Exam 7: Comparative Advantage and the Gains From International Trade

In the past two decades the United States lost its comparative advantage in automobiles to Japan.What factor was most responsible for the development of Japan's comparative advantage in automobiles?

In 1995,the General Agreement on Tariffs and Trade (GATT),which was established in 1948,was replaced by the World Trade Organization (WTO).Why did members of the GATT push for the establishment of the WTO?

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the value of revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

a.Distinguish between a tariff and a quota. b.In what ways are tariffs and quotas similar? c.In what ways are tariffs and quotas different? d.Why might a foreign producer prefer a quota rather than a tariff?

Which of the following describes the national security argument for protectionism?

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.Which country has an absolute advantage in producing swords?

Table 7-3 Mateo and Celeste produce custom saddles and spurs.Table 7-3 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 7-3.Select the statement that accurately interprets the data in the table.

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.If there was no quota,how many pounds of peanuts would domestic producers supply?

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.All of the following are reasons for this except

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.If there was no quota,how many pounds of peanuts would be imported?

Table 7-3 Mateo and Celeste produce custom saddles and spurs.Table 7-3 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 7-3.Select the statement that accurately interprets the data in the table.

If a country has a comparative advantage in producing a product,it must also have an absolute advantage in producing that product.

Trade that is within a country or between countries is based on the principle of

A quota

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia.We can conclude that

At the time policymakers debated the Trans-Pacific Partnership,the United States imposed ________ on the value of imported shoes and shoe parts.

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the reduction in value of consumer surplus after the imposition of the quota?

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane,then

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.The tariff causes domestic consumption of coffee

Members of Congress promising to support each other's legislation is known as