Econ Chapter 20
The equilibrium world price of a tradable good is determined by the
intersection of the world supply and demand schedules.
The net outcome of either tariffs or quotas for the world economy is
negative, since the costs to consumers substantially exceed the gains to producers and government.
Consider the following statement: "The United States can make certain toys with greater productive efficiency than can China. Yet we import those toys from China." Which ideas of Adam Smith and David Ricardo are represented?
China does not need Smith's absolute advantage to specialize in toys, rather it needs Ricardo's comparative advantage.
The eurozone is
a common currency zone in which members have adopted the euro as their common currency.
The World Trade Organization (WTO) is
a group that oversees trade agreements reached by member nations and arbitrates trade disputes among them.
NAFTA is
a trade bloc made up of the United States, Canada, and Mexico whose purpose is to reduce tariffs and other trade barriers among the three countries.
The European Union (EU) is
a trading bloc of 28 European countries who have agreed to abolish tariffs and import quotas on most products and have liberalized the movement of labor and capital.
Consider the following statement: "The United States can make certain toys with greater productive efficiency than can China. Yet we import those toys from China." We import these toys from China because
the United States has an absolute advantage in producing toys, but China has a comparative advantage in producing toys.
An export curve is
the difference between quantity supplied and quantity demanded in the domestic market for a price above the domestic equilibrium price.
An import demand curve is
the difference between quantity supplied and quantity demanded in the domestic market for a price below the domestic equilibrium price.
A quota that results in the same level of imports as a tariff is more detrimental to an economy because
the government loses tax revenue.