ECON 102 Lecture Notes - Lecture 25: Trade Restriction, Comparative Advantage, International Trade

40 views2 pages

Verified Note

ceriserabbit909

1 Apr 2020

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

ECON 102 verified notes

25/27View all

ECON 102 Lecture Notes - Lecture 24: Government Budget Balance, Real Interest Rate, Loanable Funds

ECON 102 Lecture Notes - Lecture 25: Trade Restriction, Comparative Advantage, International Trade

ECON 102 Lecture Notes - Lecture 26: Laffer Curve, Fiscal Policy, Transfer Payment

Document Summary

Compared to a no-trade situation, in a market with imports, consumers gain and producers loss but the gains are greater than the losses. Compared to a no-trade situation, in a market with exports, producers gain and consumers lost but the gain are greater than the losses. Countries restrict international trade by imposing tariffs, import quotas, and other import barriers. Trade restrictions raise the domestic price of imported goods, lower the quantity imported, make consumers worse off, make producers better off, and damage the social interest: the case against protection. Arguments that protection helps an infant industry to grow and counteracts dumping are weak. Arguments that protection saves jobs, allow us to compete with cheap foreign labour, is needed to penalize lax environmental standards, and prevents exploitation of developing countries are flawed. Offshore outsourcing is just a new way of reaping gains from trade and does not justify protection.

Related Questions

Compared to the no-trade situation, when a country exports a good:

a. domestic consumers gain, domestic producers lose, and the losses outweigh the gains.
b. domestic consumers gain, domestic producers lose, and the gains outweigh the losses.
c. domestic consumers gain, domestic producers lose, an equal amount.
d. domestic consumers lose, domestic producers gain, and the gains outweigh the losses.

yellowreindeer728

1. An import tariff

a. lowers the domestic price of the exported good below the world price.

b. keeps the domestic price of the exported goods the same as the world price.

c. raises the domestic price of the imported good above the world price

d. lowers the domestic price of the imported good below the world price.

2. Which two accounts are included in the balance of payments:

a. current account and the reserve account.

b. current account and the trade account.

c. current account and the capital account.

d. trade account and the capital account.

3. A producer has a comparative advantage in the production of a good when the producer:

a. has a production cost that is less than sales revenue.

b. has the highest cost of production compared to any other producer.

c. is comparatively more efficient at producing the good than it is at producing anything else.

d. specializes through the use of an assembly line.

4. According to the Fischer effect, if the "real" rate of interest in a country is 4 percent and expected annual inflation is 9 percent, the "nominal" interest rate will be _____.

5 percent

B.	13 percent

9 percent

36 percent

bluetortoise611

Suppose the market for oranges in a small country is closed to international trade. The domestic price is $3 per lb, at which 10,000 lbs are bought and sold in the country, while the world price is $4 per lb. If the country opens up to free trade with the world, the domestic quantity demanded at the world price will be 8,000 lbs, and the domestic quantity supplied at the world price will be 12,000 lbs.

A. Which of the following statements is true?

a. The country will become an importer of oranges because it has a comparative advantage in the production of oranges

b. The country will become an exporter of oranges because it has a comparative advantage in the production of oranges

c. The country will become an importer of oranges because the world has a comparative advantage in the production of oranges

d. The country will become an exporter of oranges because the world has a comparative advantage in the production of oranges

B. At what price (per lb.) will oranges be bought and sold in the country after opening up to trade?

a. $3

b. $4

c. $3.5

C. After opening up to trade, the level of exports/imports for the country will be:

a. 8,000 lbs.

b. 12,000 lbs.

c. 10,000 lbs.

d. 4,000 lbs.

D. How much (in $) is the net gain from trade for this country in opening up to free trade?

coralbadger702

ECON 102 Lecture Notes - Lecture 25: Trade Restriction, Comparative Advantage, International Trade

ECON 102 Lecture Notes - Lecture 24: Government Budget Balance, Real Interest Rate, Loanable Funds

ECON 102 Lecture Notes - Lecture 25: Trade Restriction, Comparative Advantage, International Trade

ECON 102 Lecture Notes - Lecture 26: Laffer Curve, Fiscal Policy, Transfer Payment

Document Summary

Get access

Related Documents

ECON 102 Chapter 34: Study Notes (Self Draw Graphs)

ECON 102 Chapter Notes - Chapter 33: High Tech, Opportunity Cost, Free Trade

ECON 102 Chapter Notes - Chapter 2: Absolute Advantage, Comparative Advantage, Barter

Related Questions