Exam 17: International Trade

Use the following to answer question(s): Production Possibilities in Alphaland and Omegaland -(Exhibit: Production Possibilities in Alphaland and Omegaland) If the terms of trade established turn out to be 1 car for 1 computer, then:

Assume that the United States imposes a quota on Italian shoes.Relative to the equilibrium world price that would exist in the absence of quotas, the equilibrium price of shoes in the United States will most likely _______ , and the equilibrium price of shoes in Italy will most likely _______ .

Compare and contrast protectionist trade policies with strategic trade policies.Give several examples of each and critically evaluate whether or not they can be justified and, if so, from whose perspective?

Different points on a production possibilities curve:

Use the following to answer question(s): Production Possibilities in Alphaland and Omegaland -(Exhibit: Production Possibilities in Alphaland and Omegaland) Once trade opens up between the two countries:

The expression "gains from trade" refers to:

A policy in which a country restricts the importation of goods and services produced in foreign countries is described by economists as:

Free trade is beneficial because it:

If the United States imposes a tariff of $5 per bottle on French wine, the most likely effect will be to raise the:

The most likely effects of tariffs and/or quotas is to _______ prices and to _______ consumption of the protected goods in the importing country.

The net benefits that a nation receives from trade are called its gains from trade.

A protectionist policy generally enhances free trade.

If the opportunity cost is 2X = 1Y for country A and 1X = 3Y for country B, then a possible terms of trade is:

An exporter is said to be engaged in _______ if it _______ goods and services at a price _______ .

Use the following to answer question(s): Heartland and Soulland Suppose that there are only two countries in the world, Heartland and Soulland.The two countries produce only two goods, corn and drill presses.At its current level of production, Heartland must give up production of 1/4 drill press to produce an additional 100 bushels of corn.Soulland must give up 1 drill press to produce an additional 100 bushels of corn.No trade now occurs between the two economies, and both economies are operating on their respective production possibilities frontiers. -(Exhibit: Heartland and Soulland) If trade now opens up between the two economies, we can expect that:

A tariff imposed on Japanese imports into the United States tends to:

Use the following to answer question(s): The Production of Tires and Radios -(Exhibit: The Production of Tires and Radios) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of tires each country would have to forgo in order to produce the additional radios indicated.Further assume that the only input is labor and that it remains fully employed.Assume that there is unrestricted trade and complete specialization.According to comparative advantage, country:

Opportunity cost reflected on a production possibilities curve is :

Protectionist policies:

A direct restriction on the quantity of an import is called a(n):