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Get faster at matching terms Terms in this set (53)Other sets by this creatorThe accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities A B C D E Sigma's production possibilities A B C D E Assume that before specialization and trade, Gamma and Sigma both chose production possibility "C." Now if each specializes according to comparative advantage, the gains from specialization and trade will be 40 tons of pots.
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Get faster at matching terms chapter 26 Terms in this set (67)When does a trade deficit occur? When imports exceed exports Which country has an abundant labor force suited to produce labor-intensive goods? China _______ intensive goods are products requiring relatively large amounts of natural resources to produce. Land What resources are important for a country to produce capital-intensive goods? Large amounts of capital How do nations benefit from international trade? They can enhance their resource productivity. A trade ______ occurs when imports exceed exports. deficit In a model compiled to show the economic relationship between two nations, what can be used to determine whether each country has an absolute advantage or comparative advantage? Production possibilities curves Because China has abundant low-wage workers, it can efficiently produce ______-intensive goods. labor What is the key determinant in whether a country can gain from specialization in international trade? Comparative advantage Why are beef and wool considered to be land-intensive goods? A large amount of land is required to produce them. The exchange ratio at which two countries trade their products is called the ______ of trade. terms What type of products are most often made in countries that have industrially advanced economies and large amounts of capital? Capital-intensive goods What type of graphic shows the amounts of two products a nation can obtain by specializing in one product and trading for the other? A trading possibilities line What tends to happen to a nation that increases its participation in an open economy with an international sector? The country produces more of its most profitable goods In addition to the benefits of human and geographical specialization, what are some side benefits to free trade? It promotes competition. In a hypothetical situation, the United States and Mexico have labor forces of the same size. The production possibilities curves in the figure show that the United States has an absolute advantage over Mexico in vegetables and beef. This means that if both countries use the same amount of resources on those products, ______. the United States can produce more of both goods What is the equilibrium world price? The price that equates the quantities supplied and demanded globally through international trade Economizing requires that any particular good be produced by the nation having the ______ domestic opportunity cost, or the ______ advantage for that good. lowest; comparative Assume the domestic price of corn is $1.00 and the quantity of corn produced is 100 tons. If the world price of corn exceeds $1.00, then U.S. producers will produce ______ than 100 tons of corn, creating a ______ that will be ______. more; surplus; exported What is the exchange ratio at which two countries trade their products? The terms of trade When the world price for a product is below the Canadian price, what will Canada experience? A domestic shortage A trading possibilities line reveals the amounts of two products a nation can obtain by ______. specializing in one product and trading for the other In a two-nation model, international equilibrium is determined by the ______ of one country and the ______ of the other country. import demand, export supply How does free trade tend to benefit society? It reduces animosity among nations that trade with each other.
A tax on an imported good is known as a(n) ______. tariff The interaction of world supply and demand determines the equilibrium ______. world price What type of tariff is applied to an import, with the purpose of raising money for the federal government? Revenue tariff Assume the domestic price of corn is $1.00 and the quantity of corn produced is 100 tons. What will happen if the world price of corn exceeds $1.00? U.S. firms will produce more than 100 tons of corn and export the excess, selling it at the world price. A(n) ______ is designed to shield domestic producers from foreign competition.
protective tariff If the domestic price in Canada is $0.75 and the domestic price in the United States is $1.00, what will Canadian companies do? Produce more than Canadian customers will buy, and sell the surplus to the United States What are the four direct effects of a tariff? A decline in imports The intersection of one nation's import demand curve and another nation's export supply curve represents ______. international equilibrium Which statements about tariffs and quotas are true? A tariff generates revenue for the domestic government. What is a tariff? A tax on an imported good According to various studies, how do trade protections, such as tariffs and quotas, tend to affect domestic society? Some trade protections increase government revenues. A(n) ______ is a tax on imports, with the primary purpose of raising money for the federal government. revenue tariff Although protective tariffs are usually not high enough to stop the importation of foreign goods, they put ______ producers at a competitive disadvantage in domestic markets. foreign What do critics say is a flaw in the military self-sufficiency argument for protective tariffs to encourage domestic production of goods needed for national security? Many industries can claim they make contributions to national security and deserve protection. The four direct effects of tariffs are: a decline in consumption, increased domestic production, tariff revenue, and a(n) ______. decline in imports According to the diversification-for-stability argument, why should some nations impose protective tariffs and import quotas? Their economies are highly specialized and depend on international trade for their income. What is the main economic difference between a tariff and a quota? A tariff generates revenue for the domestic government. According to the infant industry argument, why should recently established domestic firms be protected from competition from imports? They have not had time to become efficient enough to compete against mature foreign companies. Tariffs and/or quotas tend to