Exam 20: International Trade, Comparative Advantage, and Protectionism

The U.S. tariff law that set off an international trade war in the 1930s was the

Refer to the information provided in Table 20.1 below to answer the questions that follow. Table 20.1 $\quad\quad\quad\quad\quad\quad$ Mexico $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$ Guatemala Oranges bushel/acre Bananas bushel/acre Oranges bushel/acre Bananas bushel/acre 200 0 50 0 160 40 40 20 120 80 30 40 80 120 20 60 40 160 10 80 0 200 0 100 -Refer to Table 20.1. Guatemala should specialize in and export ________, and Mexico should specialize in and export ________.

A country with a lot of human capital is likely to have a comparative advantage in highly technical goods.

Refer to the information provided in Figure 20.1 below to answer the questions that follow. Figure 20.1 -Refer to Figure 20.1. Which of the following statements is true?

If the domestic price is below the world price of a certain product, the domestic country will export the product.

An export subsidy raises the domestic price of the product.

Free trade allows the people of a country to consume outside their production possibility frontier.

Country A has a comparative advantage compared to Country B in the production of shoes if

Refer to the information provided in Table 20.2 below to answer the questions that follow. Table 20.2 $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$ China $\quad\quad\quad\quad\quad\quad\quad\quad\quad$ Thailand Tractors Motorcycles Tractors Motorcycles 0 300 0 300 5 250 5 225 10 200 10 150 15 150 15 75 20 100 20 0 25 50 - - 30 0 - - -Refer to Table 20.2. If both countries specialize and trade with each other, Thailand will export ________ and China will import ________.

Refer to the information provided in Table 20.1 below to answer the questions that follow. Table 20.1 $\quad\quad\quad\quad\quad\quad$ Mexico $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$ Guatemala Oranges bushel/acre Bananas bushel/acre Oranges bushel/acre Bananas bushel/acre 200 0 50 0 160 40 40 20 120 80 30 40 80 120 20 60 40 160 10 80 0 200 0 100 -Refer to Table 20.1. In Mexico, the opportunity cost of 1 bushel of oranges is

If Spain decreases subsidies to its olive growers, the price of olives in the U.S. will fall.

The theory of comparative advantage is credited to

Related to the Economics in Practice on page 679: If the candle makers in the petition were able to gain protection for their industry, the French economy would most likely

For any pair of nations and goods, if each country has an absolute advantage in the production of one product, it is reasonable to expect that specialization and trade will benefit both countries.

When countries specialize in producing those goods in which they have a comparative advantage, they

If Russia has a comparative advantage in the production of wheat and China has a comparative advantage in the production of textiles, then

The software industry depends on highly trained workers, who are abundantly available in Country A. The heavy equipment industry depends on the availability of a large stock of physical capital with which Country B is well endowed. According to Heckscher-Ohlin theorem

Suppose that the United States and Italy both produce wine and shoes. In the United States, wine sells for $10 a bottle and shoes sell for $40 a pair. In Italy, wine sells for 15 euros a bottle and shoes sell for 20 euros a pair. Given this information, trade will flow in both directions if the price of a dollar is between

Tariffs, quotas and exports subsidies all increase domestic production.

A country has a trade deficit when