IT Econ Exam 2

The pattern of protection in industrial countries is particularly harmful to the interests of

lowminus−income developing countries.

Trade models built exclusively on the idea of comparative advantage have a ___________ record when it comes to predicting a​ country's trade patterns.

mixed

In the figure to the right the curve labeled P​ shows, for a​ "typical" monopolistically competitive​ market, the relationship between product price and the number of firms. This curve is negatively sloped because

more firms give rise to more intense competition, and hence a lower price.

If a home country forces home firms to follow home environmental standards when home firms operate at home or in a foreign​ location,

pressures for a race to the bottom will decrease.

If a nation protects an industry because it believes that there are positive externalities in the production​ process, it is asserting that the free market will

produce less than is optimal from​ society's point of view.

One reason why producers have an incentive to organize in favor of protection is because

producer gains are relatively concentrated.

The international labor organization ( ILO) proposes that five labor standards are basic rights. these include

prohibition of forced labor the right to organize and bargagin collectively

The International Labor Organization​ (ILO) proposes that five labor standards are basic rights. These include

prohibition of forced labor. the right to organize and bargain collectively.

Compared with free​ trade, large countries may increase national welfare when they place a tariff on imports. What unique aspect of large​ countries, explains this​ conclusion? Large countries

reduce the world price of the import when they levy a tariff

A "race to the bottom" refers to a situation where countries try to compete against each other for investment by

reducing their standards on labor, environmental, or other policy issues

A​ "Race to the​ Bottom" refers to a situation where countries try to compete against each other for investment by

reducing their standards on​ labor, environmental, or other policy issues.

When it comes to the gains from​ trade, economies of scale that are external tend to produce

results that are uncertain and even potentially harmful

Separate standards refers to

separate standards held by different trading partners which other partners refuse to recognize.

Internal economies of scale means that

simply expanding the size of the market the firm serves reduces overall per unit costs, since the firm can spread costs over more output

A countervailing duty is a tariff that is levied to counteract

subsidies given to foreign firms by their own governments.

Which of the following is not a tariff pattern of the major world​ traders?

tariffs are higher to economically hostile countries

A product is produced in a monopolistically competitive industry with economies of scale. If this industry exists in two​ countries, and these two countries engage in trade one with the​ other, then we would​ expect:

that this trade will lead to greater product differentiation.

Under free​ trade, a digital SLR camera sells for​ $1000. If the U.S. imported the parts to produce a digital​ SLR, the free trade price of the parts would be​ $550. U.S. digital SLR producers will receive the highest​ "Effective Rate of​ Protection" if

the U.S. introduces a​ 25% tariff on imported digital SLR cameras.

All of the following are responsible for the removal of the formal trade barriers except

the World Bank and the IMF.

mutual recognition of standards refers to

the acceptance or keeping of a trading partners standards as valid and sufficient by another trading partner

An economic sanction is least likely to succeed when

the alleged violating country is a​ large, not-so-friendly trading partner.

What​ factor(s) can cause private returns from production to be smaller than social returns of​ production?

-Capital market​ imperfections, where firms with new and sound ideas are unable to attract financing. -Knowledge​ spillovers, where firms learn from each other. -The inability to coordinate activities between​ firms, when the success of an industry requires multiple players to enter simultaneously.

If output more than doubles when all inputs are​ doubled, production is governed​ by:

increasing returns to scale.

high-income industrial nations such as the United states and japan tend to have their highest tariffs in

agriculture, clothing, and textiles

Free trade in goods is predicted to

all above

A pollution haven is said to exist when

an economic activity becomes concentrated in countries or regions having less strict environmental controls than elsewhere.

Dumping occurs when

an exporter sells a product in a foreign market below its domestic cost.

Internal economies of​ scale:

are more likely to be associated with an imperfectly competitive industry.

Using the HO​ model, assume that the United States is capital abundant and Mexico is labor abundant. If soybeans are capital intensive and avocados are labor​ intensive,

avocado prices in the United States will fall once trade begins.

Monopoly powers given to domestic utility companies to create economies-of-scale might unintentionally

be an obstacle to increased international trade.

A country may choose to levy a countervailing duty on imported products if the imported products

benefit from subsidies.

Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural resource intensive and computers are capital​ intensive, then according to the Stolperminus−Samuelson ​Theorem, the incomes of the owners of​ __________ are likely to rise in Brazil after trade with Chile begins.

capital

A country, such as the U.S., is allowed to use anti-dumping duties if the price a foreign exporter

charges for the products it sells in the U.S. is less than the price charged in the exporters market, and U.S. firms are harmed by import of the product

A​ country, such as the​ U.S., is allowed to use​ anti-dumping duties if the price a foreign exporter

charges for the products it sells in the U.S. is less than the price charged in the exporters​ market, and U.S. firms are harmed by import of the product.

When countries try to ban child​ labor,

child labor often goes​ underground, with children working in the informal​ economy, family enterprises and remote areas.

Harmonization of standards refers veto

common product safety, environment, labor, and fair competition standards agreed upon by trading partners

what advantage is the foundation of our understanding of the gains from trade and the potential income distribution effects of trade.

comparative advantage

Comparing U.S. trade with France and Chile​, trade with ChileChile is more likely to be based on _______. The basis of trade between the U.S. and Chile, as revealed​ above, follows from the fact that the two countries have

comparative advantage dissimilar productivity, technology, and factor endowments

The figure to the right shows the effects of a tariff on imports in the case of a country not large enough to affect the world price. According to this​ graph, the income distribution effects are The imposition of a tariff on imports also has resource allocation effects. In the figure to the right, these effects are

consumer surplus falls by​ (a + b​ + c​ + d), with some transferred to producers​ (a), some transferred to government​ (c), and some destroyed​ (b +​ d). a production inefficiency (b) and a consumption inefficiency (d).

The Uruguay Round of the GATT​ (1986-93) began a process of phasing out the use of voluntary export restraints​ (VERs). This form of quota came into widespread use in the 1980s because governments came to see them as being Given that VERs are a form of​ quotas, and that they create quota rents and a larger reduction in national welfare than a​ tariff, nations still used them instead of tariffs because voluntary export restraints avoid the obligations nations share under the rules of the GATT to .

"politically safe to use" not raise tariffs

What​ factor(s) can cause private returns from production to be smaller than social returns of​ production?

-Knowledge​ spillovers, where firms learn from each other. -Capital market​ imperfections, where firms with new and sound ideas are unable to attract financing. -The inability to coordinate activities between​ firms, when the success of an industry requires multiple players to enter simultaneously.

What problems may be created by home country tariff​ policies?

-Limited innovation by home firms. -Trade policy retaliation by trade partners. -Rent seeking.

When the social returns from production are larger than the private returns from production

-Market output is below the social optimum. -Prices are too high.

What are ways to realize the benefits of trade and resolve standards​ conflicts?

-Require labels for exports. -Used home country standards for home country firms operating in a foreign country. -Use international organizations as a forum for negotiations.

When the United States signed a​ free-trade agreement with Canada​ (1989), no one thought twice about it. When the agreement with Mexico was signed​ (1994), there was significant opposition. The concepts of interindustry and intraindustry trade can explain the differences in opposition to the two trade agreements in the following​ manner:

-Substantial​ productivity, technology, and factor endowment differences between the U.S. and Mexico make trade between them​ interindustry, and this type of trade is seen as more threatening to jobs and firms. -Given the​ productivity, technology, and factor endowment similarities between the U.S. and​ Canada, trade between the two is​ intraindustry, and such trade generally yields greater benefits than interindustry trade. -Trade between the U.S. and Mexico is interindustry​ trade, and such trade is comparative​ advantage-based. While consumers get the benefit of lower import prices with such​ trade, they also face the hardship of paying higher prices for export goods.

When​ high-definition television​ (HDTV) was first considered a possibility in the United​ States, the U.S. government held a competition to select the technical standards that would be used nationwide. Why would the government see an advantage to setting one​ standard? For the private businesses that were interested in producing for the U.S.​ market, a​ "pro" was the chance to have Alternatively, a​ "con" for those early producers was the possibility of

-The adoption of common standards allows states to work together and expand their commercial ties. -Shared standards permit manufacturers to capture economies of scale. -With a newly introduced product​ (such as​ HDTV) where the​ "best standards" are​ unknown, it may be wise to hold a competition to prevent locking into or adopting inferior standards. their product adopted as the standard both of the choices posed risks for early producers

Which of the following is a reason why the use of trade barriers to enforce labor or environmental standards may be less efficient than other​ measures?

