Exam 5: International Trade

Assume that the United States imposes an import quota on Italian shoes. Relative to the equilibrium world price that would exist in the absence of import quotas, the equilibrium price of shoes in the United States will most likely _____ and the equilibrium price of shoes in Italy will most likely _____.

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. If both nations specialize completely in the good of their comparative advantage and Jackson exports 120 bushels of wheat to Tahoe in exchange for 60 head of cattle, then the new consumption point for Jackson after trade is _____ bushels of wheat and _____ head of cattle.

Sri Lanka's comparative advantage over the United States in textiles can be explained by its:

Use the following to answer questions: -(Figure: The Market for iPhones) Use Figure: The Market for iPhones. Assume that P_A is the autarky price, P_W is the world price, and D and S represent domestic demand and supply, respectively. Consumer surplus in free trade equals the area:

When a market begins to engage in international trade:

If a country removes a tariff on imported shoes, we expect the domestic price of shoes to _____ and the quantity of shoes consumed in the domestic market to _____.

Use the following to answer questions: -(Figure: The Market for iPhones) Use Figure: The Market for iPhones. Assume that P_A is the autarky price, P_W is the world price, and D and S represent domestic demand and supply, respectively. The loss of producer surplus when the market moves from autarky to free trade equals the area:

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. In Mexico, the opportunity cost of producing 150,000 barrels of crude oil is _____ tractors.

France and England both produce wine and cloth with constant opportunity costs. France can produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. England can produce 50 barrels of wine if it produces no cloth or 150 bolts of cloth if it produces no wine. When international trade takes place, each country specializes completely in the production of the good in which it has a comparative advantage: 1 barrel of wine exchanges for 1 bolt of cloth and France exports 50 units of wine. We can conclude that France produces _____ units of wine and _____ units of cloth and that France consumes _____ units of wine and _____ units of cloth.

Use the following to answer questions: -(Figure: The Market for Roses) Use Figure: The Market for Roses. Assume that P_A is the autarky price and P_W is the world price. Consumer surplus with international trade would be area:

A tariff or quota will _____ prices and _____ the consumption of the protected goods in the importing country.

When a business hires people in other countries to perform various tasks, _____ has occurred.

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. In autarky, the opportunity cost of beef:

If Canada imposes a tariff of $5 per bottle on French wine, the MOST likely effect will be to raise the price of wine in Canada by:

Use the following to answer questions: -(Table: Production Possibilities for Machinery and Petroleum) Use Table: Production Possibilities for Machinery and Petroleum. The opportunity cost of _____ is _____ in the United States as (than) in Mexico.

Use the following to answer questions: -(Figure: The Production Possibilities for Two Countries) Use Figure: The Production Possibilities for Two Countries. If Indonesia and Malaysia trade 1 microchip for 1.5 tires, the most that Indonesia can consume is _____ microchips and _____ tires, while the most that Malaysia can consume is _____ microchips and _____ tires.

Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 4 sweaters is _____ hats.

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, domestic consumer surplus _____ and domestic producer surplus _____ compared with autarky.

If a country's price for wood furniture in the absence of trade is lower than the price with trade, the country will likely:

An example of an import quota is a: