Exam 20: Economic Growth in the Global Economy

Trade contributes to prosperity because:

Columbia produces coffee with less labor and land than any other country; it therefore necessarily has

​Exhibit 18-7 ​ -Refer to Exhibit 18-7: The maximum price the consumer is willing to pay for the first unit and minimum price the producer would demand is:

When both exports and imports are considered, the major advantage of international trade is that it allows us to:

​Exhibit 18-7 ​ -Refer to Exhibit 18-7. For the first unit, the consumer surplus is:

Suppose the Swiss government subsidized its watch-making industry, enabling Swiss producers to undersell foreign watch producers. The law of comparative advantage indicates that watch-importing nations would best take advantage of the Swiss subsidization policy by

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?

Economically speaking, tariffs:

​Exhibit 18-4 -Refer to Exhibit 18-4. The change in total surplus from free trade is area:

A new U.S. import quota on imported steel would be likely to:

The main reason why one nation trades with another is to

When a country allows trade and becomes an importer of goods, producers gain more than consumers lose.

Raising an existing tariff on grapes from Chile will:

If the United States could produce 4 tons of potatoes or 2 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, the country with the comparative advantage in producing potatoes is ____ and the country with the absolute advantage in producing potatoes is ____.

A tariff on a particular good does which of the following?

If the United States could produce 4 tons of potatoes or 2 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, the country with the comparative advantage in producing wheat is ____ and the country with the absolute advantage in producing potatoes is ____.

​Exhibit 18-5 ​ -Refer to Exhibit 18-5. The change in consumer surplus from free trade is area:

When a country allows trade and becomes an exporter of goods, producers gain more than consumers lose.

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

If the United States could produce 1/2 ton of potatoes or 1 ton of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, the country with the comparative advantage in producing wheat is ____ and the country with the absolute advantage in producing potatoes is ____.