Exam 5: International Trade

Both the United States and Canada produce automobiles and their components; however, each particular model or component is produced in only one of the two countries. Which factor explains this pattern of production and trade?

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre. Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve. If the world price equals $100 and there is free trade, what is the gain in consumer surplus?

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _____, domestic consumption to _____, and domestic production to _____.

Use the following to answer questions: -(Table: The Production Possibilities for Tractors and Crude Oil) Use Table: The Production Possibilities for Tractors and Crude Oil. Both the United States and Mexico will gain from trade if one tractor trades for _____ barrels of crude oil.

Suppose the United States auctioned off all import quotas, the auctions were perfectly competitive, and the government received the revenues from the auction. In this case, the deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff.

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef for tulips, we expect the consumer surplus from beef consumption to:

In which area does the United States significantly limit imports?

The term autarky refers to a situation when a country:

The United States must give up the production of 300 motorcycles to produce 15 additional SUVs with the same resources. The opportunity cost of producing 100 motorcycles is _____ SUV(s).

Although U.S. exports and imports have grown substantially in absolute terms since the 1960s, the share of exports and imports in total output has fallen significantly over the past few decades.

In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce 750 boxes of tulips. From this information, we know that:

Use the following to answer questions: -(Table: Production Possibilities for Machinery and Petroleum) Use Table: Production Possibilities for Machinery and Petroleum. The opportunity cost in Mexico of producing 105 units of petroleum is _____ units of machinery.

A tariff is MOST likely to _____ prices and _____ domestic consumption of the good or service being protected.

The infant industry argument for trade protection states that:

Lower wages in China reflect _____ labor productivity in China than in the United States. This means that if the United States moved high-tech industries to China, the overall cost of production would be _____ in China than in the United States.

Use the following to answer questions: -(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Use Figure: The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. With complete specialization according to comparative advantage, the two nations' combined production of wheat will:

A tax on imported goods or services is a:

When an economy moves from autarky to free international trade, for industries in the export sector, consumer surplus _____, producer surplus _____, and the economy as a whole _____.

Which trade pattern is BEST explained by increasing returns?

Use the following to answer questions: -(Figure: The Production Possibilities for Two Countries) Use Figure: The Production Possibilities for Two Countries. If Malaysia specializes completely in the production of the good of its comparative advantage, it will produce: