Exam 8: Global Markets in Action

How can a nation and its producers determine whether or not it has a comparative advantage in producing a particular good or service?

If the world price of a good is below the no-trade domestic price, a country

When politicians debated the North American Free Trade Agreement (NAFTA), some told stories of U.S. workers whose jobs would be moved to Mexico. Which of the following arguments in favor of protection was being used?

Suppose that elimination of tariffs on agricultural products means that 1,000 farm workers lose jobs that pay an average of $20,000 per year. At the same time, because of the importation of relatively cheaper foreign vegetables, 150 million consumers save $2 per year on their grocery bills. a. What is the total income lost by farm workers because of the free trade? b. What is the total dollar amount saved by all consumers combined? c. Which is greater, the lost income or the consumer savings? Do the benefits of free trade outweigh the costs in this simple example? d. Which group is most likely to become politically involved over the issue of removing the tariffs, the farm workers or the consumers? Why?

When a nation exports a good, its ________ surplus decreases and its ________ surplus increases.

Who gains from international trade?

The imposition of tariffs on Korean steel has led to ________ in imports of Korean steel to the United States and ________ the price of steel in the United States.

-The above figure shows the U.S. market for flip-flops. With international trade, the equilibrium price in the United States is ________ and the United States ________ flip-flops.

A tax on a good that is imposed when it is imported is called

Why are the losers from free international trade not fully compensated for their losses?

A nation will export a good if its

A quota ________ a deadweight loss and a tariff ________ a deadweight loss.

-The above figure shows the U.S. market for wheat. With international trade, the price of wheat in the United States is ________ per ton and the United States ________ wheat.

-The above figure shows the U.S. market for replacement cell phone batteries. When there is no international trade, the equilibrium price is ________ per battery and when there is international trade the equilibrium price is ________ per battery.

If supporters of restrictions on imports argue that protection is needed to preserve a strategic industry; which of the following is being used?

-The above figure shows the U.S. market for chocolate. With international trade, ________ is the transfer of surplus from producers to consumers.

If a tariff is imposed on imports of shrimp into the United States, U.S. consumer surplus from shrimp will ________ and U.S. producer surplus from shrimp will ________.

-The above figure shows the U.S. market for wheat. When there no international trade, the U.S. price of wheat is ________ per ton and the U.S. equilibrium quantity is ________ tons.

A quota is a

When a nation exports a good or service in which it has a comparative advantage, employment in that industry