CH 9

​ Refer to Figure 9-6. The size of the tariff on roses is

$1.

Refer to Figure 9-6. Without trade, the equilibrium price of roses is

$4 and the equilibrium quantity is 300.

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

97 percent

Tariff

A tax on goods produced abroad and sold domestically

Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the world price of televisions to the price of televisions in Teeveeland, we can determine whether

All of the above are correct.

The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic sellers of soybeans if

Canada forbids international trade in soybeans.

Price takers

Market participants that cannot influence the price so they view the price as given

World price

The price of a good that prevails in the world market for that good

A quota is

a limit on the quantity of imports.

Refer to Figure 9-8. The price corresponding to the horizontal dotted line on the graph represents the price of cars

before trade is allowed.

Trade among nations is ultimately based on

comparative advantage.

When the nation of Isoland opens up its steel market to international trade, that change

creates winners and losers, regardless of whether Isoland ends up exporting or importing steel.

An important factor in the decline of the U.S. textile industry over the past 100 or so years is

foreign competitors that can produce quality textile goods at low cost.

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

if it fails the country faces a choice between two bad options.

The North American Free Trade Agreement

reduced trade restrictions among Canada, Mexico and the United States.

A tax on an imported good is called a

tariff.

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

the gains from trade are based on comparative advantage.

Workers displaced by trade eventually find jobs in

the industries in which the country has a comparative advantage.

Several arguments for restricting trade have been advanced. Those arguments do not include

the no-deadweight-loss argument.

A logical starting point from which the study of international trade begins is

the principle of comparative advantage.

The price of a good that prevails in a world market is called the

world price.