Exam 9: Application: International Trade

Scenario 9-2 For a small country called Boxland, the equation of the domestic demand curve for cardboard is $Q ^ { D } = 200 - 2 P$ , where $Q ^ { D }$ represents the domestic quantity of cardboard demanded, in tons, and $P$ represents the price of a ton of cardboard.For Boxland, the equation of the domestic supply curve for cardboard is $Q ^ { S } = - 60 + 3 P$ , where $Q ^ { s }$ represents the domestic quantity of cardboard supplied, in tons, and $P$ again represents the price of a ton of cardboard. -Refer to Scenario 9-2. Suppose the world price of cardboard is $60. Then Boxland's gains from international trade in cardboard amount to

Trade raises the economic well-being of a nation in the sense that

In principle, trade can make a nation better off, because the gains to the winners exceed the losses to the losers.

Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers, with the tariff, is 8 million bottles per year, then we can conclude that

Figure 9-9 -Refer to Figure 9-9. Consumer surplus in this market after trade is

Suppose Haiti has an absolute advantage over other countries in producing oranges, but other countries have a comparative advantage over Haiti in producing oranges. If trade in oranges is allowed, Haiti

For any country that allows free trade,

When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of pistachios decreases to equal the world price of pistachios, then

The infant-industry argument

If a country is an exporter of a good, then it must be the case that

Figure 9-1 The figure illustrates the market for wool in Scotland. -Refer to Figure 9-1. When trade in wool is allowed, consumer surplus in Scotland

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. -Refer to Scenario 9-1. If trade in peaches is allowed, U.S. producers of peaches

A country has a comparative advantage in a product if the world price is

If the Korean steel industry subsidizes the steel that it sells to the United States, the

Figure 9-11 -Refer to Figure 9-11. The change in total surplus in this market because of trade is

Figure 9-3. The domestic country is China. -Refer to Figure 9-3. If China were to abandon a no-trade policy in favor of a free-trade policy,

A tariff

The price of a good that prevails in a world market is called the

Figure 9-9 -Refer to Figure 9-9. Total surplus in this market after trade is