Exam 9: Application International Trade: Part B

William and Jamal live in the country of Dumexia.As a result of Dumexia's legalization of international trade in bananas,William becomes better off and Jamal becomes worse off.It follows that William is a seller,and Jamal is a buyer,of bananas.

Trade decisions are based on the principle of absolute advantage.

The history of the textile industry raises important questions for economic policy.

If a small country imposes a tariff on an imported good,domestic sellers will gain producer surplus,the government will gain tariff revenue,and domestic consumers will gain consumer surplus.

The results of a 2008 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

The nation of Spritzland used to prohibit international trade,but now trade is allowed,and Spritzland is exporting wristwatches.Relative to the previous no-trade situation,total surplus in the market for wristwatches in Spritzland has increased.

If Argentina exports oranges to the rest of the world,Argentina's producers of oranges are worse off,and Argentina's consumers of oranges are better off,as a result of trade.

Imposing a tariff on the import of a good is preferable to a quota because a tariff produces revenue for the government,while a quota never produces any revenue for a government.

Economists view free trade as a way to raise living standards both at home and abroad.

If the world price of a good is greater than the domestic price in a country that can engage in international trade,then that country becomes an importer of that good.

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.

The results of a 2008 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

If a country is exporting a good,this is because the country has an absolute advantage in the production of that good. ​

When markets open up to international trade,we know that consumer surplus will rise. ​

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

The world price of cotton is the highest price of cotton observed anywhere in the world.