Exam 18: International Trade, Comparative Advantage, and Protectionism

If the opportunity cost of corn to wheat is 3:1 in the United States and 5:1 in France, only the United States would benefit from trade if the actual terms of trade between corn and wheat were 2:1.

The advantage in the production of a product enjoyed by one country over another when it uses ________ to produce that product than the other country does is an absolute advantage.

Country A has a comparative advantage compared to Country B in the production of shoes if

If Holland decreases subsidies to its tulip growers, the price of tulips in the United States will rise.

If the domestic price is above the world price of a certain product, the domestic country will import the product.

Refer to the information provided in Figure 18.3 below to answer the questions that follow. Figure 18.3 -Refer to Figure 18.3. The domestic price of shoes is $80. After trade the price of a pair of shoes is $60. Now domestic production costs fall so that the equilibrium domestic price of a pair of shoes is $70. This would cause

Refer to the information provided in Table 18.3 below to answer the questions that follow. Table 18.3 -Refer to Table 18.3. If the exchange rate is $1 = 2 euros, then

If the exchange rate between the United States and India changes from $1 = 60 rupees to $1 = 10 rupees, ceteris paribus

Refer to the information provided in Figure 18.4 below to answer the questions that follow. Figure 18.4 -Refer to Figure 18.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. If the tariff is raised so that it now equals $10, tariff revenue in this country will be

The theory of ________ is credited to David Ricardo.

-Refer to Table 18.4. Before specialization, Germany produces 45 cases of beer and 30 cases of wine, and Chile produces 18 cases of beer and 24 cases of wine. After specialization, the increase in wine production is

The international agreement signed by the United States and 22 other countries in 1947 to promote the liberalization of foreign trade is known by its initials as

A country has a trade surplus when

Refer to the information provided in Table 18.3 below to answer the questions that follow. Table 18.3 -Refer to Table 18.3. Trade will flow in both directions between countries only if the price of the euro is between

When countries specialize in producing those goods in which they have a comparative advantage, they

The Dominican Republic has a comparative advantage in the production of tobacco, and Panama has a comparative advantage in the production of oranges. If both countries specialize based on the theory of comparative advantage

Related to the Economics in Practice on page 349: Satirist Frederic Bastiat's essay arguing for a quota on sunlight in order to protect domestic candle makers suggests that it is pointless to

Suppose that Japan and India are both engaged in the production of radios and rice, and that Japan has an absolute advantage in the production of both goods. If India has a lower opportunity cost for producing rice, then

Refer to the information provided in Figure 18.2 below to answer the questions that follow. Figure 18.2 -Refer to Figure 18.2. The theory of comparative advantage suggests that

The quantity and quality of labor, land, and natural resources of a country are its