impose ______ on domestic consumers, and ______ to the producers of the protected goods in the importing economy. costs; gains If a firm charges a foreign market a lower price than it charges the domestic market, that firm is said to be ______ its product. dumping What type of tariff is applied to an import, with the purpose of raising money for the federal government? Revenue tariff Which argument against free trade becomes particularly popular when the economy goes into a recession? Increased domestic employment The idea that protective tariffs are needed to preserve industries that produce the materials essential for national defense is called the ______ argument. military self-sufficiency The cheap foreign ______ argument says that trade protection is required to ensure that cheap imports do not flood U.S. markets, dragging down prices of goods and U.S. wages. labor True or false: The diversification for stability argument for protection is a valid one for the U.S. False Because of trade wars and other factors, more nations have been moving toward ______. free trade According to the infant industry argument, why is import protection needed? Trade barriers allow protected industries the time to become efficient and competitive. What were some of the effects of the trade policy changes under GATT? Tariffs replaced quotas on apparel and textiles. Dumping occurs in which of the following situations? A firm charges a price to a foreign market that is lower than its production costs. What are the purposes of the World Trade Organization? To rule on trade disputes among member nations Why is arguing for a tariff to save U.S. jobs popular during a recession? Reduced spending on imports can be diverted to domestic spending and increase domestic employment. What is the European Union (EU)? A regional free-trade zone What argument says that domestic firms and workers must be shielded from competition from countries where wages are low? Cheap foreign labor argument Which problems did critics fear that NAFTA would cause? Massive loss of jobs in the United States In recent years, what has been the general worldwide trend regarding tariffs? Lower tariffs Why do economists generally support the Trade Adjustment Assistance Act? It helps create political support for international free trade. When was GATT originally signed? 1947 What business activity shifts work previously done by American workers to workers located in other countries? Offshoring What institution is in charge of overseeing trade agreements and ruling on disputes relating to them? World Trade Organization What was the European Union called when it was initiated in 1958? The Common Market The North American Free Trade Agreement (NAFTA) created a ______ zone among Mexico, the United States, and Canada in 1993. free-trade Workers who are displaced due to foreign imports are eligible for what kinds of benefits under the Trade Adjustment Assistance Act? Cash assistance for up to 78 weeks Shifting work that was previously done by American workers to workers abroad is called what? Offshoring Recommended textbook solutionsPrinciples of Microeconomics7th EditionN. Gregory Mankiw 830 solutions Principles of Microeconomics8th EditionN. Gregory Mankiw 796 solutions Economics: Principles in Action3rd EditionArthur O'Sullivan, Steven M. Sheffrin 808 solutions Macroeconomics7th EditionN. Gregory Mankiw 213 solutions Sets found in the same folderECON Connect Chapter 1067 terms XxBrittaniRose95xX Macroeconomics Chapter 1427 terms sydney13166 ECON 2010 CH 10 LearnSmart87 terms schloegel481 ECON 2010 CH 14 LearnSmart87 terms kenner95 Other sets by this creatorTaxation ch 2538 terms exum24PLUS Taxation ch 2438 terms exum24PLUS Taxation Ch 2329 terms exum24PLUS Tax chp 2247 terms exum24PLUS Verified questions
ECONOMICS If the average product of labor is rising as more workers are hired, then A. the marginal product of labor must be rising. B. the marginal product of labor must be falling. C. the marginal product of labor must be higher than the average product of labor. D. the average total cost must be rising. E. the marginal cost must be falling. Verified answer ECONOMICS You are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is profit maximizing, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? a. P < MC, P > ATC b. P > MC, P < ATC c. P = MC, P > ATC d. P > MC, P = ATC Verified answer ECONOMICS A single value used to estimate a population parameter is called a ______. Verified answer ECONOMICS What are the three types of economic systems? Verified answer
Other Quizlet setsChapter 19 Palliative and Hospice Care28 terms junkintrunk Conflict in the Colonies66 terms Yhuhoo Forensics Casts & Impressions20 terms DSK1959 Religion10 terms Akour082906 Related questionsQUESTION the process by which the links between open economies strengthen over time 2 answers QUESTION Suppose that in autarky in the neoclassical model PX/PY = 0. This should mean that 6 answers QUESTION Mansfield and Mutz offer an alternative explanation for why individuals are in favor or against trade. According to them, what is the central factor/variable explaining people's attitudes toward trade? 4 answers QUESTION the Ricardian theory of comparative advantage implies that... 7 answers How do nations benefit from international trade quizlet?Benefits of international trade: Consumers benefit with high-quality goods at lower prices. Producers improve profits be expanding their operations. Workers benefits with higher employment rates.
What does international trade increases of participating countries?Countries that are open to international trade tend to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people. Open trade also benefits lower-income households by offering consumers more affordable goods and services.
What were some of the effects of the trade policy changes under GATT quizlet?What were some of the effects of the trade policy changes under GATT? -Tariffs were reduced by 33% on average. -Tariffs replaced quotas on apparel and textiles. -Intellectual rights were given more protection.
What happens when a country opens up to trade?Trade contributes to global efficiency. When a country opens up to trade, capital and labor shift toward industries in which they are used more efficiently. That movement provides society a higher level of economic welfare.
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What tends to happen to a nation that increases its participation in an open economy with an international sector quizlet?
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