: Comparative Advantage and the Gains From International Trade

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

Suppose in Finland a worker can produce either 32 cell phones or 4 kayaks while in Canada a worker can produce either 40 cell phones or 10 kayaks. a.Which country has an absolute advantage in cell phone production? In kayak production? b.What is the opportunity cost of 1 cell phone in Finland? In Canada? c.What is the opportunity cost of 1 kayak in Finland? In Canada? d.Which country has a comparative advantage in cell phone production? In kayak production? e.Suppose each country has 1,000 workers.Currently,each country devotes 40 percent of its labor force to cell phone production and 60 percent to kayak production.What is the output of cell phones and kayaks for each country and what is the total output of cell phones and kayaks between the two countries? f.Suppose each country specializes in the production of the good in which it has a comparative advantage.What is the total output of cell phones and kayaks in the two countries? g.Provide a numerical example to show how Finland and Canada can both gain from trade.Assume that the terms of trade are established at 6 cell phones for 1 kayak.

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

A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is

Table 9-6 Production and Consumption Production Without Trade With Trade Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many hats will Belize gain compared to the "without trade" numbers?

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 loss in domestic consumer surplus as a result of the tariff is equal to the area

Table 9-6 Production and Consumption Production Without Trade With Trade Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-6.With trade,what is the total gain in clock production?

A situation in which a country does not trade with other countries is called

Protectionism

If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada,which of the following would explain this pattern of trade?

Table 9-6 Production and Consumption Production Without Trade With Trade Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 9-6.With trade,what is the total gain in hat production?

What is autarky?

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

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.If the tariff was replaced by a quota which limited rice imports to 16 million pounds,the amount of revenue received by rice importers would equal

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

China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is

If Japanese workers are more productive than French workers then trade between Japan and France

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.If there was no quota,how many pounds of peanuts would be imported?