QUESTION 7 According to international trade theory, a country should: O import goods in which it has an absolute advantage O import goods in which it has a comparative advantage O export goods in which it has an absolute advantage import goods in which it has an absolute disadvantage

QUESTION 7 According to international trade theory, a country should: O import goods in which it has an absolute advantage O import goods in which it has a comparative advantage O export goods in which it has an absolute advantage import goods in which it has an absolute disadvantage

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Violations of the factor-endowment theory of trade While different natural resources and the theory of comparative advantage can explain many trade patterns, they cannot explain all types of trade that economists observe. Consider each scenario in the following table and determine which theory best explains the trade pattern described. Scenario Since the turn of the century, nearly all X-ray machines purchased by hospitals have been made in Alloway. However, engineers in Osteoville recently designed an X-Ray machine that produces much more accurate results, leading to fewer malpractice cases and more reliable diagnoses. These new X-ray machines quickly become the industry standard. As a result of this, the production of X-ray machines is thriving in Osteoville, while firms in Alloway lose market share and begin trying to develop a new source of advantage. Ice wine is a special spirit that can only be made during a few months in the winter. The nations of Fruzenton and Grappovia are…
Suppose that France and Germany both produce wine and cheese. The table below shows combinations of the goods that each country can produce in a day. France Germany Wine (Bottles) Cheese (Pounds) 16 Wine (Bottles) Cheese (Pounds) 12 8. 4. 25 20 15 2 3 3 4 10 4 Who has the comparative advantage in producing wine and who has the comparative advantage in producing cheese? O A. France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese. O B. France has a comparative advantage producing wine and cheese. OC. Germany has a comparative advantage producing wine and cheese. -OD. Neither has a comparative advantage producing wine or cheese. OE. France has a comparative advantage producing cheese and Germany has a comparative advantage producing wine. Suppose that France is currently producing 1 bottle of wine and 12 pounds of cheese and Germany is currently producing 3 bottles of wine and 10 pounds of cheese. Then, assume instead that France and…
5. Free-trade benefits In addition to the positive welfare effects that free trade has on an economy, there are a variety of other benefits of international trade. Consider the following scenario: Because of international trade, poorer countries are able to learn about technological advances made by other countries rather than investing scarce resources in developing advanced technology themselves. The previous scenario represents which of the following benefits of free trade? O Increased variety of goods O Increased competition O Lower costs through economies-of scale O An enhanced flow of ideas
Figure 2-9 Snow cones 240 0 Greenland 200 Popsicles Snow cones 270 0 Iceland O 100 popsicles & 130 snow cones; 100 popsicles & 140 snow scones O 100 popsicles & 140 snow cones; 100 popsicles & 100 snow scones O 140 popsicles & 120 snow cones; 100 popsicles & 130 snow scones none of the above. 180 Popsicles Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. With the opening of international trade, the agreed price between Iceland and Greenland for popsicles is 1.3. Assume that the country which now imports popsicles (with int'l trade) decides that it will import 100 units of popsicles. The new consumption bundles/points after international trade for Greenland and Iceland, respectively, are?
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5. The price of trade Suppose that Poland and Wales both produce alive oil and shoes. Poland's opportunity cost of producing a pair of shoes is 5 crates of olive oil while Wales's opportunity cost of producing a pair of shoes is 11 crates of olive oil. By comparing the opportunity cost of producing shoes in the two countries, you can tell that Poland production of shoes and Wales has a comparative advantage in the production of olive oil. has a comparative advantage in the Suppose that Poland and Wales consider trading shoes and olive oil with each other. Poland can gain from specialization and trade as long as it receives more than 5 crates of olive oil for each pair of shoes it exports to Wales. Similarly, Wales can gain from trade as long as it receives more than 11 pairs of shoes for each crate of olive oil it exports to Poland. Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of olive oil) would allow both Wales…
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Refer to Table 19.1. Mexico has Group of answer choices a comparative advantage but not an absolute advantage in orange production. an absolute advantage and a comparative advantage in orange production. a comparative advantage but not an absolute advantage in banana production. an absolute advantage and a comparative advantage in banana production.
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6. The arguments for restricting trade Suppose there is a policy proposal to increase trade restrictions on imported microprocessors to the United States. Read the following scenario and answer the question that follows. The president of the United States argues that the United States should threaten to impose a tariff on Chinese microprocessors in order to induce the Chinese to remove its tariff on American cars. Which of the following justifications is the president using to support their argument in favor of the trade restriction on microprocessors? Unfair-competition argument Infant-industry argument Jobs argument Using-protection-as-a-bargaining-chip argument National-security argument
A= C+1 45 Y. Yo Y1 Which one of the following statements is false? Y1 represents the equilibrium level of income. The curve labelled A = C +1 shows the total of consumption and investment spending. The curve labelled C shows the total of autonomous and induced consumption spending. The point labelled D shows where savings equal investment. A. C. 2. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregate production of income by Y. Which one of the following statements is incorrect? When A is greater than Y, there is disequilibrium and Y will tend to increase. When A is equal to Y, there is equilibrium and Y will remain unchanged. When A is less than Y, there is disequilibrium and Y will decrease. When A is greater than Y, there is disequilibrum and A will decrease A. 10
↳ A Click Submit to complete this assessment. Question 33 What insights do welfare analysis (consumer surplus/producer surplus) offer into international trade? O a. That trade increases the welfare of producers, so trade may make total surplus fall. O b. That tariffs make a country better off and trade wars can definitely be won! Oc. That nations are better off NOT trading with each other, because lower world prices harm most nations' producers and consumers. Od. That while trade increases total surplus, consumers or producers in a country may gain or lose, depending on world price. A Click Submit to complete this assessment. tab caps lock shift fn 1 Q 2 A W Z I 3 S E X S D R C F T V G H B J N K