Econ103 Ch.7 - Exam 1

A tariff or quota will___ prices and ___ the consumption of the protected goods in the importing country.

raise; decrease

France must give up the production of 75 ties to produce 25 additional dress shirts. The opportunity cost of producing four dress shirts is _____ ties.

12

Collectively, people in nations that engage in international trade are likely to

Consume more than they could consume in the absence of trade

Your family's business, a manufacturer of plastic containers, depends on imports of recycled plastic pellets from Asia. Your supplier offers substantial volume discounts, so the larger your order of plastic the lower your production costs. Your family benefits from:

Economics of scale

In a single year, Germany can raise 100 tons of wheat or produce 1,000 boxes of daisies. In the same growing season, France can raise 50 tons of wheat or produce 750 boxes of daisies. When the two countries began trading wheat for daisies, consumer surplus from wheat consumption will:

Fall in Germany

If a country's domestic price of a good is below the world price of the good, then with trade, the domestic quantity supplied of the good will be _____ the domestic quantity demanded.

Greater than

Which statement describes a source of comparative advantage

Hawaii has a more favorable climate for the cultivation of tropical fruit than England has. Other options: In general, France has an absolute advantage over Italy in the production of goods and services The US airplane design technology is equivalent to that of India Canada has a many trees that can be used to produce lumber as the US has

Suppose the United States places a tariff on imported Brazilian ipe. As a result of the tariff, the domestic price of lumber will______, consumer surplus will_______ are producer surplus will ________

Rise, fall, rise

South Korea's comparative advantage in cellular technology can be attributed to

Specialized skills

Which of these is a source of comparative advantage

Specialized skills

The job creation argument for protection against free trade is

That restricting imports allows for greater domestic production

Your artisan candle stick manufacturing business is doing well domestically, so you decide to expand it to other countries. As you would like to make many international sales, you hope:

The dollar will depreciate against other currencies

If you and your group partners assign various tasks for a project in the most efficient way possible, then it is likely that:

You got a task in which you have a comparative advantage

A trade cost

an extra cost incurred as a result of buying or selling a good abroad rather than domestically.