Exam 5: International Trade 5

The model suggesting that countries will specialize in producing the good that uses its relatively abundant factor of production most intensively is referred to as the _____ model.

If the opportunity costs of production are constant, then the production possibility frontier is:

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 producer surplus _____ to _____.

If a country's price in the absence of trade is lower than the price with trade, then the domestic quantity supplied with trade is _____ the domestic quantity demanded.

Use the following to answer question : Figure: The Market for Digital Cameras with Tariff -(Figure: The Market for Digital Cameras with Tariff) Look at the figure The Market for Digital Cameras with Tariff. The domestic price is P_A and the world price is P_W. The government decides to impose a tariff on each imported digital camera, and the new price is P_t. Identify the area corresponding to the tax revenue collected by the government. Identify the area corresponding to the deadweight loss that results from the tariff.

The United States must give up the production of 300 motorcycles to produce 15 additional SUVs with the same resources. The opportunity cost of producing 100 motorcycles is _____ SUV(s).

The main difference between a tariff and an import quota is that:

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

France and England both produce wine and cloth with constant opportunity costs. France can produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. England can produce 50 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. Using this information, we can conclude that:

Use the following to answer questions: Figure: The Production Possibilities for Two Countries -(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. The opportunity cost of producing 1 radio in Indonesia is:

According to the infant industry argument, import protection is needed because:

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. The opportunity cost of producing a unit of toys in country A is _____ unit(s) of wheat.

As measured by a percentage of the entire economic output of the United States, imports have been _____ and exports have been _____.

Use the following to answer questions: Figure: The Production Possibilities for Two Countries -(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. If Malaysia specializes completely in the production of the good of its comparative advantage, it will produce:

Sri Lanka's comparative advantage over the United States in textiles can be explained by its:

If the _____ differ(s) between two countries, this suggests the possibility for mutually advantageous trade.

Use the following to answer questions : -(Table: Production Possibilities in the United States and Colombia) Look at the table Production Possibilities in the United States and Colombia. Suppose that each nation specializes in producing the good in which it has the comparative advantage, and the two nations agree to trade. A year later we observe Colombia consuming 20 computers and 20 tons of coffee, and we observe the United States consuming 80 computers and 5 tons of coffee. How many computers does the United States export? How many tons of coffee does the United States import? If the world price of a computer is $500, what is the world price of a ton of coffee? Justify your answers.

A tax on imports of foreign goods is called:

Use the following to answer questions: Figure: The Market for Calculators -(Figure: The Market for Calculators) Look at the figure The Market for Calculators. Assume that S and D represent the domestic demand and supply of calculators. The world price, P_W, equals $100. The government imposes an import tariff of $20 per calculator. Compared with the free trade situation, the tariff leads to a deadweight loss equal to area:

The job creation argument for protection against free trade: