You work for a consumer organization that seeks to bring about lower prices through increased trade. As you lobby Congress for trade-friendly policies, your boss cautions you to keep in mind that "arguments in favor of free trade whereas arguments against free trade O are supported by economic theory; are often political in nature stem from political interests; are based on economic theory O demonstrate that there are no negative aspects of trade; focus on how trade reduces economic surplus

You work for a consumer organization that seeks to bring about lower prices through increased trade. As you lobby Congress for trade-friendly policies, your boss cautions you to keep in mind that "arguments in favor of free trade whereas arguments against free trade O are supported by economic theory; are often political in nature stem from political interests; are based on economic theory O demonstrate that there are no negative aspects of trade; focus on how trade reduces economic surplus

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter18: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 6DQ

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ee-trade benefits Ttion to the positive welfare effects that free trade has on an economy, there are a variety of other benefits of international trade ng scenario: Thout free trade, Sapphira has market power as a local producer. Once free trade is implemented in the local economy, Sapphira ger able to raise its prices above competitive levels. vious scer represents which of the following benefits of free trade? D An enhanced flow of ideas Increased variety of goods Increased competition Lower costs through economies of scale Grade It Now Sav
You are watching the nightly news. A political candidate being interviewed says, "I'm for free trade, but it must be fair trade. If our foreign competitors will not raise their environmental regulations, reduce subsidies to their export industries, and lower tariffs on their imports of our goods, we should retaliate with tariffs and import quotas on their goods to show them that we won't be played for fools!" If a foreign country subsidizes the production of a good exported to the United States, who bears the burden of their mistaken policy?
The textile industry in your country persuades the legislature to put a tariff on imported textiles. Who does not gain from this law? Select one: O a. Domestic textile producers. O b. Your government. O c. Workers in the domestic textile industry. O d. Domestic consumers. Check Next page s page Unit 6 Jump to... HW Unit 6 DUE March 17 ► logged in as Ashli-Amari Bent (Log out) 00/1-2021/SPRING/DAY MacBook Pro Search or type URL $ & 4 6 7 8.
Consider the arguments for restricting trade.a. Imagine that you are a lobbyist for timber, anestablished industry suffering from low-pricedforeign competition, and you are trying to getCongress to pass trade restrictions. Which twoor three of the five arguments discussed in thechapter do you think would be most persuasiveto the average member of Congress? Explain yourreasoning.b. Now assume you are an astute student ofeconomics (not a hard assumption, we hope).Although all the arguments for restricting tradehave their shortcomings, name the two or threearguments that seem to make the most economicsense to you. For each, describe the economicrationale for and against these arguments for traderestrictions.
The minister for labor of the Utopia (small country) is eager to encourage domestic production of bikes. A small bike industry exists, but only a few producers can survive foreign competition without government help. The country decided to help the local producers, the problem is the country has no idea what to do, some argues for 20% tariff and others thought 20% subsidy can gain same benefits to the country with less social cost. a. Show the following diagrammatically: The effects of the tariff on domestic bike output and consumption. The beneficial side effects of the tariff. The net gains or losses for the country. 4. All the same effects for the case of the production subsidy. 5. The differences in the effects of the two alternatives on the government’s budget. b. Can you describe a policy that captures the alleged benefits of worker training better than either the 20% tariff or the 20% subsidy?
In 1932, U.S. manufacturers, which used to enjoy steady relationships with their foreign distributors and export nearly 60% of their output, realized that their exports had fallen to only 20% of total output. Which of the following is the most likely reason for this decrease in exports? O The low quality of U.S. products O war between the United States and Canada O Retaliatory tariffs by trading partners The signing of the General Agreement on Tariffs and Trade (GATT) in 1947 resulted in the adoption of several new trade policies. In the following table, indicate if each of the policies listed was a result of GATT. Then, complete the last column by identifying the means by which each GATT policy was implemented. Policy GATT Policy Implementation Promotion of protectionism Clear and public trade rules Promotion of lower trade barriers Yes v Institution of the WTO Promotion of trade transparency Settling trade disputes In the 1960s, multilateral negotiations called the Uruguay Round…
Question & Use the table to answer the question. Apples Bananas Country A Country B 800 500 O a O b Ос Od 1500 If all resources of Country A and Country B were dedicated toward the production of either apples or bananas, the maximum production of each is summarized in the table above. In order for both countries to benefit from trade, which country should specialize in banana productio and why? 1600 Review Answers Country A since it has the absolute advantage in banana production. Country A since it has the comparative advantage in banana production. Country B since it has the comparative advantage in banana production. Country B since it has the absolute advantage in banana production. Saved at 8:09 am Support | Schoology Blog | PRIVACY POLICY | Terms of
D Question 24 Which of the following is NOT an argument for restricting trade? O The Infant Industry Argument O Trade protection will increase the total surplus for the market protected Trade protection will increase jobs O Trade protection will decrease inequality
Suppose the U.S. imposes a trade embargo onNorth Korea in order to exert political pressureon the government. Consider how the embargowill affect U.S. producers. Under what conditionswould they support the embargo? Why mightthey oppose it?
The figure shows trade in auto parts between the United States, Mexico, and Asia. Had the United States and Mexico failed to join the United States-Mexico-Canada (USMCA) free trade agreement, Mexico's supply curve would have been SMex. a. Shift Mexico's supply curve to show the impact of USMCA on this market. 20 19 18 17 S. Меx S' Mex 16 15 14 13 12 A 11 8 10 S. +t Asia S Asia 8 4 3 2 M US 1 20 40 60 80 100 120 140 160 180 200 Import Quantity b. Who supplies auto parts to the United States? Does the United States import a larger quantity of auto parts after USMCA; that is, does trade creation occur? After the USMCA was established, Mexico and Asia supply - auto parts to the United States. The United States imports the same amount of - auto parts after USMCA. Trade creation does not occur - c. What is the change in government revenue compared with before USMCA? -30 Change in government revenue: $ Price ($)
A. Did you follow the still ongoing discussion about free trade in the recent election cycle? Do you thinkthat the USA is tending toward a mercantilist approach and likely to impose restrictions on foreign tradeover the next few years?B. Do you agree or disagree with Adam Smith that we are better off with some form of free trade, thanwould be the case if each country raised or lowered tariffs based on its own economic needs and politicalphilosophy? Provide a logical reason for your answer.Not at all Somewhat Completely1 2 3 4 5 6 7 8 9 10C. Thomas Freedman made the following statement in the “World is Flat”. He maintains that technologymakes it possible to compete with, or collaborate with anyone, anywhere in the world. Globalization, heargued is both inevitable and desirable. The winners says Freedman, will be the countries andcompanies that can respond quickly to change and that the loser will be those who are slow to do so.“Whatever our political and philosophical points of view we…
The two main reasons why international trade is restricted are that tariffs O A. save jobs and allow domestic producers to compete with foreign firms that use cheap labor penalize lax environmental standards and protect defense industries O B. O C. create tariff revenue and rent seeking is popular O D. protect infant industries from competition and protect national security The countries that benefit most from tariff revenue are O A. countries involved in trade organizations but are separated by large distances OB. developed countries OC. developing countries O D. countries involved in trade agreements such as NAFTA and the European Union The United States still implements some trade restrictions because the people who would lose from free trade would lose big and the people who gain, would gain a small amount. O A. True O B. False