Exam 19: International Trade and Finance

Refer to the figure PPF and Comparative Advantage. The figure shows the production possibility frontier for producing baseball bats and bobblehead dolls in Stewarton and Colberton. If both countries have identical resources, then Stewarton has a comparative advantage in producing_____ and has an absolute advantage in: ​ Figure: PPF and Comparative Advantage

Refer to the figure Free Trade and Imports. The figure shows the U.S. demand, U.S. supply, and world supply curves for baseball bats. With free trade, the consumers will purchase _____ million bats, of which _____ million will be supplied domestically. ​ Figure: Free Trade and Imports

Refer to the figure Import Tariffs. The figure shows the U.S. demand, U.S. supply, and world supply curves for baseball bats. With free trade and no tariffs, the consumers will purchase_____ million bats, of which _____ million will be imported from the rest of the world. ​ Figure: Import Tariffs

Refer to the figure Mutually Beneficial Trade II. The figure shows the production possibility frontier (PPF) for producing tennis rackets and tennis balls in Stewarton and Colberton. Suppose that the countries trade according to their comparative advantage and as a result Colberton ends up consuming 5 million tennis balls and 37.5 million tennis rackets. In this case, the terms of trade for tennis rackets is: ​ Figure: Mutually Beneficial Trade II

Refer to the figure Currency Appreciation and Depreciation. The figure shows the supply and demand of U.S. dollars in the euro-U.S. dollar foreign exchange market. Which of the following shifts in the equilibrium represents an appreciation in the euro? ​ Figure: Currency Appreciation and Depreciation

Which of the following statements is true?

Suppose that the United States imposes tariffs on cars manufactured in Europe. As a result, the demand for cars in the U.S. is 100 million cars per year, and the domestic supply is 95 million cars. Further, the government earns $500 million in revenue from the tariff. We can conclude that the import tariff per car is:

Refer to the figure Currency Appreciation and Depreciation. The figure shows the supply and demand of U.S. dollars in the euro-U.S. dollar foreign exchange market. A shift in the equilibrium from A to B implies that the U.S. dollar is _____ and the euro is: ​ Figure: Currency Appreciation and Depreciation

Refer to the figure Mutually Beneficial Trade II. The figure shows the production possibility frontier (PPF) for producing tennis rackets and tennis balls in Stewarton and Colberton. The opportunity cost of producing tennis balls in Stewarton is: ​ Figure: Mutually Beneficial Trade II

Refer to the table Comparative and Absolute Advantage I. The table summarizes the amount of tennis rackets and tennis balls that can be produced per unit of labor in Stewarton and Colberton. The opportunity cost of producing tennis rackets in Stewarton is: ​

Imposing a tariff on the import of a good _____ the quantity supplied domestically and _____ the quantity demanded compared to free trade.

Refer to the table Comparative and Absolute Advantage II. The table summarizes the amount of baseball bats and bobblehead dolls that can be produced per unit of labor in Stewarton and Colberton. The opportunity cost of producing bats in Stewarton is:

Refer to the figure Import Quota. The figure shows the U.S. supply, world supply, and U.S. demand curve for cheese. With free trade, the total quantity of cheese purchased will be _____ million pounds, out of which _____ million pounds will be imported. ​ Figure: Import Quota

Refer to the table Comparative and Absolute Advantage II. The table summarizes the amount of baseball bats and bobblehead dolls that can be produced per unit of labor in Stewarton and Colberton. If both countries have the same amount of labor, then it can be concluded that Stewarton has a comparative advantage in producing _____ and has an absolute advantage in:

Refer to the table Comparative and Absolute Advantage I. The table summarizes the amount of tennis rackets and tennis balls that can be produced per unit of labor in Stewarton and Colberton. The opportunity cost of producing tennis rackets in Colberton is:

A country produces bobblehead dolls and baseball bats using only labor as input. One unit of labor can produce four dolls or two bats, and the country has 100 units of labor. If the country is operating on its production possibility frontier (PPF) and producing 100 bats, then how many dolls is it producing?

Portugal specializes in the production of wine and produces 10 million bottles. The United Kingdom specializes in the production of cheese and produces 100 million pounds. After trading with each other, Portugal consumes 6 million bottles of wine and 60 million pounds of cheese. Therefore, the terms of trade is _____ pounds of cheese per bottle of wine.

Which of the following statements is NOT true?

Refer to the figure Mutually Beneficial Trade II. The figure shows the production possibility frontier (PPF) for producing tennis rackets and tennis balls in Stewarton and Colberton. If both countries have identical resources, then Colberton has a comparative advantage in tennis _____ and has an absolute advantage in: ​ Figure: Mutually Beneficial Trade II

Refer to the figure Mutually Beneficial Trade I. The figure shows the production possibility frontier (PPF) and consumption possibility frontier (CPF) for baseball bats and bobblehead dolls in Stewarton and Colberton. In the absence of trade, if Colberton is consuming 4 million dolls, then it can consume _____ million bats. ​ Figure: Mutually Beneficial Trade I