Exam 8: Trade

Scenario: The following quote describes China's effect on world labor markets. China's emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in the US industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. (The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade by David H. Autor, David Born, and Gordon H. Hanson, Annual Review of Economics Vol.8:1-635, October 2016) -Refer to the scenario above.Which of the following statements does this quote best exemplify?

Scenario: Hawaii and South Carolina are trading partners. Hawaii has an absolute advantage in the production of both coffee and tea. The opportunity cost of producing 1 pound of tea in Hawaii is 2 pounds of coffee, and the opportunity cost of producing 1 pound of tea in South Carolina is 1/3 pound of coffee. -Refer to the scenario above.If both nations decide to trade,which of the following statements is true?

The following figure shows the demand curve,D,and supply curve,S,for milk in Cadbia. a)What is the consumer surplus,producer surplus,and total surplus if Cadbia does not engage in free trade? b)If the world price of milk is $4 per quart,will Cadbia import or export milk? c)What is the change in consumer surplus,producer surplus,and total surplus if Cadbia participates in free trade?

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40. -Refer to the figure above.What is the domestic production of calculators in Barylia once the economy opens up to free trade?

Scenario: Viola and Davis are two students who are taking a math class and an English class. The graph below shows the production possibilities curves for each of them. -Refer to the scenario above.Davis has a ________ opportunity cost of doing math homework assignments and a ________ opportunity cost of writing English essays compared to Viola.

An export is any good that is ________.

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40. -Refer to the figure above.Which of the following statements is true?

The figure below shows the domestic supply and demand of a product in the United States. -Refer to the figure above.If the world price of this product is $14 and the United States engages in free trade,it will ________ units of this product.

The figure below shows production possibilities curves for tomatoes and oranges in two prefectures in a country. -Refer to the figure above.In Prefecture A,the opportunity cost of producing each additional pound of tomatoes ________.

If a nation is a net importer,it means that the ________.

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40. -Refer to the figure above.What is the consumer surplus before Barylia opens up to free trade?

If a nation opens up to free trade and becomes an importer of goods,which of the following is then true?

The figures below show markets for solar panels and textiles in Banana Republic. Pwₒᵣld is the world price in each market. -Refer to the figures above.When Banana Republic opens up to international trade,the total surplus ________.

Scenario: Jack takes 3 hours to complete a painting and 6 hours to create a sculpture. He has 30 hours of time to spend on both activities. -Refer to the scenario above.Which of the following combinations will lie below Jack's production possibilities curve?

Scenario: Meryl and Steve are two classmates who form a study group. The graph below shows the production possibilities curves for each of them. -Refer to the scenario above.________ has comparative advantage in doing math homework,and ________ has comparative advantage in writing Econ essays.

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40. -Refer to the figure above.Which of the following statements is true?

A production possibilities curve is plotted for a nation producing cotton and jute.Which of the following will cause a parallel rightward shift of the production possibilities curve?

The following figure depicts four different scenarios in which the blue line represents California's production possibilities curve (PPC) and the red line represents Texas' PPC. These two states trade wine and cloth. -Refer to the figure above.In what scenario(s)does Texas have a comparative advantage in wine?

The figure below shows production possibilities curves for tomatoes and oranges in two prefectures in a country. -Refer to the figure above.Which statement is true?

Scenario: Viola and Davis are two students who are taking a math class and an English class. The graph below shows the production possibilities curves for each of them. -Refer to the scenario above.What is the opportunity cost of one English essay for Viola?