Exam 14: International Trade

Table 14-2 Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour. -Refer to Table 14-2.What terms of trade between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?

Consider a situation where opening up international trade has resulted in Canada becoming a wheat exporter.Relative to the prior no-trade situation,what would be the effect on Canada's domestic price of wheat?

Under NAFTA,Canada,the U.S.,and Mexico have the free flow of capital and labour.

Which of the following is the best example of a tariff?

When markets reach the equilibrium price,all the opportunities for mutually beneficial trade have taken place.What can be said of the sum of consumer and producer surplus at this point?

Steve and Lee have been shipwrecked on a deserted island in the South Pacific.Their economic activity consists of either gathering pineapples or fishing.We know Steve can catch four fish in one hour or harvest two baskets of pineapples.In the same time,Lee can reel in two fish or harvest two baskets of pineapples. a. If they each spend four hours a day fishing and four hours a day harvesting pineapples, how many of each will Steve produce? How many will Lee produce? What will their total production be? b. If Steve and Lee don't trade with each other, who is better off? Why? c. Assume Lee and Steve both operate on straight-line production possibilities curves. What is Steve's opportunity cost of producing a basket of pineapples? Of producing a fish? What is Lee's opportunity cost of producing a basket of pineapples? Of producing a fish? d. If Steve and Lee traded, who has the comparative advantage in fish? Pineapples? e. If Lee and Steve specialize and trade the good in which they have a comparative advantage, how much of each good will be produced in an eight hour day? What are the gains from trade?

What matters most in determining the efficient distribution of production all over the world?

What is the main reason one nation trades with another?

Figure 14-1 -Refer to Figure 14-1.After a tariff is imposed,what is the domestic producer surplus?

What would likely be the effect of imposing a quota on composite hockey sticks shipped into Canada?

Which international trade agreement did the World Trade Organization evolve from?

Which of the following is the best example of a quota?

What is the law of comparative advantage,and why is it important in international trade?

A country that is half as productive at producing some goods as another country,but is one quarter as productive at producing others,will not be able to gain from trade.

Which of the following is Canada NOT a member of?

Table 14-1 Alternate Outputs from One Day's Labour Input: Canada: 12 bushels of wheat or 3 yards of textiles Great Britain: 3 bushels of wheat or 12 yards of textiles -Refer to Table 14-1.What can we conclude about Canada?

Tariffs contribute to higher prices of textile products imported into Canada,but import quotas on textiles brought into Canada do not.

Import tariffs in Canada are likely to reduce Canadian exports,both because of the resulting decrease in foreign earnings of dollars from exports to Canada and because of the likelihood of increases in other countries' import restrictions against Canadian goods.

Why is protectionist legislation often passed?

What effect does reducing a tariff on a particular good have?