-The imposition of trade barriers may make conditions worse rather than​ better, since some producers may move their facilities into the informal sector of the economy. -Without a coalition of​ countries, which are difficult to​ assemble, the trade barriers may be ineffectual. -Trade barriers are very​ costly, creating deadweight losses in consumption and production at home. -The trade barriers may come to be exploited by special interest groups for ulterior motives.

The creation of an integrated market as a result of international trade results in

-a wider range of choices for consumers. -more​ firms, each operating at a larger scale. -lower prices.

Standards vary across countries because In the area of labor​ standards, variation tends to be substantial. For which of the following labor standards is there no ​variation?

-economic conditions and living standards vary dramatically across​ countries, and standards undoubtedly reflect these underlying conditions. -many standards reflect history and​ culture, and these clearly vary widely across countries. -national laws and regulations are usually initially adopted for strictly domestic​ reasons, and these reasons obviously differ from country to country. none of above

If an industry has technological​ externalities, an infant industry policy is justified

-if the industry experiences falling costs. -if the protection offered is temporary.

The labor argument for​ tariffs, argues that it is unfair for a country to face imports from countries that have lower wages. The​ problem(s) with this argument

-it ignores the fact that tariffs or quotas are an expensive method of saving jobs. -is that it ignores the fact that cross country wage differences reflect productivity differences.

A country may actually make itself better off by levying a tariff if

-it is large enough to affect the world price when it imposes a tariff. -there are no harmful effects on innovation. -no rent seeking behavior occurs. -other nations do not retaliate.

some proponents of trade sanctions argue for changes in policy because they fear low standards will be used to capture markets and foreign investment. while theoretically possible, there is little or no support for the view that countries use low labor standards in this way, because

-low standards can reduce costs, but they cannot change a country's comparative advantage -countries with low labor standards generally have trouble attracting foreign investment

The​ "Uruguay Round" of trade talks resulted in

-measures regulating the treatment of intellectual property. -new measures for trade dispute settlement. -the formation of the World Trade Organization.

what externalities may arise in low income country after trade barriers are removed?

-more incentives exist to exploit differences in environmental regulations to gain a cost advantage -more incentives exist to exploit certain low-wage sectors of the population, such as children, to gain a cost advantage -more incentives to increase specialization to exploit comparative advantage, leading to bigger losses to less productive sectors of the economy

The creation of an integrated market as a result of international trade results in

-more​ firms, each operating at a larger scale. -a wider range of choices for consumers. -lower prices.

Market failures occur whenever

-social returns may be greater than private returns. -monopolies exist in a market. -the free market produces less than what is socially optimal. -private returns may be greater than social returns.

Given that tariffs and quotas cost consumers and that they are a grossly inefficient means for creating or preserving​ jobs, citizens nevertheless allow these policies to exist because

-the costs of tariffs and quotas are diffused throughout an entire​ nation, while the benefits are concentrated. -incentives to organize around the issue of trade policy are asymmetric.

External economies of scale happen when

-there is a dense network of input suppliers. -the presence of a large number of producers in one area helps to create a deep labor market for specialized skills. -there are knowledge spillovers.

Your text mentions several ways that international trade flows are qualitatively different than they were a century ago. Which of the following is NOT one of those​ ways?

. International trade in raw commodities and agricultural products is more important than it was in the past.

The primary mission of the World Bank today is to

. provide capital to underdeveloped countries.

Scenario 6.1 Suppose that United States furniture makers import​ $100 of wood and parts in order to make a dining room table selling for​ $500. The imports have no tariff of quota restrictions. Based on Scenario 6.1​ above, if a tariff of 20 percent is placed on imports of dining room​ tables, the effective rate of protection is

25 percent

Which of the following kinds of agreements between two or more countries would be an example of a deep integration​ measure?

A. An agreement to impose the same limits on cartels and monopolies

If two countries agree to specialize and trade based on comparative​ advantage, which of the following is most likely to be​ TRUE?

A. Both of the countries will consume outside their respective production possibilities curves.

If a nation has no absolute​ advantage, then it

A. still gains from trade.

An essential feature of geographical concentration is its​ self-reinforcement. Why does this occur​ mostly?

Agglomeration economies.

