Chapter 9: International Trade
Trade raises the economic well-being of a nation in the sense that
the gains of the winners exceed the losses of the losers
Tariff
A tax on imported goods
President Bush imposed temporary tariffs on imported steel in 2002. The reasons for this trade restriction is most consistent with the
National-security argument
Suppose the United States exports cars to Switzerland and imports cheese from France. This situation suggests
The United States has a comparative advantage relative to Switzerland in producing cars, and France has a comparative advantage relative to the United States in producing cheese
With which of the Ten Principles of Economics is the study of international trade most closely connected?
Trade can make everyone better off
Economists view the fact that Florida grows oranges, Texas pumps oil, and California makes wine as
confirmation of the virtues of free trade
An important factor in the decline of the U.S. textile industry over the past 100 or so years is
foreign competitors that can produce quality textile goods at low cost.
The nation of Falconia forbids international trade. In Falconia, you can obtain a computer by trading 3 bicycles. In other countries, you can obtain a computer by trading 5 bicycles. These facts indicate that
if Falconia were to allow trade, it would export computers.
A tariff on a product
increases the domestic quantity supplied
When a country allows trade and becomes an importer of coal
the gains of the domestic consumers of coal exceed the losses of the domestic producers of coal.
A logical starting point from which the study of international trade begins is
principle of comparative advantage
When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,
producer surplus increases and total surplus decreases in the market for that good.
If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,
the country will be an importer of the good