Exam 5: International Trade 5

If Japan must give up the production of 75 computers to produce 25 additional cellular telephones, the opportunity cost of producing 4 cellular telephones is _____ computers.

International trade based on comparative advantage allows a country to produce outside its production possibility frontier.

Use the following to answer questions : Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P₁. When the economy is opened to trade, the price rises to P_W and the change in total surplus is:

Use the following to answer questions : -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. _____ has (have) an absolute advantage in producing tractors.

Use the following to answer questions : Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P₁. When the economy is opened to trade, the price rises to P_W. Sri Lanka will _____ tea and the volume of trade will equal _____.

If the world price of good X is lower than the domestic (autarky) price of that good, will a nation be an exporter or importer of good X? How will the domestic market adjust the price? Explain.

Use the following to answer questions : Scenario: The Production of Wheat and Toys The table describes the production of two goods, wheat and toys, in country A and country B. Each country has a linear production possibility frontier with respect to its production of the two goods. The numbers in each column represent the total number of units each country could produce if it used all of its resources to produce the good. -(Scenario: The Production of Wheat and Toys) Look at the scenario Production of Wheat and Toys. Country A has an absolute advantage in _____ and a comparative advantage in the production of _____.

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef for tulips, we expect the consumer surplus from beef consumption to:

Economists claim that opening up a market to imports leads to an increase in total surplus but that trade makes winners and losers. How does this work?

Use the following to answer questions : -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. The United States has a comparative advantage in _____ and Mexico has a comparative advantage in _____.

Import tariffs always benefit domestic producers more than they hurt domestic consumers.

Use the following to answer questions : Figure: The Market for Melons in Russia -(Figure: The Markets for Melons in Russia) Look at the figure The Market for Melons in Russia. If Russia is trading based on comparative advantage and the world price is D, then Russia has _____ in the production of melons.

Use the following to answer questions: Figure: The Domestic Market for Digital Cameras -(Figure: Domestic Market for Digital Cameras) Look at the figure The Domestic Market for Digital Cameras. Assume that P_A is the autarky price and P_W is the world price. Consumer surplus after international trade is equal to the area:

Use the following to answer questions : Figure: The Market for Oranges in South Africa -(Figure: The Market for Oranges in South Africa) Look at the figure The Market for Oranges in South Africa. In autarky, the price of oranges in South Africa is P₁. When the economy is opened to trade, the price falls to P_W and consumer surplus will _____ to area _____.