econ
Comparative advantage refers to:
Being the lowest relative opportunity cost producer of a good.
____revenue equals a tariff times the quantity imported. (Use one word for the blank.)
Tariff
One of the major themes in economics is that trade creates wealth.
True
___effects are generally found by comparing changes in consumer and producer surplus. (Enter one word in the blank.)
Welfare
__ is/are generally found by comparing changes in consumer and producer surplus.
Welfare effects
When a domestic country is small relative to world markets, is a price taker, and its consumption and production do not affect the world price, it can be studied using:
a small-country model
A(n) __to __ is any policy that is designed to reduce the competitiveness of foreign producers that wish to sell their goods or services in the domestic market.
barrier --- trade
Any policy that is designed to reduce the competitiveness of foreign producers who wish to sell their goods or services in the domestic market is a:
barrier to trade.
Consider the two production possibilities frontiers (PPFs) shown in the graphs. If the two countries do not specialize, Country A would likely ______.
choose point MA
Specialization is based on ____ advantage
comparative
____ advantage is the foundation of establishing the benefits of trade.
comparative
The value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium is the __ loss.
deadweight
In the small-country model, the ___ price equals the world price if the country is open to trade.
domestic
The price of a good, service, or resource that prevails in the domestic market is the __ price
domestic
Goods and services that are manufactured domestically but sold abroad are called
exports
___trade is trade between nations that is free from barriers such as regulations tariffs or quotas.
free
Trade between nations without barriers such as regulations, tariffs, or quotas is called:
free trade.
A quota is a numerical limit on the amount of a good that can be
imported
Tariff revenue equals a tariff times the quantity
imported
Goods services or resources produced abroad and sold domestically are called
imports
For two parties to be willing to trade, the terms of trade must be:
less than the buyer's opportunity cost, but greater than the seller's opportunity cost.
If the terms of trade are the same as your _____ cost, you will receive no gains from the trade.
opportunity
If the terms of trade are the same as your __cost, you will receive no gains from the trade.
opportunity
The producer with the lowest relative _____ cost has a comparative advantage and should specialize in the production of that good.
opportunity
The value of the next-best forgone alternative is called the __ cost.
opportunity
Consider the two production possibilities frontiers (PPFs) shown in the graphs. If the two countries do specialize, Country A would likely ______, while Country B would likely ______.
produce at point CA; produce at point WB
A numerical limit on the amount of a good that can be imported is a(n)
quota
There is a(n) ___ on sugar imports in the United States.
quota
__ __ is the income earned by whoever has the right to import the good at the world price and sell it in the domestic market at the higher quota price.
quota rent
The income earned by whoever has the right to import the good at the world price and sell it in the domestic market at the higher quota price is:
quota rent.
The dollar value of a quota ____ is equal to the size of the quota times the difference between the quota price and the world price.
rent
When using the ___ -country model, the country adopts the world price for any good service or resource as the domestic price. (Use only one word.)
small
Quotas can have unintended consequences, such as:
substituting less expensive goods for the good that has a quota.
A tax or fee that must be paid on goods imported from other countries is called a(n)
tariff
A tax or fee that must be paid on goods imported from other countries is called a(n) ____
tariff
When the United States imposes a(n) __ on foreign steel, any foreign producers who want to sell their steel in the United States have to pay an extra fee, making it more expensive for them to sell their products.
tax
A person benefits less from trade than he or she did before if:
the terms of trade move closer to the person's opportunity cost.
Deadweight loss is the:
the value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium
Opportunity cost is:
the value of the opportunity that you give up when you choose one activity instead of another.
Comparative advantage is the foundation for establishing the benefits of ___
trade
When __ occurs, wealth is created.
trade
Tariff revenue is the product of the tariff rate and the quantity of goods imported.
true
The effects that a change in market conditions, usually price, has on the welfare or economic well-being of market participants are ___ effects.
welfare
The effects that a change in market conditions, usually price, has on the welfare or economic well-being of market participants are ____ effects.
welfare
If the terms of trade are the same as your opportunity cost, you will receive ___ gains from the trade.
zero