Econ 1: Final 4/4

provide protection to all industries; maintain the protections indefinitely

what the Department of Trade should not do for infant industry argument

will effect of a tariff

- a domestic market price above world price - decreased imports - deadweight loss

A farmer produces both beans and corn on her farm. If she must give up 16 bushels of corn to be able to get 6 bushels of beans, then her opportunity cost of 1 bushel of beans is ______________

2.67 bushels of corn

the unfair-competition argument

a common argument is that free trade is desirable only if all countries play by the same rules

tariff

a tax on goods produced abroad and sold domestically

what is an important role for World Trade Organization in international trade

attempts to minimize barriers to trade and assesses complaints of unfair trading from member countries

above the world price: lastly, consumer surplus in Cuba will...

decrease

T or F: Because the oil is produced domestically, residents of Sakhalin will pay less than the world price

false

T or F: Even after trade is open, the producer surplus and consumer surplus will be equal

false

T or F: In order for oil producers in Sakhalin to decide to export, the world price must be below the domestic price

false

imports

goods produced abroad and sold domestically

exports

goods produced domestically and sold abroad

what should the Department of Trade do for infant industry argument

have guidelines for when the policy will end; focus on a few key industries

above the world price: Cuban exports of grapefruits will...

increase

above the world price: the price of domestic Cuban grapefruit for consumers will...

increase

above the world price: while producer surplus in Cuba will...

increase

Absolute advantage can be determined by comparing different producers' ________

input requirement per unit of output

A gardener can produce either beans or corn in her garden. It follows that the gardener's opportunity cost of a bushel of beans multiplied by her opportunity cost of a bushel of corn is ______

is equal to one

the infant-industry argument

new industries sometimes argue for temporary trade restrictions to help them get started

Ireland taxes the import of potatoes in order to keep domestic farmers in business

operation of a tariff

the job argument

opponents of free trade often argue that trade with other countries destroy domestic jobs

The infant industry argument states that domestic industries should be ____________ foreign competition in the early stages of development so that the industry ______________

protected from; can mature

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

absolute advantage

the ability to produce a good using fewer inputs than another producer

which argument: The microprocessor industry is facing stiff competition from abroad, so the government decides to install a temporary tariff to allow the industry to become more competitive against its foreign competitors

the infant-industry

which argument: Phil works as a foreman in an auto manufacturing plant. After a downturn in the economy, his plant is being shut down and all of the manufacturing relocated to Fiji

the jobs

which argument: Otis heads a steel mining operation and hears that his company plans to move his job overseas. He responds that they should keep the company domestic because its operations provide materials for the country's domestic defense

the national-security

world price

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

the protection-as-a-bargaining-chip argument

the strategy of bargaining. argue that trade restrictions can be useful when we bargain with our trading partners

which argument: The government decides to place a tariff on platinum imports as it determines that mining practices abroad are not as strictly regulated as those domestically

the unfair-competition

T or F: As the country begins to export, producer surplus will increase

true

the national-security argument

when a industry is threatened with competition from other countries, opponents of free trade often argue that the industry is vital for national security