Exam 7: Comparative Advantage and the Gains From International Trade

Over the past several decades there has been rapid growth in international trade.This growth has been due to all but one of the following factors.Which factor has not contributed to the growth of international trade?

Your roommate Hansen argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States.Hansen

All of the following are sources of comparative advantage except

Table 7-6 Output per hour Production and Production of work Consumption without Trade with Trade Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 7-6 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade. -Refer to Table 7-6.Prior to trade,what was the opportunity cost to produce 1 belt in Estonia?

Governments sometimes erect barriers to trade other than tariffs and quotas.Which of the following is not an example of this type of trade barrier?

Which of the following statements is false?

In the United States during the Great Depression,tariffs were ________ than they were following World War II,and ________ than they are today.

The Trans-Pacific Partnership (TPP)is an agreement between the United States and ________ that was meant to reduce trade barriers.

Figure 7-1 Figure 7-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 7-1.Suppose the government allows imports of leather footwear into the United States.What will the market price be?

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods,effectively acting as a quota of zero imports when stimulus money was being spent.For the U.S.steel industry,a "Buy American" provision would create gains for all of the following except

Which of the following is common to both tariffs and quotas?

Figure 7-4 -Refer to Figure 7-4.Suppose the U.S.government imposes a $0.25 per pound tariff on rice imports.Figure 7-4 shows the demand and supply curves for rice and the impact of this tariff.Use the figure to answer questions a-i. a.Following the imposition of the tariff,what is the price that domestic consumers must now pay and what is the quantity purchased? b.Calculate the value of consumer surplus with the tariff in place. c.What is the quantity supplied by domestic rice growers with the tariff in place? d.Calculate the value of producer surplus received by U.S.rice growers with the tariff in place. e.What is the quantity of rice imported with the tariff in place? f.What is the amount of tariff revenue collected by the government? g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff. h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government? i.Calculate the deadweight loss due to the tariff.

Automobiles and many other products are differentiated.As a result,

Table 7-1 Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and prepare their own food.Rob and Bill spent one day each fishing and picking berries.The table lists the pounds of output Rob and Bill produced. -Refer to Table 7-1.Use the table above to select the statement that accurately interprets the data in the table.

Figure 7-1 Figure 7-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 7-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $24.What area represents consumer surplus?

Twenty-nine countries in Europe have formed the European Union (EU).After the EU was formed it

Eliminating trade barriers does all of the following except

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.Without the tariff in place,the United States produces

Although the United States is the second largest exporting country,international trade is less important to the United States than it is to most other countries.

Examples of comparative advantage show how trade between two countries can make each better off.Compared to their pre-trade positions,trade makes both countries better off because in each country