Exam 28: International Trade

It is possible for some individuals within countries to lose from reducing international trade barriers.

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,England has the comparative advantage in both goods.

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

Exhibit 28-1 Alpha can produce either 18 tons of oranges or 9 tons of apples in a year,while Omega can produce either 16 tons of oranges or 4 tons of apples. Refer to Exhibit 28-1.If the terms of trade are established as 1 ton of apples for 2 tons of oranges:

Exhibit 28-7 Refer to Exhibit 28-7.At what price is the sum of consumer surplus and producer surplus maximized?

The difference between the price the seller receives for a good or service and the minimum price he would be willing to accept for that unit is called:

Which of the following would be expected if the tariff on foreign-produced automobiles was increased?

A tariff can be defined simply as a

If two countries each are currently producing two goods,and each begins to specialize in the good in which it has a comparative advantage,what will happen to total world output?

Comparative advantage occurs when a person or a country can produce a good or service at a lower ____ than others.

Suppose that the U.S.can make 15 cars or 20 bottles of wine with one year's worth of labor.France can make 10 cars or 18 bottles of wine with one year's worth of labor.From these numbers,we can conclude

After the U.S.introduces of a tariff in the market for phones,the price of phones in the U.S.will

Steve and Lee have been shipwrecked on a deserted island in the Hawaiian chain.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.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? If Steve and Lee don't trade with each other,who is better off? Why? 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 a producing a fish? What is Lee's opportunity cost of producing a basket of pineapples? Of a producing a fish? If Steve and Lee traded,who has the comparative advantage in fish? Pineapples? If Lee and Steve specialize in 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 is producer surplus? How is it different from consumer surplus?

Politicians often argue for tariff increases in order to reduce the size of a balance of trade deficit.If tariffs are increased,the long-run effect is most likely to be:

Which of the following is true?

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

Import tariffs generally ____ the output of domestic producers of the affected products and also ____ the output of domestic exporters.

The U.S.committed itself to creating a free trade zone between the U.S.,Canada and Mexico.Why might this be important? Relative to imports and exports to other nations,what is the size of these two North American trading partners trade relationship with the U.S.?

Why would a new limit on trade in goods with the United States by Canada be more important to the U.S.economy than the same type of policy in Italy?