The agreement signed after the Uruguay Round of the General Agreement on Tariffs and Trade included coverage in several new areas of trade and investment. Which of the following is not one of those new​ areas?

Agriculture and agriculture support policies

The inverse relationship between market size and product price occurs​ because:

An increase in market size allows each firm to produce more and thus have a lower average cost. The resulting economic profit entices new firms to​ enter, putting downward pressure on price.

Of the industries listed​ below, which one does not receive significant protection from either or both the United States and​ Japan? American and Japanese trade barriers have their greatest effect upon ________ nations.

Automobiles low- income

What obstacles to increased international economic integration begin to appear after trade barriers are​ removed?

A​ country's domestic regulations may unintentionally limit international commerce for that country. Each country may set up different​ standards, generating conflicts over enforcement and application.

Which of the following DOES NOT help to reduce the frequency of child​ labor?

A​ country's movement away from manufacturing and towards more agricultural production.

When are preferential trade agreements​ welfare-improving?

B. When they lead to net trade creation.

A free trade agreement plus a common set of tariffs toward nonminus−members is called

B. a customs union.

Assume the U.S. currently grows 2.52.5 million tons of fresh winter fruit and that the resources absorbed in the production of this fruit could have produced 275 comma 000275,000 laptop computers.​ Therefore, the opportunity cost of those 2.52.5 million tons of fruit is 275000275000 computers. Suppose that South America could have instead produced those 2.52.5 million tons of fruit at an opportunity cost of​ 150,000 laptops. Because of the difference in opportunity costs between the two​ regions, it can be shown that trade gives the possibility of

B. a mutually beneficial rearrangement of world production.

Suppose a country has two​ factors, land and​ labor, and assume that wheat is a​ land-intense product. If the relative price of wheat increases by 10​ percent, the​ "magnification effect" implies that

B. the income earned by land owners will increase by more than 10 percent.

Suppose the​ "Effective Rate of​ Protection" for Brazilian automobile producers is calculated to be

Brazilian automobile producers would be better off if Brazil adopted free trade for all parts and final goods.

Which of the following is​ FALSE?

C. A common market is more deeply integrated than an economic union.

Which of the following kinds of agreements between two or more countries would be an example of a shallow integration​ measure?

C. An agreement to unify customs forms in order to speed up crossminus−border traffic

Why was the IMF​ created?

C. To manage the system of fixed exchange rates after World War II.

The trademinus−tominus−GDP ratio is calculated by

C. exports plus imports divided by GDP.

The international organization that serves as a forum for trade discussions and the development of trade rules is called

C. the WTO.

A country possesses a comparative advantage in the production of a product if

C. the opportunity​ cost, in terms of the amount of other products that it gives up to produce this​ product, is lower than it is for its trading partners.

One important difference between the international economy of today and the economy of 100 years ago is

C. the presence of international bodies such as the IMF and World Bank.

International economics can be divided into two broad​ subfields:

C. trade of production output​ (products and​ services), and trade of production input​ (capital and​ labor).

Which of the following is not among the measures economists examine to assess the degree of globalization and international economic​ integration?

D. Number and complexity of trade agreements

Assume the U.S. currently grows 2.52.5 million tons of fresh winter fruit and that the resources absorbed in the production of this fruit could have produced 275 comma 000275,000 laptop computers.​ Therefore, the opportunity cost of those 2.52.5 million tons of fruit is 275000275000 computers. Suppose that South America could have instead produced those 2.52.5 million tons of fruit at an opportunity cost of​ 150,000 laptops. Because of the difference in opportunity costs between the two​ regions, it can be shown that trade gives the possibility of

D. a mutually beneficial rearrangement of world production.

Made in the USA or Made in China has less meaning for products that

D. are a product that is technological and involves assembling many different types of sometimes sophisticated components.

The economic philosophy that favors strict limits on imports and strong support for exports is called

D. mercantilism.

The Stolperminus−Samuelson Theorem predicts

D. the income distribution effects of trade.

Trade and capital flows were described and measured in relative terms rather than absolute terms. The difference between the two is that

D. the latter are the dollar amounts of trade and capital flows and the former are the ratio of dollar values to GDP. Your answer is correct. With respect to indicating the importance of trade and capital flows to an​ economy, the terms that seem more valid are relative terms because such terms are proportional to the size of national economies.

