Exam 7: Comparative Advantage and the Gains From International Trade

The World Trade Organization (WTO)promotes foreign trade and investment,or globalization.In recent years opposition to globalization has led to violent protests at meetings of the WTO.All of the following are reasons for these anti-globalization protests except

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called comparative advantage.

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of consumer surplus after the imposition of the quota?

The United States would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

More than half of Caterpillar's sales are made

How does the U.S.federal government assist workers who have lost their jobs due to international trade?

In the past two decades the United States lost its comparative advantage in automobiles to Japan.What factor was most responsible for the development of Japan's comparative advantage in automobiles?

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $24.What areas represent consumer surplus and domestic producer surplus?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of the deadweight loss as a result of the quota?

Figure 9-2 Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.The tariff revenue collected by the government equals

Which of the following statements is true?

The first example of comparative advantage appeared in a book that was published in 1817.This example showed that mutually beneficial trade between two countries (England and Portugal)was possible.The example assumed that two goods (wine and cloth)could be produced by both countries.Which of the following describes the conclusion of this example?

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?

Once an industry becomes established in a certain area firms that locate in that area gain advantages over firms located elsewhere,leading to lower costs of production.Economists refer to the lower costs that result from increases in the size of an industry in a certain area as

The textbook referred to the following quotation from a Federal Reserve publication: "Trade is a win-win situation for all countries that participate." But many firms and workers oppose free trade policies and protests against globalization have become a regular occurrence at meetings of the World Trade Organization.If trade is a "win-win" situation,why is there strong opposition to free trade and globalization?

Protectionism is usually justified on the basis of one of four arguments.What are those four arguments?

If the U.S.government implements a tariff on Chinese tire imports,the price of Chinese-made tires will ________,the quantity demanded will ________,and consumer surplus will ________.

Automobiles and many other products are differentiated.As a result

The 1994 agreement that eliminated most tariffs among the United States,Canada,and Mexico is known as

Table 9-1 Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and make their own food. Rob and Bill spent one day each fishing and picking berries. The following table lists the pounds of output Rob and Bill produced. -Refer to Table 9-1.Use the table above to select the statement that accurately interprets the data in the table.