ch.9 micro

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800:

domestic producers will export 300 units

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $1,000:

domestic producers will export 600 units

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of a television is $500, buyers and sellers will make exchanges at a price of _____ because buyers will refuse to pay _____ than the world price.

$500; more

The North American Free Trade Agreement (NAFTA), signed in 1994, reduced trade barriers between the United States, Canada, and Mexico. NAFTA's supporters argued that lower trade barriers would reduce consumer prices and that increased trade would create more jobs in the United States. ----- Identify the reason or reasons why the creation of NAFTA could lead to lower consumer prices and job creation in the United States.

-- Mexico and Canada are likely to produce some consumer goods previously produced in the United States at a lower opportunity cost. As a result, American consumers will pay lower prices for these goods. -- Industries in which the United States has a comparative advantage will likely grow, thereby creating more jobs in the United States.

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800, the value of the consumer surplus is:

250,000

(Figure: Market for Engines) If there is no international trade in this market, the value of the consumer surplus is:

360,000

(Figure: Market for TVs 2) Suppose that the world price of TVs is $400, and the government imposes a $100 tariff. According to the figure, domestic consumers purchase _____ units from domestic producers and _____ units from foreign producers after the tariff.

40,000; 30,000

If Brazil imposes a tariff on imported American oranges, who would benefit the most?

Brazilian orange growers and the Brazilian government

Which of the following is LEAST likely to be traded internationally?

sports arenas

If the United States and China entered into a free trade agreement, abolishing all tariffs and quotas, who would benefit and who would lose in the United States?

Consumers of Chinese imports would win; American workers competing against Chinese goods would lose

In 2018, the unemployment rate in the United States went as low as 3.7%, as measured by the Bureau of Labor Statistics. This historically low level of unemployment occurred simultaneously with a large trade deficit. This provides evidence against which of the following arguments against international trade?

International trade may lead to job loss.

Suppose that one hour of labor in Singapore can produce 20 computers or 40 cellphones. Further, suppose that one hour of labor in Ireland can produce 10 computers or 15 cellphones. _____ has a comparative advantage in the production of computers. _____ has a comparative advantage in the production of cellphones.

Ireland; Singapore

If the United States were to export more of its supply of natural gas, what would happen to the price of natural gas in the United States?

The price of natural gas would rise in the United States.

If a Canadian lumber company can produce more plywood per worker than an American lumber company, should the United States export plywood?

Yes, if the United States' opportunity cost of producing plywood is lower than that of Canada.

A tariff is a:

a tax on imported goods

Argentina and Chile both produce copper and timber. If Chile produces copper much more efficiently than Argentina and timber slightly more efficiently than Argentina, _____ can benefit from trading copper and timber with each other.

both countries

Russia and Kazakhstan both produce horses and oil. If Kazakhstan is much more efficient than Russia in the production of horses and slightly more efficient than Russia in the production of oil, _____ can benefit from trading horses and oil with each other.

both countries

Colombia's main exports include coffee, flowers, bananas, and tropical fruit.---- Colombia exports these particular goods because

climatic conditions—mild temperatures, substantial rainfall, plentiful sunlight—make Colombia relatively more suitable for the cultivation of these goods than other countries.

During the 2016 presidential campaign, Bernie Sanders, a Democratic candidate, and Donald Trump, a Republican candidate, both denounced NAFTA as having a negative impact on jobs in the United States. In particular, they cited the impact on manufacturing jobs. ---- Free trade agreements may lead to reduced output and the loss of American jobs in certain industries because

in industries in which a trading partner has a comparative advantage, domestic firms typically lose market share.

Countries benefit from trade by exporting goods in which their opportunity costs are relatively _____ and importing goods in which their opportunity costs are relatively _____.

low; high

An import is a good or service:

purchased from a foreign seller

An export is a good or service:

sold to a foreign buyer.

Which of the following is NOT a trade cost?

the cost of producing a good

Which of the following is an example of a trade cost associated with a U.S. citizen importing a sweater produced in India?

the cost of the tariff on imported sweaters from India

(Figure: Imports and Exports) During the 2008 to 2009 financial crisis, imports as a share of GDP fell in the United States. Which of the following could explain this phenomenon?

the percentage decrease in imports was greater than the percentage decrease in GDP

Suppose Japan and South Korea can both produce the same amount of cars per worker, but Japan can produce more satellite dishes per worker. Does South Korea have a comparative advantage in either good?

yes, South Korea would have a comparative advantage in producing cars