chapter 21 practice ( econ)

suppose Canada can produce either 300 tons of paper of 200 HDTVs and India can produce either 200 tons of paper of 100 HDTVs. the terms of trade between the two countries will lie between

1/2 and 2/3 of HDTV per ton of paper

the benefits from international trade include

Greater efficiency in the use of the world's limited resources

comparative advantage in production is achieved by

Having a lower opportunity cost of producing a good relative to that of other countries.

two countries with differing comparative advantage may engage in trade because

They will be able to consume more goods in total due to specialization and trade.

Over a given period of time, if imports are greater than exports, the result is

a trade deficit

over a given period of time, if exports are greater than imports , the result is

a trade surplus

to ensure mutually beneficial trade, the terms of trade between two countries should always

be between their respective opportunity costs in production

assume belgium can produce 5 units of good X or 2 units of good Y. germany can produce 4 unites of good x or 3 units of good y. What would be the terms of trade between belgium and germany for 1 unit of good y?

between 4/3 and 5/2 unites of x

specilization in production and then trading with other countries

change the mix of output of each country and increases total world output

Suppose China can produce 200 TVs or 200 DVD players. South Korea can produce either 100 TVs or 200 DVD players. In terms of TV production we can conclude that

china has a comparative advantage in tv production

what should happen to the equilibrium price and quantity in a market as a result of a tariff on imports

equilibrium price should go up and equilibrium quantity should go down

A country with a comparative advantage in producing computer chips:

has a lower opportunity cost of producing computer chips than its trading partners

refer to figure 35.5 s1 represents the U.S domestic supply of a good and s2 represents supply in the united states under conditions of free trade. If the united states imposes a tariff on this good, what will happen to the quanitity imported ?

imports will decline as price increases and domestic production increases

specialization in production

increases output

a country has a comparative advantage in a good if

it can produce a good at a lower opportunity cost relative to another country

suppose the united states can produce 2,000 cars or 2,000 trucks. Japan can produce either 2,000 cars or 1,000 trucks. In terms of car production , we can conclude that

japan has a comparative advantage

suppose that brazil has a comparative advantage in coffee and Mexico has a comparative advange in tomatoes. Which of the following groups would be worse off id these countries specialize and trade

mexican coffe producers

suppose the production of 12 tons of copper in the united states requirers the same amount of resources as the production of 3 tons of aluminum. In Mexico, 12 tons of copper requires the same amount of resources as 2 tons of aluminum . Implicitly

mexico has a comparative advantage in producing copper

based on the information in table 35.1 assume china and the united states have the same amount of resources with which to produce soybeans and computers and they produce no other goods. For trade to be mutually beneficial for both countries, the terms of trade will be such that 1 computer will exchange for

more than 1/5 of a ton of soybeans but less than 1/3

Protectionism achieves which of the following goals?

protection of infant industries

the amount of good A given up for good B in trade is the

terms of trade

two countries will have zero incentive to trade if their production possibilites curves are parallel straight lines because

the opportunity costs for both countries are the same

if the united states has a trade deficit, this means that

the trade balance is negative

in figure 35.1 what is the opporunity cost of motorcyles in the united states

1 dvd players per motorcycle

if the two countries are at points A and B in figure 35.1 and do not trade , what is the total number of motocyles produced per year

3000