econ 2302 ch. 26

Refer to the diagram, which pertains to two nations and a specific product. The equilibrium level of exports and imports occurs at

H, where GB and FC intersect.

Which of the following statements is false?

As a percentage of GDP, U.S. exports are the highest among the industrially advanced nations.

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size. Alpha's production possibilities A B C D E Fish (Tons) 80 60 40 20 0 Chips (Tons) 0 5 10 15 20 Beta's production possibilities A B C D E Fish (Tons) 240 180 120 60 0 Chips (Tons) 0 10 20 30 40

Beta is more efficient than Alpha both in catching fish and in producing chips.

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities A B C D E Tea 120 90 60 30 0 Pots 0 30 60 90 120 Sigma's production possibilities A B C D E Tea 40 30 20 10 0 Pots 0 30 60 90 120 On the basis of this information,

Gamma should export tea to Sigma, and Sigma should export pots to Gamma.

"NAFTA" stands for

North American Free Trade Agreement.

Research studies indicate that

U.S. consumers lose more from tariffs than U.S. producers gain.

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

a nation's trading possibilities line lies to the right of its production possibilities line.

The United States' most important trading partner quantitatively is

canada

Countries engaged in international trade specialize in production based on

comparative advantage

Consider This) The greatest benefit to an economy from international trade is

consumption beyond domestic production possibilities.

Differences in production efficiencies among nations in producing a particular good result from

different levels of technological knowledge. different amounts of skilled labor. different endowments of fertile soil. ALL OF THESE!!^^^

In order for mutually beneficial trade to occur between two otherwise isolated nations,

each nation must be able to produce at least one good relatively cheaper than the other.

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will

export wheat

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will

import copper

Answer the question on the basis of the accompanying production possibilities tables for two countries, Latalia and Trombonia. Latalia's production possibilities A B C D E Pork (Tons) 4 3 2 1 0 Beans (Tons) 0 5 10 15 20 Trombonia's production possibilities A B C D E Pork (Tons) 8 6 4 2 0 Beans (Tons) 0 6 12 18 24 In Latalia the domestic real cost of 1 ton of pork

is 5 tons of beans

The "eurozone"

is the subset of the EU that uses a common currency.

Tariffs

may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).

The primary gain from international trade is

more goods than would be attainable through domestic production alone.

If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B,

mutually advantageous specialization and trade between A and B may still be possible.

In the real world, specialization is rarely complete because

nations normally experience increasing opportunity costs in producing more of the product in which they are specializing.

Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will

neither export nor import the product.

In a two-nation model, the equilibrium world price will occur where

one nation's export supply curve intersects the other nation's import demand curve.

Excise taxes on imported goods that help shield domestic producers of the good are called

protective tariffs

The terms of trade reflect the

ratio at which nations will exchange two goods.

An excise tax on an imported good that is not produced domestically is called a

revenue tariff.

Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price for this product is $0.50, this nation will experience a domestic

shortage of 160 units, which it will meet with 160 units of imports.

In comparing a tariff and an import quota, we find that

the tariff generates revenue for the U.S. Treasury, but the quota does not

Export supply curves are __________________; import demand curves are ___________________.

upsloping; downsloping