The Heckscherminus−Ohlin Theorem predicts

D. which goods will be exported.

Which of following is TRUE?

GENERALly, the lower the country's average income, the less administrative, scientific, and technical capacity it has to design and enforce standards

An import​ quota:

Generates rents that might go to foreigners.

With respect to the size of​ firms, external and internal economies of scale have

differing​ implications; with internal​ economies, large firms are likely to emerge while external economies tend to yield​ smaller-sized firms.

Why do critics of trade want to use trade barriers to enforce environmental​ regulations?

Environmental standards reduce competitiveness. Polluting industries in countries with standards relocate to countries with lower standards.

Which of the following is NOT a reason social returns might be greater than private​ returns?

Excess competition between firms

​"Cheap foreign​ wages" is a poor argument for protection because it fails to recognize the importance of productivity. Which of the following does NOT contribute to increasing​ productivity?

Government subsidies

How do economies of scale give rise to international​ trade? These economies of scale are ________ economies of scale.

International trade occurs because economies of scale make a comparative advantage. internal

Which of the following is NOT true about the​ VER?

It benefits the exporting country as a whole

Which of the following is TRUE about monopolistic​ competition?

It is competition among many firms producing similar but differentiated products.

Why do internal economies of scale lead to imperfectly competitive​ industries?

Large firms have cost advantages over small firms.

vWhy do internal economies of scale lead to imperfectly competitive​ industries?

Large firms have cost advantages over small firms.

Which of the following is not the reason for external economies of​ scale?

Large fixed costs.

Table 3.1 Output per Hour Worked Based on Table​ 3.1, which country or countries has an absolute advantage and a comparative advantage in​ shoes?

Mexico has a comparative​ advantage, and the United States has an absolute advantage in shoes.

What externalities may arise in a low income country after trade barriers are​ removed?

More incentives exist to exploit differences in environmental regulations to gain a cost advantage. More incentives exist to exploit certain​ low-wage sectors of the​ population, such as​ children, to gain a cost advantage. More incentives to increase specialization to exploit comparative​ advantage, leading to bigger losses to less productive sectors of the economy.

Labor and environmental interests differ on which complaints against​ trade?

None of the above. Labor and environmental agree on all of the above complaints. . -Lower standards create a​ "race to the​ bottom" in standards. -High standards countries either lower their standards or lose business. -Differing standards result in a lack of​ fairness, giving those with lower standards an advantage.

Which of the following is not one of the three ways for countries to handle different standards abroad? In order for countries to be​ integrated, standards

Optimization of standards can differ, even persistently

What problems may be created by home country tariff​ policies?

Rent seeking. Limited innovation by home firms. Trade policy retaliation by trade partners.

Sales and excise taxes are an alternative to tariffs as a method of government revenue generation. Why​ can't government simply subsidize a protected industry by taxing unprotected​ industry?

Tariffs are easier to collect at boundary lines​ (country borders).

Which of the following would be a deadweight loss from a​ tariff?

The decrease in consumer surplus due to a drop in consumption

In addition to the production and consumption side of deadweight​ losses, a variety of other potential costs of tariffs have been identified. Which of the following is not one of those​ costs?

The likelihood of excessive growth in the protected industry.

The figure above indicates that when the country moves from free trade to the tariff equilibrium

The net effect on the​ country's welfare is a loss whose magnitude is given by the area​ "b + d"

Which of the following would NOT be associated with the LATE PHASE of the product​ cycle?

There is experimentation and improvement in design and manufacturing.

What is the main problem with imposing environmental​ standards?

They can cause potential export industries to shut down in poor countries.

The two industries most commonly receiving protection​ are:

agriculture and clothing.

Most regional trade and WTO agreements practice

a combination of​ harmonization, mutual​ recognition, and separate standards.

The figure to the right shows Home's monopolistically competitive software market. Suppose that initially the market contains 9 firms. In this case the software market can be expected to experience

a decrease in the number of firms.

The figure to the right shows​ Home's monopolistically competitive software market. Suppose that initially the market contains 99 firms. In this case the software market can be expected to experience

a decrease in the number of firms.

Harmonization of standards implies that countries decide to

adopt a common set of standards in an area of​ concern, such as product safety or labor.

