HW ch 7

The term external economies refers to

the reduction of costs resulting from increases in the size of an industry in a given area.

Which of the following is a source of comparative​ advantage?

the relative abundance of capital and labor

​_____ is a situation in which a country does not trade with other countries. The​ _____ is the ratio at which a country can trade its exports for imports from other countries.

​Autarky, terms of trade

The United States practices​ "sugar protectionism" by

imposing a quota on sugar imports.

International trade has always played a role in the U.S. economy. Is this role increasing or decreasing​ (in terms of exports and​ imports)? International trade is

increasing because shipping costs have decreased.

​"Sugar protectionism" is viewed as a​ "job killer" because

it leads to job losses in the candy industry and various food manufacturing industries that use sugar.

In what way is sugar protectionism a burden on​ consumers? As far as the effect of​ "sugar protectionism" on U.S. consumers is​ concerned,

it raises the prices of sugar and candy that consumers have to pay and leads to a loss of consumer surplus.

We do not see complete specialization in the real world because

not all goods and services are traded​ internationally, production of most goods involves increasing opportunity​ costs, and tastes for products differ.

Protectionism is the use of trade barriers to shield domestic firms from foreign competition. Protectionism is usually justified on the basis of several arguments which​ include:

saving​ jobs, protecting infant​ industries, and protecting national security.

Assume the table below shows the quantities of computers and cell phones that a worker can produce in an hour in Japan and South Korea. computers cell phones Japan 2 28 South Korea 8 14 The opportunity cost of producing a computer in Japan is ______________cell phones and the opportunity cost of producing a computer in South Korea is _____________cell phones. ​ _________________ has a comparative advantage producing computers and_____________________ has a comparative advantage producing cell phones.

blank 1: 14 blank 2: 1.75 blank 3: South Korea blank 4: Japan

Among the main sources of comparative advantage are the​ following:

climate and natural​ resources, relative abundance of labor and​ capital, technology, external economies.

What is the difference between absolute advantage and comparative​ advantage? ________________advantage is the ability of an​ individual, a​ firm, or a country to produce a good or service at a lower opportunity cost than competitors. While _______________advantage is the ability of an​ individual, a​ firm, or a country to produce more of a good or service than competitors when using the same amount of resources. A country will always be an exporter of a good where it has _____________ advantage in production

comparative absolute a comparative

What is the name given to the sale of a product for a price below its cost of​ production?

dumping

Suppose Italy and Portugal produce only cloth and wine. Assume that each country uses only labor to produce each​ good, and that the cloth and wine made in Italy and Portugal are exactly alike. The table below shows how much each country can produce of each good with one hour of labor. Output per hour of labor: Cloth Wine Italy 22 12 Portugal 3 9 According to the​ table, the opportunity cost to Italy of producing one more unit of cloth is ___________ units of wine ​(enter a numeric response using a real number rounded to two decimal​ places)​, and the opportunity cost to Portugal of producing one more unit of cloth is __________ units of wine. ​Thus, we can conclude that

blank 1: 0.55 blank 2: 3 D. Italy has a comparative advantage in producing cloth and Portugal has a comparative advantage in producing wine.

____________ are goods and services produced domestically but sold to other countries. ___________are goods and services bought domestically but produced in other countries. ___________are taxes imposed by a government on imports of a good into a country.

exports imports tariffs

If sugar protectionism has the bad effects as stated in the​ editorial, which of the following is a likely reason why Congress and the president do not eliminate​ it?

A. Consumers are unaware of the existence of the quota. B. Sugar growers have a very strong lobby in Washington. C. There is little political support for the elimination of the quota.

In addition to tariffs and​ quotas, governments sometimes erect other barriers to trade. Which of the following is an example of a barrier to trade that a government may​ impose?

A. Imports of certain products may be restricted on national security grounds. B. Imports must meet certain safety requirements. C. Imports must meet certain health requirements.

By​ trading, countries are able to consume more than they could without trade. This outcome is possible because

A. inefficiencies in resource allocation are reduced. B. world production of both goods increases after trade. C. shifting production to the more efficient country—the one with the comparative advantage—increases total production.

How does the World Trade Organization​ (WTO) allow countries to determine whether dumping has​ occurred? The WTO allows countries to determine that dumping has occurred if

a product is exported for a lower price than it sells for on the home market

In​ 2018, when the Trump administration imposed a 25 percent tariff on imports of steel to the United​ States, economists at the Federal Reserve Bank of New York​ wrote, "We can conclude that the 25 percent steel tariff is likely to cost more jobs than it​ saves." ​Source: Mary​ Amiti, Sebastian​ Heise, and Noah​ Kwickli, "Will New Steel Tariffs Protect U.S.​ Jobs?" https://libertystreeteconomics.newyorkfed.org/2018/04/will-new-steel-tariffs-protect-us-jobs.html, April​ 19, 2018. a. Why might a tariff on steel imports cost more jobs than it​ saves? b. Which jobs are being​ saved, and which are being​ lost?

a. A tariff will raise the price of​ steel, increasing the costs to​ firms, and higher costs will result in higher​ prices, leading to lower sales and potentially lost jobs. b.Some jobs in the U.S. steel industry are​ saved, but some jobs that use steel as an input are lost.

Who gains and who loses when a country imposes a tariff or a quota on imports of a​ good? Suppose the United States imposes a tariff or quota on sugar imports. For each of the​ following, enter the letter G if it will gain from the tariff or quota or enter the letter L if it will lose from the tariff or quota. a. domestic sugar producers and their workers b. consumers c. industries that use sugar and their workers d. the U.S. economy

a. G b. L c. L d. L

The table below shows the hourly output per worker in two industries in Chile and Argentina. Use this table to answer the following questions. Outputs per hour work hats beer Chile 10 6 Argentina 1 2 a. ___________has an absolute advantage in the production of​hats, and _______________has an absolute advantage in the production of beer. b. ____________ has a comparative advantage in the production of​ hats, and____________ has a comparative advantage in the production of beer. c. Suppose that Chile and Argentina currently do not trade with each other. Each has​ 1,000 hours of labor to use for producing hats and​ beer, and the countries are currently producing the amounts of each good shown in the table below. Using this​ information, give a numerical example of how Chile and Argentina can both gain from complete specialization and trade. Assume that after trading​ begins, one hat can be exchanged for one barrel of beer. hats beer chile 9000 600 Argentina 600 800 Complete the table below. The table represents the amount of hats and beer after trading for each country hats beer chile ________ 600 Argentina 600 _______

a. chile; chile b. chile; argentina c. 9400; 1400