ECON 10010 Chapter Notes - Chapter 9: Trade Restriction, Startup Company, Invisible Hand

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periwinklechimpanzee451

6 Dec 2017

School

Department

Economics

Course

ECON 10010

Professor

Kirk Doran

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Document Summary

Indicates comparative advantage: world price: price prevailing in the world markets. World price < domestic price = import good: trade among nations is based on comparative advantage. Domestic price rises to meet world price. Ps rises: trade raises economic well-being as a whole, qs and qd are different at equilibrium. Country becomes exporter = domestic producers are better off than domestic buyers, who are worse off. Country becomes importer = domestic consumers are better off than domestic producers, who are worse off. Domestic price < world price = exporter: if price rises, sellers are better off. If price decreases, consumers are better off: tariff only has an impact if the country imports. It creates deadweight losses: trade without a tariff is the best policy, other benefits of international trade, increased variety of goods: goods from different countries are not the same, lower costs through economies of scale: Economies of scale: low cost of production only in large quantities.

Related Questions

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

Question 1

In 2003, the ________ ruled that U.S. tariffs on steel imported from the EU were unfair and allowed the EU to issue retaliatory tariffs on U.S. products.

World Trade Organization

United Nations

European Central Bank

International Human Rights Commission

Question 2

The idea of the U.S.-Canadian Free-Trade Agreement that ________ barriers to trade including tariffs and quotas between the United States and Canada by 1998 was to increase the amount that the United States exports to Canada and the amount that the United States imports from Canada.

increased all

removed some

removed all

increased some

Question 3

According to the theory of comparative advantage, a country should specialize and ________ goods with ________ opportunity cost.

import; the lowest

import; negative

export; the lowest

export; the highest

Question 4

A quota is a restriction on imports.

True

False

Question 5

If Holland decreases subsidies to its tulip growers, the price of tulips in the United States will rise.

True

False

Question 6

According to comparative advantage, trade between two countries allows ________ of the trading countries to use its resources most efficiently.

only the smaller

only the larger

neither

each

Question 7

________ U.S. president(s) who has/have held office since GATT was signed has argued for free-trade policies, yet each one has used his powers to protect various sectors of the economy.

Only one

No

Every

Only 3

Question 8

In 1991, the European Union began the process of forming the

		largest free-trade zone in the world.
		only continental military force in the world.
		first international trade agreement in the world.
		first unified currency in the world.

Question 9
1. The Smoot-Hawley tariff set off an international trade war in the
  
  1930s.
  
  1950s.
  
  1970s.
  
  1990s.
  
  Please help me with these questions Thank you.

magentadeer293

In 2013, U.S. sugar imports are restricted by way of an import quota. The domestic sugar price is kept above the world market price of sugar by way of a federal domestic price guarantee. A special feature of the sugar import quota is that the rights to sell the sugar in the united states are allocated to the governments of foreign nations, who then allocate these rights to their own residents, just like a voluntary export restraint.

The quantity demanded was estimated to be 5.7 million tons, the quantity supplied was 2.7 million tons, and the price was $426 per ton when the quota was in effect. Also estimated (with free trade) was the world market price of $275 per ton of sugar, the quantity demanded would be 6.9 million tons, and the quantity supplied would be about 1.8 million tons of sugar per year.

In 2013, the size of the U.S. population was about 316 million. In the same year, the sugar industry employed about 6,500 workers. Assume the U.S. is a "small nation" when it comes to sugar imports.

a. what is the total dollar amount the U.S. loses or gains from imposing the import quota? How much of this amount is earned by foreigners?

b. How much did the sugar quota cost or benefit the average U.S. consumer (assuming each resident was a sugar consumer)?

c. What was the implicit subsidy per worker, based on the impact of the import quota on sugar producers?

azureturtle876

ECON 10010 Chapter Notes - Chapter 9: Trade Restriction, Startup Company, Invisible Hand

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