An industry in which economies of scale are predominantly external will tend toward a market structure known as

agglomerations

following the completion of the uruguay round in 1993

direct agricultural subsidies were curtailed,. but indirect payments to support farmer income were allowed

Following the completion of the Uruguay round in​ 1993,

direct agricultural subsidies were​ curtailed, but indirect payments to support farmer income were allowed.

The GATT strongly favors tariffs as a protective measure over quotas or other nontariff measures. It encourages new members to convert quotas to their tariff equivalents. One of the main reasons that tariffs are preferred is because they are more​ transparent, particularly by comparison to nontariff measures. Transparency refers to the ability of all participants to easily Nontariff barriers such as​ quotas, health and safety​ codes, product​ standards, etc. tend to be less transparent than tariffs because they

discover and understand the rules . -are often associated with special circumstances known only to a select few. -often require careful and precise interpretation.

Comparing U.S. trade with Germany and Brazil​, trade with Germany is more likely to be based on The basis of trade between the U.S. and Germany​, as revealed​ above, follows from the fact that the two countries have

economies of scale similar ​productivity, technology, and factor endowments

Most of the​ world's aluminum is smelted in Norway or Canada. Half of the​ world's large jet aircraft are assembled in Seattle. Most semiconductors are manufactured in either the United States or Japan. Most Scotch whiskey comes from Scotland. Much of the​ world's best wine comes from France.

economies of scale economies of scale economies of scale comparative advantage comparative advantage

External economies of scale occur when average costs of a​ firm:

fall as the industry grows​ larger, but may or may not rise as the representative firm grows larger.

Internal economies of scale occur when the average costs of the​ firm:

fall as the representative firm grows larger.

One reason markets may fail to provide the optimal quantity of public goods is the problem of

free riders

high income countries have tariff policies that generally have

higher tariff and quota protection on products in agriculture, and clothing and textiles

High income countries have tariff policies that generally have

higher tariff and quota protection on products in​ agriculture, and clothing and textiles.

if an industry has technological externalities, an infant industry policy is justified

if the protection offered is temporary if the industry experiences falling costs

One common critique of the WTO is that it overturns national environmental protections and forces countries to lower their standards. For​ example, when the United States tried to protect endangered sea​ turtles, the WTO prevented it. This action illustrates that

individual countries can raise their​ standards, but must do so in accordance with WTO rules.

international trade in products made between different industries is called _______ trade

interindustry

international trade in products made within the same industry is known as __________ trade

intraindustry

The simultaneous export and import of textiles by India is an example​ of:

intraindustry trade.

Escape clause relief to assist domestic firms

is authorized by the U.S. and by GATT rules.

One reason that a large share of the trade between high - income industrial economies is intraindustry trade is because

it allows firms to take advantage of internal economies of scale.

Export labels provide an alternative to the use of trade barriers to promote environmental standards in partner trading​ countries, since

labels might allow customers to determine whether products were produced in an environmentally sustainable fashion.

Consider an oligopolistic​ market, such as the market for laptop computers. If a producer leaves the​ market,

laptop prices will rise and output per firm will increase.

Where there are economies of​ scale, an increase in the size of the market will

lead to more firms producing and selling in that market and lower the price per unit.

Empirical studies have found that countries with low labor standards generally attract less foreign investment due to

low labor standards are highly correlated with labor forces that are unskilled and illiterate. countries with low labor standards are often high cost​ locations, since these countries often have poor infrastructure in terms of​ roads, communications, power supply and schools.

Suppose the U.S. decided to use a quota to limit cell phone imports. Assume the U.S. is a small country. If the U.S. used an auction to allocate quota rights

the auction could generate revenue that was roughly equal to the revenue generated by a tariff which limited imports to the level allowed under the quota.

The logic of collective action explains the persistence of tariffs and quotas as an outcome that is driven by the asymmetry between

the benefits concentrated in the hands of the few​ firms, versus the costs distributed across many consumers.

which of the following describes the asymmetry moncur olson observed in the incentives to support and oppose trade policy?

the benefits of policy are concentrated, and the costs are spread out over a large number of participants

When economists talk about the gains from trade they mean that

the benefits of trade outweigh the losses.

Where there are economies of​ scale, the scale of production possible in a country is constrained​ by:

the combined size of the domestic and foreign market.

One reason why consumers are unlikely to be too upset about tariffs is because

the costs are so spread out that no one pays a big share of the total.

the biggest flaw in the logic of the labor argument is the failure to consider

the differences in national productivity levels

The biggest flaw in the logic of the labor argument is the failure to consider

the differences in national productivity levels.

