Foreign trade -allows a country to avoid trade-offs - increases the scarcity of resources - allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home - makes the members of a country more equal

Foreign trade -allows a country to avoid trade-offs - increases the scarcity of resources - allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home - makes the members of a country more equal

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter19: International Trade

Section: Chapter Questions

Problem 4QFR

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Question

Foreign trade

-allows a country to avoid trade-offs

- increases the scarcity of resources

- allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home

- makes the members of a country more equal

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When two or more nations engage in free trade, how is the standard of living improved in the participating countries? goods become more expensive, demand rises, and output increases goods become cheaper, demand lowers, and output decreases goods become more expensive, demand lowers, output decreases goods become cheaper, demand rises, and output increases
If a certain trade is good for one country, it must be good for the other country?
Countries that trade on the basis of comparative advantage have __________ than countries that do not. higher production costs and transportation costs. more goods and services available to them. a lower standard of living. lower levels of labor productivity. lower levels of product quality from which to choose.
Large gains from trade are most likely when countries are very different. True False
Explain the importance of foreign trade.
Discuss the importance of terms of trade for countries.
The most basic international transaction involves the exchange of tangible goods and services. True or false
Globalization of technology and communication is the sourcing of goods from different countries to take advantage of the national differences
Happyland can produce 40 tones of marshmallows or 20 tones of chocolate in a year. Friendshipland can produce 80 tones of marshmallows or 40 tones of chocolate in a year. Can these countries benefit from trade with each other based on specialization and comparative advantage? Yes No
Who loses when a country imports cheaper goods from abroad?
Current trends and issues in international trade
You just overheard your friend say the following: “Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade.” How would you respond?