Econ Homework 9

Do you agree with​ Obama's statement? Briefly explain

Producers in industries in which the U.S. does not have a comparative advantage would likely agree with Obama.

Who is harmed when individual nations move from autarky to free​ trade?

The owners of the firms that went out of business

Among the main sources of comparative advantage are the​ following

climate and natural​ resources, relative abundance of labor and​ capital, technology, external economies

Dumping

is selling a product for a price below its cost of production

While running for​ president, Barack Obama made the following​ statement: ​"Well, look, people​ don't want a cheaper​ T-shirt if​ they're losing a job in the​ process." What did Obama mean by the phrase​ "losing a job in the​ process"? Obama was suggesting that a job would be lost if the​ T-shirt were cheaper because

it would be produced in another country

_____ are goods and services produced domestically but sold to other countries. _______ are goods and services bought domestically but produced in other countries. _______ are taxes imposed by a government on imports of a good into a country.

Exports Imports Tariffs

Protectionism is the use of trade barriers to shield domestic firms from foreign competition. Protectionism is usually justified on the basis of several arguments which​ include

saving​ jobs, protecting infant​ industries, and protecting national security

The primary difference between a quota and a voluntary export restraint​ (VER) is that

the quota is unilaterally imposed by one nation on the other while the VER is the result of negotiations between nations

Why do some people oppose the World Trade Organization​ (WTO)?

All of the above - Some opponents are specifically against the globalization process that began in the 1980s and became widespread in the 1990s - Some opponents desire to erect trade barriers to protect domestic firms from foreign competition - Some critics of the WTO support globalization in principle but believe that the WTO favors the interests of the​ high-income countries at the expense of the​ low-income countries

The World Trade Organization​ (WTO)

All of the above - generally aids in negotiating trade agreements that include not only goods but also services and intellectual property - is an international organization that oversees international trade agreements - replaced the General Agreement on Tariffs and Trade​ (GATT) in January 1995

By​ trading, countries are able to consume more than they could without trade. This outcome is possible because

All of the above - inefficiencies in resource allocation are reduced - world production of both goods increases after trade - shifting production to the more efficient country—the one with the comparative advantage—increases total production.

Some politicians argue that eliminating U.S. tariffs and quotas would help the U.S. economy only if other countries eliminated their tariffs and quotas in exchange.

This statement is​ false; the U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

We do not see complete specialization in the real world because

not all goods and services are traded​ internationally, production of most goods involves increasing opportunity​ costs, and tastes for products differ

​_____ is a situation in which a country does not trade with other countries. The​ _____ is the ratio at which a country can trade its exports for imports from other countries.

​Autarky, terms of trade

Using the economic concept of comparative​ advantage, explain under what circumstances it would make sense for the United States to produce all of the​ T-shirts purchased in the United States. The United States should produce all of the​ T-shirts purchased in the United States if the U.S. could produce

​T-shirts at lower opportunity cost than other countries