Exam 21: International Trade and Comparative Advantage

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

How extensively does the United States use quotas?

"Free trade benefits one country at another country's expense." Evaluate this statement using economic analysis.

What is strategic trade policy? What are the pros and cons of such a policy by a nation in its dealings with other nations?

Gain from trade is the increase in total production due to specialization allowed by trade.

Generally, if a nation imposes a tariff on imports,

Quebec is capable of producing 10,000 pallets of wood shingles or 8,000 barrels of maple syrup. Vermont is capable of producing 12,000 pallets of wood shingles or 12,000 barrels of maple syrup. a. Graph these production possibilities curves. Indicate from the slope, which has the absolute advantage, which the comparative advantage, and whether there are gains from trade. b. Assume that Vermont and Quebec each specializes in the good in which they have a comparative advantage. Suppose that Vermont and Quebec decide to trade 5,000 pallets of shingles for 5,000 barrels of syrup. Indicate this on the graph. How does this affect the well-being of the two societies? Explain.

Figure 34-9 ​ In Figure 34-9, at price OC total quantity demanded exceeds quantity supplied and price will rise to

Suppose that the United States can make 15 cars or 20 bottles of wine with one year's worth of labor. France can make 10 cars or 18 bottles of wine with one year's worth of labor. From these numbers, we can conclude that

Figure 34-9 ​ In Figure 34-9, at price OC

Specialization means that a country devotes its energy and resources to only a small proportion of the world's productive activities.

If Japan imposes a quota on imports of rice, the effect will be

Which of the following statements regarding the cheap foreign labor argument is correct?

Figure 34-7 ​ In Figure 34-7, 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,

Figure 34-6 ​ From Figure 34-6, one can infer that

Figure 34-9 ​ In Figure 34-9, Pestoland exports pasta to Pastaland. The equilibrium price of pasta will be

Table 34-4 Table 34-4 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 Japan?

American producers often complain about dumping. What is dumping, and should it be prohibited?

The U.S. Constitution

A country that must inhibit imports should give preference to