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Exam 17: A: International Trade

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Question 21

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Given the data in the graph below, which nation should specialize in steel production and which nation in wheat production? Why?

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The opportunity cost for 1 unit of wheat...

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Question 22

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What are the benefits of having a common currency such as the Euro?

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A common currency eliminates the cost an...

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Question 23

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Who gains and who loses from a protective tariff? Explain.

What are the net costs of tariffs and quotas on consumption and income distribution?

The following table shows the domestic quantity demanded (Q_D) and quantity supplied (Q_S) of soybeans in Canada and Brazil at various prices (in Canadian dollars). (a) Complete the above table by indicating the size of exports or imports for each country at each price.(b) Suppose Canada and Brazil are closed economies.What is the domestic price of soybeans in Canada? What is the domestic price of soybeans in Brazil?(c) Suppose Canada and Brazil are the only countries in a two-nation world.What is the world price of soybeans? Is Canada an exporter or an importer at the world price? Is Brazil an exporter or an importer at the world price?

How important is international trade for Canada?

What are the limitations to the diversification for stability argument for trade protection?

Evaluate the statement: "Tariffs and quotas are needed to protect Canadian products from dumping."

Of all the reason for protests against the WTO, which are most substantive?

How can Canada compete successfully with relatively low-wage nations such as India and China?

What are the similarities and differences in the economic effects of tariffs and quotas?

How can supply and demand analysis be used to explain the equilibrium price and quantity of exports and imports for aluminum when there is trade between two nations (e.g., the United States and Canada)?

Evaluate the validity of the argument that a new industry in a nation needs protection from foreign competition if it is to prosper.

The table below shows the maximum amounts of food and clothing that two nations, A and B, can produce.Draw the production possibilities curve for A and B using the below graphs.Assume constant costs. (a) What is the cost ratio for the two products?(b) If each nation specializes according to comparative advantage, who should produce and trade each product? Why?(c) What will be the range for the terms of trade? If the terms are set at 1 food = 2 clothing, show how the trading possibilities lines will change in the graph.Explain.

Answer the next three questions on the basis of the following production possibilities data for Narnia and Somosa.All figures are in thousands of units. (a) If trade occurs between Narnia and Somosa, which nation should export what product? Why?(b) What are the limits of the terms of trade between Narnia and Somosa?(c) Assume that prior to specialization and trade, Narnia and Somosa chose production possibility "C." Now each specializes according to comparative advantage.What will be the resulting gains from trade? Explain your answer.

Why might trade barriers be a highly ineffective technique for increasing domestic employment?

Cite three important reasons why nations trade.

Why has international trade grown rapidly since World War II?

How do protectionist policies affect consumers, workers, producers, and the government? Explain.

In what ways are national economies linked?