Chapter 20 - International Trade

15 October 2022
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question
A nation's export supply curve for a specific product: lies below its import demand curve for the product. shows the amount of the product it will export at prices below its domestic price. depends on domestic supply of the product, but not on domestic demand.
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is upsloping.
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Picture Refer to the given diagram in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of trade): cannot be determined on the basis of this information. is the absolute value of the slope of line AB.
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is the absolute value of the slope of line AC.
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Studies show that: it is impossible to estimate the benefits of trade barriers. benefits of trade barriers exceed their costs in developing nations. costs and benefits of trade barriers are about equal.
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costs of trade barriers exceed their benefits, creating an efficiency loss for society.
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The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the: Common Market Organization (CMO). International Trade Commission (ITC). International Monetary Fund (IMF).
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World Trade Organization (WTO).
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Picture Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per-unit tariff in the amount PcPt, price and total quantity sold will be: Pc and z. Pa and x.
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Pt and y.
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Picture Refer to the diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are: 1 beer for 2 pizzas. 2 beers for 1 pizza. 1.5 beers for 1 pizza.
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1 beer for 1.5 pizzas.
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The primary gain from international trade is: tariff revenue. increased employment in the domestic import sector. increased employment in the domestic export sector.
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more goods than would be attainable through domestic production alone.
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Answer the question on the basis of the following production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities: Picture Sigma's production possibilities: Picture On the basis of the given information: Gamma should export both tea and pots to Sigma. Sigma should export tea to Gamma and Gamma should export pots to Sigma.
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Gamma should export tea to Sigma and Sigma should export pots to Gamma.
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Picture Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per-unit tariff of PcPt, the total amount of tariff revenue collected on this product will be: PcPa times x. PcPt times z. PaPt times wy.
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PcPt times wy.
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Answer the question on the basis of the following data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. Picture Refer to the given data. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price must be lower than $4 because at $4: Beta wants to export more than Alpha. both nations want to import steel.
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both nations want to export steel.
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Answer the question on the basis of the following production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities: Picture Sigma's production possibilities: Picture Refer to the given data. What are the limits of the terms of trade between Gamma and Sigma? 1 tea = 2 pots to 1 tea = 3.5 pots 1 tea = 2 pots to 1 tea = 6 pots
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1 tea = 1 pot to 1 tea = 3 pots
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Answer the question on the basis of the following data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. Picture Refer to the given data. At a world price of $2: neither country will want to import steel. Beta will want to export 20 units of steel. Alpha will want to export 20 units of steel.
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Alpha will want to import 20 units of steel.
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In 2012, the United States: had a small trade surplus in goods and services. traded mainly with developing nations such as Mexico and India.
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imported more goods than it exported.
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In order for mutually beneficial trade to occur between two otherwise isolated nations: each nation must be able to produce at least one good absolutely cheaper than the other. one nation's production must be labor-intensive while the other nation's production is capital-intensive. each nation must face constant costs in the production of the good it exports.
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each nation must be able to produce at least one good relatively cheaper than the other.
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In recent years, the United States has: maintained an overall trade surplus (goods and services combined) with the rest of the world. had a large goods trade surplus with the rest of the world. had a small goods trade surplus with Japan.
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exported more services abroad than it has imported.
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Picture Refer to the given diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. If this economy was entirely closed to international trade, equilibrium price and quantity would be: Pa and z. Pc and z.
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Pa and x.
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Which of the following statements is false? The high tariffs of the Smoot-Hawley Act of 1930 and the retaliation they caused worsened the Great Depression. The U.S. Constitution forbids individual states from levying tariffs. The European Union has enhanced prosperity in Western Europe.
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Studies show that developing nations that have relied on import restrictions to protect domestic industries have had higher growth rates than similar nations pursuing more open economic policies.
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Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect: profits to rise in the U.S. bicycle industry. employment to decrease in the German bicycle industry. the price of German bicycles to increase in the United States.
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employment to decrease in the U.S. bicycle industry.
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"Offshoring" refers to: exporting key resources. importing goods, services, and resources.
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shifting work overseas that was previously done domestically.
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A nation will neither export nor import a specific product when its: import demand curve is downsloping. export supply curve lies above its import demand curve. export supply curve is upsloping.
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domestic price equals the world price.
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Answer the question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Picture Picture Refer to the tables. If these two nations specialize on the basis of comparative advantage: Trombonia will produce beans and Latalia will produce pork. Trombonia will produce both beans and pork. Latalia will produce both beans and pork and Trombonia will produce neither.
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Latalia will produce beans and Trombonia will produce pork.
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(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that: we should buy everything from abroad. consumers should only buy goods from other states. the best quality goods are found in the United States.
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people should only consume what they can produce themselves.
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Answer the question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size. Picture Refer to the given data. Beta: should specialize in producing chips and trade with Alpha for fish. will not realize gains from specialization and trade. will export both fish and chips to Alpha.
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should specialize in catching fish and trade with Alpha for chips.
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(Consider This) The greatest benefit to an economy from international trade is: the economic power it gives a nation over other countries. greater employment in the export sector of the economy. full employment of its labor force.
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consumption beyond domestic production possibilities.
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Answer the question on the basis of the following domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. Picture Refer to the given data. The total amount of revenue collected from a $1-per-unit tariff on this product will be: $22. $14. $8.
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$7.
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In a two-nation model, the equilibrium world price will occur where: both nations' export supply curves are horizontal. both nations' import demand curves are vertical. exports are exactly twice the level of imports.
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one nation's export supply curve intersects the other nation's import demand curve.
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(Last Word) Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from: invention of the electric light. fire. other European countries.
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the sun.
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Picture Refer to the graphs. These production possibilities curves: reflect the law of diminishing marginal utility. reflect the law of increasing opportunity costs. imply that specialization will be incomplete.
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demonstrate that there can be gains from specialization and trade between the two nations.
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Answer the question on the basis of the following information about the cost ratios for two products—fish (F) and chicken (C)—in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Refer to the given information. In Singsong the domestic real cost of each chicken: increases with the level of fish caught. is 2 fish. decreases with the level of fish caught.
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is ½ fish.
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Answer the question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Picture Picture Refer to the tables. Assume that before specialization and trade, Latalia produced combination C and Trombonia produced combination B. If these two nations now specialize completely based on comparative advantage, the total gains from specialization and trade will be: 2 tons of pork and 4 tons of beans. 4 tons of pork. 1 ton of pork and 2 tons of beans.
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4 tons of beans.