Goods and services purchased from abroad are ________, while goods and services sold abroad are ________.
imports; exports
France and England both produce wine and cloth under conditions of constant opportunity costs. France will have a comparative advantage in wine production if:
the opportunity cost of wine production is lower in France than in England.
In a single growing season, the country of Pastoral can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, the country of Bucolic can raise 50 tons of beef or produce 750 boxes of tulips. We then know that:
Pastoral has the comparative advantage in raising beef.
The United States, at the point where it is currently producing, must give up the production of 300 motorcycles to produce 20 additional SUVs with the same resources. In this case, the opportunity cost of producing 5 SUVs is ________________ motorcycles.
75
When an economy moves from autarky to free international trade, in the import sector:
consumer surplus rises, producer surplus falls, and the economy as a whole gains.
The infant industry argument for trade protection essentially states that:
new industries should be protected temporarily from foreign competition until they become established.
If labor is abundant in Southlandia but capital is scarce, when Southlandia opens to trade:
the price of labor will rise and the price of capital will fall.
In the market for wooden furniture, if a country's price in the absence of trade is lower than the price with trade, the country must:
export wooden furniture.
The World Trade Organization:
oversees trade agreements.
(Figure: Market for Melons in Meloncholy II) In the graph, the demand curve illustrates the domestic demand for melons and the supply curve illustrates the domestic supply of melons. Suppose the country opens to trade and finds the world price to be equal
import 42 units of melons.
(Figure: Market for Melons in Meloncholy II) In the graph, the demand curve illustrates the domestic demand for melons and the supply curve illustrates the domestic supply of melons. Suppose producers lobby effectively for the imposition of a tariff that
$150.
(Figure: Market for Melons in Meloncholy II) In the graph, the demand curve illustrates the domestic demand for melons and the supply curve illustrates the domestic supply of melons. As a result of a tariff that raises the world price to $15, the country
$30.
Imports are good and services that are:
purchased from another country.
The model that suggests countries will specialize in producing the good that uses its relatively abundant factor of production most intensively is referred to as the:
Heckscher-Ohlin model.
A country that is relatively labor-abundant and relatively land-scarce opens to international trade. As a result, it will find that wages:
will increase while rents will decrease.
(Scenario: Production of Wheat and Toys) Given the information provided, one can determine that Country A has an absolute advantage in ________ and a comparative advantage in the production of ________.
wheat; wheat
(Scenario: Production of Wheat and Toys) The opportunity cost of producing a unit of wheat in Country B is:
3 toys.
(Scenario: Production of Wheat and Toys) If each country specializes in the good for which it has the comparative advantage, then:
Country A will produce wheat, Country B will produce toys.
If the executives of the U.S. silicon-chip industry lobby Congress for protection from imports on the grounds that the military should have an unrestricted domestic supply of silicon chips, they are using:
the national security argument.
If the executives of the U.S. silicon-chip industry lobby Congress for protection from imports on the grounds that theirs is a new industry that needs time to develop technological efficiency, they are using the:
infant industry argument.