Macroeconomics Ch 9

Imports.

A tariff is a tax imposed by a government on

a voluntary export restraint.

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

comparative advantage.

An economic principle that explains why countries produce different goods and services is

does not trade with other countries.

Autarky is a situation in which a country

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

Dumping refers to

Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never "growing up."

Economists believe the most persuasive argument for protectionism is to protect infant industries. But the argument has a drawback. What is this drawback?

sold to other countries.

Exports are domestically produced goods and services

Q2

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded?

$24

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. What will the market price be?

R.

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Under autarky, the consumer surplus is area

$30

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Under autarky, the equilibrium price is

S + V.

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Under autarky, the producer surplus is area

imports

Goods and services bought domestically but produced in other countries are referred to as

Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter.

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden, which of the following would explain this pattern of trade?

mutually beneficial trade is possible.

If the opportunity costs of production for two goods is different between two countries, then

voluntary export restraints

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to limit their exports to a country. What are these types of agreements called?

limit their exports to a country.

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to voluntary export restraints. With voluntary export restraints, foreign producers

the true costs of production are difficult to calculate.

It is difficult to determine if foreign companies are selling their products for prices below their costs of production because

Linda has a comparative advantage in dog bathing.

Linda 60 (Bathing) 20 (Grooming) Sandy 50 (Bathing) 25 (Grooming) Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

at the lowest opportunity cost.

Many economists support trade agreements, maintaining that the agreements improve economic efficiency because they result in goods being produced

manufacturers who export to Canada.

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries. This protectionism will cause the greatest harm to

E.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. The tariff revenue collected by the government equals the area

imports 16 million pounds of rice.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. With the tariff in place, the United States

31 million pounds of rice.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. With the tariff in place, the United States consumes

9 million pounds of rice.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. Without the tariff in place, the United States produces

increase; decrease

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. In the market for steel, the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

reduce the foreign competition that domestic firms face.

The main purpose of most tariffs and quotas is to

a limit imposed on the number of sport utility vehicles that the United States can import from Japan

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

a limit on the quantity of tires that can be imported from a foreign country

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

a $150 fee imposed on all imported residential air conditioners

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

a limit set by the Korean government on the number of cell phones that the United States can import from Korea

Which of the following is the best example of a voluntary export restraint?

they believe the restrictions will protect their jobs.

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

Bryce has a greater opportunity cost than Tina for making candles.

​ Bryce 150 (Candles) 450 (Soap) Tina 200 (Candles) 450 (Soap) Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Tina has an absolute advantage in making candles.

​ Bryce 150 (Candles) 450 (Soap) Tina 200 (Candles) 450 (Soap) Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming.

​ Linda 60 (Bathing) 20 (Grooming) Sandy 50 (Bathing) 25 (Grooming) Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

Sandy's opportunity cost for dog grooming is less than Linda's.

​ Linda 60 (Bathing) 20 (Grooming) Sandy 50 (Bathing) 25 (Grooming) Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

Sandy has a comparative advantage in dog grooming.

​ Linda 60 (Bathing) 20 (Grooming) Sandy 50 (Bathing) 25(Grooming) Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

Sarita has an absolute advantage in baking pies and cakes.

​ Sarita 15 (Pies) 25 (Cakes) Gabriel 12 (Pies) 16 (Cakes) Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. Refer to Table 9-2. Select the statement that accurately interprets the data in the table.

Sarita's opportunity cost for baking cakes is less than Gabriel's.

​ Sarita 15 (Pies) 25 (Cakes) Gabriel 12 (Pies) 16 (Cakes) Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. Refer to Table 9-2. Select the statement that accurately interprets the data in the table.