Econ final Problem set 10

There are nontariff barriers in the form of _______ regulations, in which certain textiles are made in the United States, shipped to other countries, combined in making apparel with textiles made in those other countries, and then re-exported back to the United States at a lower tariff rate.

"rules of origin"

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. The opportunity cost of producing 1 orange for Alpha and Beta, respectively, are:

0.5 apples; 0.25 apples

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following terms of trade between apples and oranges would allow both Alpha and Beta to gain by specialization and exchange?

1 apple for 3 oranges

Alternate Outputs from One Day's Labor Input: SA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. The opportunity cost of one bushel of wheat in India is:

4 yards of textiles

Which of the following is true?

A nation cannot have a comparative advantage in the production of every good

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?

Alland has an absolute advantage in producing food and clothing

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?

Alland has an absolute advantage in producing food but will not trade with Georgeland

In India one average worker can produce 330 pounds of rice or 110 shirts in one year. In China one average worker can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true?

An Indian worker has a comparative advantage in the production of rice

Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude

Canada has a comparative advantage in the production of hockey sticks

means selling goods below their cost of production

Dumping price

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 36 units of food per year or 18 units of clothing. Which of the following is true?

Georgeland has an absolute but not a comparative advantage in producing clothing

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following statements is true?

If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade

It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the ______

National Interest Argument

are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products

Nontariff barriers

The race to the bottom scenario of global environmental degradation is explained roughly like this:

Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits

If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, there can be mutual gains from trade if

The USA specializes in potatoes because of its comparative advantage in producing potatoes

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise

Why would foreign firms export a product at less than its cost of production—which presumably means making a loss?

This may be part of a longterm strategy in which foreign firms would sell at below the cost of production in the shortterm for a time, and when they have driven out the domestic U.S. competition, they would then raise prices

Politicians often argue for tariff increases in order to reduce the nation's dependence on imports. If tariffs are increased, the long-run effect is most likely to be

a decrease in both American imports and exports

Which of the following is the best example of a quota?

a limit imposed on the number of men's suits that can be imported from a foreign country

A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as

a non-tariff barrier

A tariff differs from a quota in that a tariff is

a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported

When one nation can produce a product at lower cost relative to another nation, it is said to have a(n) in producing that product.

absolute advantage

Suppose the government of Taiwan subsidized its watch-making industry, enabling Taiwanese producers to undersell foreign watch producers. The law of comparative advantage indicates that watch-importing nations would best take advantage of the Taiwanese subsidization policy by:

accepting the subsidy of the Taiwanese government, making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry

As international trade increases, it contributes to a shift in jobs away from industries where that economy does not have a(n) advantage and toward industries where it has a(n) __________________advantage.

comparative; comparative

When a country allows trade and becomes an exporter of a good,

consumer surplus decreases and producer surplus increases

When a country allows trade and becomes an importer of a good

consumer surplus increases and producer surplus decreases

The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that

domestic producers can mature or attain the economies of scale to allow them to compete in world markets

Which of the following is not a short-run impact of imposing quotas on the American industries they seek to protect?

government tax revenues increase

Alternate Outputs from One Day's Labor Input: USA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. From the data, the USA:

has an absolute advantage over India in the production of wheat

An import quota or tariff on French wine that raises the prices for wine will probably

hurt domestic wine drinkers but help domestic wineries, which will gain from the higher price

"Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement

is essentially correct

Intra-industry trade between similar trading partners allows the gains from __________________that arise when firms and workers specialize in the production of a certain product

learning and innovation

The reasons that nations trade includes the fact that

no one country produces all of what citizens within the country want

The theory of comparative advantage shows that the gains from international trade do not just result from the absolute advantage of producing at lower cost, but also from pursuing comparative advantage and producing at a lower ____________

opportunity cost

The underlying reason why trade benefits both sides of a trading arrangement is rooted in the concept of

opportunity cost

Low-wage U.S. workers suffer from protectionism in all the industries that they don't work in, because

protectionism forces them to pay higher prices for basic necessities like clothing, medicine and agricultural products.

Some nations that seek to produce all of their own needs face the problem that:

some industries are too small to be efficient if restricted to their domestic markets alone

Tariffs result in a decrease in consumer surplus because

the price of the protected good increases and quantity consumed decreases

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 2 oranges, then

there are no incentives for Alpha to specialize and trade with Beta.

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 4 oranges, then

there are no incentives for Beta to engage in international specialization and trade with Alpha