Exam 9: Comparative Advantage and the Gains From International Trade

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.Prior to trade,what was the opportunity cost to produce 1 hat in Belize?

A quota is the same as a voluntary export restraint.

Figure 9-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 9-1.Under autarky,the deadweight loss is

In the United States,imports and exports make up more than half of GDP.

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

Automobiles and many other products are differentiated.As a result

Figure 9-9 -Refer to Figure 9-9.Fenwick currently both produces and imports pistachios.The government of Fenwick decides to restrict international trade in pistachios by imposing a quota that allows imports of only 5 million pounds each year.Figure 9-9 shows the estimated demand and supply curves for pistachios in Fenwick and the results of imposing the quota.Answer questions a-j using the figure. a.If there is no quota what is the domestic price of pistachios and what is the quantity of pistachios demanded by consumers? b.If there is no quota how many pounds of pistachios would domestic producers supply and what quantity would be imported? c.If there is no quota what is the dollar value of consumer surplus? d.If there is no quota what is the dollar value of producer surplus received by producers in Fenwick? e.If there is no quota what is the revenue received by foreign producers who supply pistachios to Fenwick? f.With a quota in place what is the price that consumers of Fenwick must now pay and what is the quantity demanded? g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off? h.With a quota in place what is the dollar value of producer surplus received by producers in Fenwick? Are domestic producers better off? i.Calculate the revenue to foreign producers who are granted permission to sell in Fenwick after the imposition of the quota. j.Calculate the deadweight loss as a result of the quota.

Eliminating trade barriers does all of the following except

Today,few U.S.-based manufacturing firms make their products exclusively in the United States out of entirely U.S.-made parts.

Globalization is the process of countries imposing trade restrictions on other countries.

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.Prior to trade,what was the opportunity cost to produce 1 clock in Belize?

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.If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded,how many belts will Morocco consume?

________ raised average tariff rates by over 50 percent in the United States in 1930.

The selling of a product for a price below its cost of production is called

a.Define the term "globalization." b.Describe the benefits of globalization. c.Who is likely to oppose globalization and why?

A tariff is a tax imposed by a government on

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.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many clocks will Denmark consume?

Disagreements about whether the U.S.government should regulate international trade

Measuring the impact of a quota or tariff on the U.S.economy is an example of ________.Stating that a quota or tariff should be eliminated is an example of ________.

A voluntary export restraint is an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country.