Exam 21: International Finance

-Refer to Exhibit 34-3.The world price is P_W.If a tariff is imposed,the price rises to P_W + T.Because of the tariff,government collects tariff revenues equal to the area of

Comparative advantage is the ability to produce a good at a lower opportunity cost than others.

-Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,where imports are permitted,the world price is P_W.If there is a policy change such that imports are prohibited,the price becomes P_N,consumers' surplus equals __________ and producers' surplus equals __________.

If a U.S.company operates within a competitive environment and chooses to offshore part of its production process,the resulting change in the firm's costs should shift the ______________ curve for its product ___________________,thus _____________ the price of the product being produced.

-Refer to Exhibit 34-9.For country X,the opportunity cost of producing one unit of good A is __________ unit(s)of good B.

Producers' surplus is the difference between the price __________ receive for a good and the __________ price for which they would have __________ the good.

A tariff is a tax on

The effects of tariffs and quotas are: a(n)__________ in consumers' surplus,and a(n)__________ in producers' surplus.

-Refer to Exhibit 34-3.The world price is P_W.If a tariff is imposed the price rises to P_W + T.Because of the tariff,consumers' surplus is reduced by an amount equal to the area of

A tariff on avocadoes ______________ the price of avocadoes,_____________ consumers' surplus for avocado buyers,_______________ producers' surplus of avocado growers and __________________ tariff revenue.Because the loss to _____________ is more than the gain to ___________________,there is a net loss to society.

Suppose that a tariff is imposed on imported cheese.This will have the effect of __________ the price of cheese,__________ consumers' surplus,and __________ producers' surplus.

The effect of a tariff is

Company Z is a U.S.company that has just entered the market for a given good and is the first in this country to produce that good.The good is already being produced in many foreign countries is exported to the United States.If company Z wants to restrict this foreign competition,it will most likely use which of the following arguments?

Evidence indicates that tariffs and quotas are

-Refer to Exhibit 34-1.The opportunity cost of one unit of X in country B is

-Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is P_W.If there is a policy change such that imports are prohibited,the price becomes P_N.U.S.producers are better off if imports are __________; specifically,their producers' surplus changes by area __________.

-Refer to Exhibit 34-1.Country A is the lower opportunity cost producer of

One country has a comparative advantage over another country in the production of a good if it

-Refer to Exhibit 34-8.Assume that the current price of sugar in the United States is $300 per ton (which includes a $100 per ton tariff on sugar imports).The government collects tariff revenues on sugar imports in the amount of __________ million.

Producers' surplus is