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Exam 20: International Trade

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Question 101

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Evaluate the validity of the argument that a new industry (infant industry) in a nation needs protection from foreign competition if it is to establish itself.

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The infant-industry argument is based on...

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Question 102

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Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves For the two countries are shown in the graphs. Assume that prior to specialization and trade, Italy And Greece preferred points I and G on their respective production possibilities curves. As a result Of complete specialization according to comparative advantage, the resulting gains in total output Will be

A) 5 steel and 15 chemicals.
B) 10 chemicals.
C) 15 steel and 5 chemicals.
D) 25 steel.

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Question 103

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${ \text { Domestic Market For Steel, Alpha } }$ $\begin{array}{l}\begin{array} { | c | c | c | } \hline Q _ { S } & P & Q _ { d } \\\hline 60 & \$ 5 & 10 \\\hline 40 & 4 & 20 \\\hline 30 & 3 & 30 \\\hline 20 & 2 & 40 \\\hline 10 & 1 & 50 \\\hline\end{array}\\\\\\{ \text { Domestic Market For Steel, Beta } } \\\begin{array} { | c | c | c | } \hline Q _ { S } & P & Q _ { d } \\\hline 80 & \$ 5 & 20 \\\hline 70 & 4 & 30 \\\hline 60 & 3 & 40 \\\hline 50 & 2 & 50 \\\hline 40 & 1 & 60 \\\hline\end{array}\end{array}$ The accompanying tables show data for the hypothetical nations of Alpha and Beta. $Q _ { S }$ is domestic Quantity supplied, and $Q _ { d }$ is domestic quantity demanded. At a world price of $5,

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect

It is impossible for a nation to have a comparative advantage in producing everything.

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

If Nations Quirk and Turk only produce aluminum or oil, the accompanying table shows the maximum output of each nation. $~~~~~~~~~~~~~~~~~~~~~~~Output ~(Units)$ $\begin{array} { | l | c | c | } \hline \text { Nations } & \text { Aluminum } & \text { Oil } \\\hline \text { Quirk } & 20 & 40 \\\hline \text { Turk } & 30 & 90 \\\hline\end{array}$ Which one of the following terms of trade is most likely to produce mutually bene?cial exchange Between the two nations?

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case,

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

Tariffs

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

$\quad\quad { Country ~X }$ $\begin{array} { | c | c | c | } \hline Price & Q _ { d d } & Q _ { S d } \\\hline \$ 5.00 & 200 & 400 \\\hline 4.00 & 250 & 350 \\\hline 3.00 & 300 & 300 \\\hline 2.00 & 350 & 250 \\\hline 1.00 & 400 & 200 \\\hline\end{array}$ The accompanying table gives data for Country $X$ . Column 1 of the table is the price of a product. Column 2 is the quantity demanded domestically $\left( Q _ { d d } \right)$ , and Column 3 is the quantity supplied domestically $\left( Q _ { s d } \right)$ . If Country $X$ opens itself up to international trade, at what world price will it begin importing some units of the product?

Refer to the graphs. Stanville has a comparative advantage in producing

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

The U.S. has a trade surplus in services.

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\\text { Supplied } \\\text { (Domestic) }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity } \\\text { Demanded } \\\text { (Domestic) }\end{array} \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$ The total amount of revenue collected from a $1-per-unit tariff on this product will be

What is the eurozone? How has the euro benefited the countries that have adopted it?

Tariffs and import quotas would benefit the following groups, except

In the real world, specialization is rarely complete because

The World Trade Organization