Exam 18: International Trade and Comparative Advantage

Figure 22-8 -Table 22-4 presents the demand and supply schedules for television sets in Japan and the United States.If there is no trade between these countries,what are the equilibrium price and quantity in the United States?

Nothing raises the standard of living more than a greater

When every country does what it is best at,

The main reason why one nation trades with another is to

"Protection" is designed to help

An export subsidy helps reduce the selling price of a product by allowing individual producers to charge less and still cover all of their production costs.

Economists believe that trade is necessary for prosperity because

A country's comparative advantage can be illustrated by the graph of the production possibilities frontier.

One nation can gain from an exchange only at the expense of another.

If a nation does not have an absolute advantage in producing anything,it

By tradition,Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses,they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

A country can gain by importing a good that it can make itself if

Some nations that seek to produce all of their own needs face the problem that

Figure 22-9 -In Figure 22-9,at price OC total quantity demanded exceeds quantity supplied and price will rise to

Figure 22-7 -In Figure 22-7,CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland,respectively.If both countries are given the opportunity to trade at prices indicated by CF,

A tariff is

An import quota on a product normally does all of the following except

One of the main reasons that people want to limit imports is the

Foreign competition will always put a domestic industry at a disadvantage.This leads to massive trade adjustment assistance on the part of each country.

If a nation has an absolute advantage in the production of some commodity,it