Based on Figure​ 6.1, how much revenue will the government raise from a​ $0.25 per bushel tariff on soybean​ imports?

the government will raise $5 million

In a small​ country, the net national cost of tariff protection is equal to the reduction in consumer surplus minus

the increase in government revenue and the increase in producer surplus.

Domestic firms operating abroad may find it economically beneficial to adopt environment

the least−cost strategy usually involves the adoption of one set of environment−friendly technology rather than multiple standards.

A major difficulty with the infant industry argument for protection is that

the measurement of production externalities is hard and uncertain.

In the figure to the right the curve labeled AC shows for a typical" monopolistically competitive​ market, the relationship between average cost and the number of firms. This curve is positively sloped because

the more firms there are, the less each firm produces.

In the figure to the right the curve labeled AC​ shows, for a​ "typical" monopolistically competitive​ market, the relationship between average cost and the number of firms. This curve is positively sloped because

the more firms there​ are, the less each firm produces.

The notion that trade policy often imposes costs on large numbers of​ people, and benefits only a few is explained by

the problem of collective action

the notion that trade policy often imposes costs on large numbers of people, and benefits only a few i.es explained by

the problem of collective action

​Tijuana, Mexico is across the border from San​ Diego, California. It has become a worldminus−leading producer and exporter of television sets and computer​ monitors, which it assembles in modern factories owned by multinational consumer electronics firms such as Sony. ​ Initially, these electronics were produced in the industrialized countries of their parent​ companies, and after several​ years, the production moved to Tiajuana This is an example of

the product cycle

Requiring home country firms to use home country standards in a foreign country would not usually involve adopting

the same wage and benefit scale for employees.

Economists use the term opportunity cost to refer to

the value of the next best alternative occurring as a result of making a particular choice.

Under free​ trade, a digital SLR camera sells for​ $1000. If the U.S. imported the parts to produce a digital​ SLR, the free trade price of the parts would be​ $550. If U.S. producers produce digital SLRs under these conditions

their​ value-added equals​ $450.

when a country must resort to tariffs for protection, the result is considered a "second best" solution, which means the tariff is not the most efficient action. this result occurs because

there are always deadweight losses to market interventions

When a country must resort to tariffs for​ protection, the result is considered a​ "second best"​ solution, which means the tariff is not the most efficient action. This result occurs because

there are always deadweight losses to market interventions.

Developing countries are usually unwilling to negotiate over labor standards because

they fear that industrialized nations are trying to undermine their comparative advantage—production of agriculture and ​textiles/apparel—and close the markets of high−income countries in these areas.

Developing countries are usually unwilling to negotiate one labor standards because

they fear that industrialized nations are trying to undermine they comparative advantage- production of agriculture and textiles/apparel- and close the markets of high-income countries in these areas

Infant industry protection requires

time limited protection. a positive technological externality.

​Historically, one of the most common reasons for countries to impose tariffs was

to raise revenue for the government.

A country that imports goods produced under conditions of external economies of scale may suffer if

trade stifles the development of new industries that could be more efficient than the existing ones.

international negotiations are especially appropriate when environmental problems are

transboundary in nature

International negotiations are especially appropriate when environmental problems are

transboundary in nature.

If social returns to the production of a good are greater than private​ returns, then we can conclude that relative to the social​ optimum, the good will be

under produced and over priced.

An example of social costs being greater than private costs is

water pollution.

It is possible for one country to use trade barriers to pressure another country into altering its labor standards

when the country using the trade barriers is a large country.

Which list places regional trade agreements in an order moving from the least provisions to the​ most?

​Free-trade Area, Common​ market, Economic Union.

What is the main problem with imposing labor standards to prevent child labor and poor working conditions in the exporting sector of a​ less-developed country?

​Less-developed countries are opposed to them.

Suppose Canada exports cars and imports furniture. This is an example of

​inter-industry trade.

Labor standards are Arguments about labor standards are confined primarily to arguments between​ high-income countries on the one​ hand, and​ low- and​ middle-income countries on the other because these countries have underlying conditions that are very

​multifaceted, covering both basic rights​ (freedom form forced​ labor) as well as civic rights​ (union representation). dissimilar