Exam 9: Comparative Advantage and the Gains From International Trade

The United States has developed a comparative advantage in digital computers,airliners,and many prescription drugs.The source of its comparative advantage in these products is

The terms of trade refers to

A consequence of increasing marginal costs of producing digital music players in Japan is

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.What will the market price be?

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?

Saddles Spurs (pairs) Mateo 75 225 Celeste 100 225 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.

-Refer to Figure 9-8.Suppose the U.S.government imposes a $0.25 per pound tariff on rice imports.Figure 9-8 shows the demand and supply curves for rice and the impact of this tariff.Use the figure 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 rice growers with the tariff in place? d.Calculate the value of producer surplus received by U.S.rice growers with the tariff in place. e.What is the quantity of rice 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.

Dumping refers to countries exporting unwanted and inferior products to other countries.

A tariff

Output per hour Production and Production of work Consumption without Trade with Trade Clocks Hats Clocks Hats Clocks Hats Denmark 6 3 900 150 1,200 0 Belize 1 2 150 100 0 400 Denmark and Belize can produce both clocks and hats.Each country has a total of 200 available labor hours for the production of clocks and hats.Table 9-11 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade. -Refer to Table 9-11.Which country has a comparative advantage in producing hats?

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 9-4 shows the U.S.demand and supply for leather footwear. -Refer to Figure 9-4.Under autarky,the producer surplus is area

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.In the market for steel,the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

Absolute advantage is

Output per hour Production and Production of work Consumption without Trade with Trade Swords Belts Swords Belts Swords Belts Estonia 5 3 100 40 200 0 Morocco 2 2 60 60 0 120 Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 9-12 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade. -Refer to Table 9-12.Which country has an absolute advantage in producing swords?

A tariff is the same as a quota.

Pies Cakes Sarita 15 25 Gabriel 12 16 Sarita and Gabriel own S&G Bakery.Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. -Refer to Table 9-2.Select the statement that accurately interprets the data in the table.

Economists believe the most persuasive argument for protectionism is to protect infant industries.But the argument has a drawback.What is this drawback?

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

China has developed a comparative advantage in the production of children's toys.The source of this comparative advantage is