Exam 20: International Trade, Comparative Advantage, and Protectionism

Related to the Economics in Practice on p. 667: When a country imposes a quota, imports to that country generally ________ and the price of the affected product in that country generally ________.

An export subsidy raises the domestic price of the product.

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

If the exchange rate between the United States and Greece changes from $1 = 1 euro to $1 = 2 euros, then holding everything else constant, the price of U.S. goods in Greece will increase.

Refer to the information provided in Figure 20.4 below to answer the question(s) that follow. Figure 20.4 -Refer to Figure 20.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed, this country will ________ 250 leather wallets.

The case for ________ is based on the theory of comparative advantage.

Suppose that Japan and India are both engaged in the production of radios and rice, and that Japan has an absolute advantage in the production of both goods. If India has a lower opportunity cost for producing rice, then

When a nation's net exports are equal to zero, it has a

The Dominican Republic has a comparative advantage in the production of tobacco, and Panama has a comparative advantage in the production of oranges. If both countries specialize based on the theory of comparative advantage

If Japan has exports of 70 billion yen and imports of 60 billion yen, it is running a trade surplus.

Related to the Economics in Practice on p. 666: When a country opens its markets to free trade, competition ________ and efficiency ________.

Acquired comparative advantage comes from factor endowments.

Refer to the information provided in Table 20.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 20.5 $\quad$$\quad$$\quad$$\quad$$\text { India}$$\quad$$\quad$$\quad$$\quad$ $\quad$$\text { Vietnam }$ Cashews Tea Cashews Tea 0 600 0 600 20 500 20 450 40 400 40 300 60 300 60 150 80 200 80 0 100 100 - - 120 0 - - -Refer to Table 20.5. If both countries specialize and trade with each other, Vietnam will export ________ and India will import ________.

Refer to the information provided in Table 20.2 below to answer the question(s) that follow. Table 20.2 China 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. Which terms of trade benefits both countries?

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.

Refer to the information provided in Table 20.2 below to answer the question(s) that follow. Table 20.2 China 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. ________ has a comparative advantage in motorcycles and ________ has an absolute advantage in motorcycles.

A tariff imposed on imported shoes will cause the domestic price of shoes to ________ and the domestic production of shoes to ________.

A country is said to enjoy a comparative advantage over another country in the production of a product if it uses fewer resources to produce that product than the other country does.

Free trade decreases world production and consumption.

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