Econ. chapter 19

Consider the market for widgets. Widgets can be produced in the United States or abroad. Assume that U.S. consumers wish to buy the least expensive widgets possible. However, if widgets from all countries cost the same, consumers would prefer to buy domestically.

$10

Suppose crude oil comprises 25% of U.S. imports from Canada, U.S. production is 500 million barrels of crude oil, U.S. consumption is 1.49 billion barrels of crude oil, and the United States only imports crude oil from Canada. If the world price is $80 per barrel and the United States imposes a 20% tariff on each barrel, what is the amount of government revenue collected in the United States if the United States imports 40% less from Canada as a result of the tariff?

$11.88 billion

Suppose the United States is trading with a new country, Muffinville. The amount of imported and exported goods and services from the United States to Muffinville is shown below.

$3 billion

Imagine that the United States only trading partners in 2014 were its major trading partners shown in the graphic. What was the United States' trade balance among these trading partners in 2014?

$600 billion

Consider the market for widgets. Widgets can be produced in the United States or abroad. Assume that U.S. consumers wish to buy the least expensive widgets possible. However, if widgets from all countries cost the same, consumers would prefer to buy domestically.

$7

Among the United States' major trading partners, a total of _____ countries would have a(n) _____ in exports if the United States imposed a tariff on passenger cars. The amount supplied domestically would _____ as domestic price ______.

6; decrease; increase, increased

Which of the following statements best describes the trends in the United States and the world regarding international trade?

As a percentage of GDP, the United States has been trading more internationally, and the rest of the world has also been trading more.

Which of the major trading partners of the United States are members of NAFTA?

Canada and Mexico

Suppose that the United States and Canada each produce only two products, televisions and food. The United States can produce 100 televisions a day, 150 pounds of food a day, or any combination in between. (For example, it could produce 100 televisions and no food, 50 televisions and 75 pounds of food, or 150 pounds of food and no televisions.) Canada can produce 300 televisions a day, 330 pounds of food a day, or any linear combination in between. Which of the following statements is true?

Canada has a comparative advantage in producing televisions

Of the countries listed in the graphic, in 2014 the United States' largest trading partner was _______ and its smallest trading partner was _______.

Canada; the United Kingdom

From which of the major trading partners listed did the United States import the most goods and services in 2014?

China

In 2011, with which country did the United States run the largest trade deficit?

China

Suppose that the price with free trade is $7. If lawmakers want to ensure that U.S. widget producers can sell at least 8,000 widgets, which of the following trade restriction could they impose?

Impose a tax on imported widgets.

Which of the following is one of the three largest trading partners with the United States?

Mexico

How are quotas and tariffs typically applied to restrict international trade?

Tariffs are taxes on imported goods and services, and quotas limit the number of imported goods and services.

Suppose that the United States and Canada each produce only two products, televisions and food. The United States can produce 100 televisions a day, 150 pounds of food a day, or any linear combination in between. (For example, it could choose 100 televisions and no food, 50 televisions and 75 pounds of food, or 150 pounds of food and no televisions.) Canada can produce 300 televisions a day, 330 pounds of food a day, or any linear combination in between. Which of these trades could make both the United States and Canada better off? Correct!

The United States could trade Canada 20 pounds of food for 17 televisions.

Suppose that the United States and Canada each produce only two products, televisions and food. The United States can produce 100 televisions a day, 150 pounds of food a day, or any linear combination in between. (For example, it could choose 100 televisions and no food, 50 televisions and 75 pounds of food, or 150 pounds of food and no televisions.) Canada can produce 300 televisions a day, 330 pounds of food a day, or any linear combination in between. Would trade between the United States and Canada occur? If so, how?

The United States would trade food to Canada and Canada would trade televisions to the United States.

Among United States' major trade partners in 2014, a trade ______ occurred only with _____. The United States also had the largest trade _____ with ______.

balance; the United Kingdom; deficit; China

When comparing Germany and the United Kingdom to the United States, we could say the United States has a comparative advantage in _______ and _______ could be realized from trade.

civilian aircraft; gains

What is a benefit of international trade?

higher standards of living

Which of the following are common reasons for trade being restricted?

national defense

Consider the three largest trading partners of the United States. Suppose the United States imposed quotas on each of its top goods. Which one of the top goods would generate revenue for the United States?

quotas do not generate revenue.

What is a trade deficit

the amount by which a country's imports exceed its exports

Suppose that the United States and Canada each produce only two products, televisions and food. The United States can produce 100 televisions a day, 150 pounds of food a day, or any linear combination in between. (For example, it could produce 100 televisions and no food, 50 televisions and 75 pounds of food, or 150 pounds of food and no televisions.) Canada can produce 300 televisions a day, 330 pounds of food a day, or any linear combination in between. What is the United States' opportunity cost for producing 1 pound of food?

two-thirds of a television