Chapter 21 Flashcards
The United States has historically imported heavily in all of the following markets except
aircraft
Which of the following is true?
The United States has a very low export ratio.
The benefits from international trade include
greater efficiency in the use of the world’s limited resources.
A country has a comparative advantage in a good if
it can produce a good at a lower opportunity cost relative to another country.
The United States is capable of producing many goods and services that it imports, but it does not because
we can import those goods at a lower opportunity cost than if we make them ourselves.
Two countries with differing comparative advantages may engage in trade because
they will be able to consume more goods in total due to specialization and trade.
The expansion of world output as a result of trade is mainly due to the effects of
specialization according to comparative advantage.
Suppose China can produce 200 TVs or 200 smartphones. South Korea can produce either 100 TVs or 200 smartphones. In terms of TV production, we can conclude that
China has a comparative advantage in TV production.
(Figure 35.1) What is the opportunity cost of DVD players in Japan?
2 motorcycles per DVD player
Producers of paper products are most likely to be in favor of
protectionism in the paper product market but free trade in the lumber market.
Which group is most likely to be adversely affected by the importation of foreign steel?
domestic steelworkers
If we add together all the gains from specialization and trade and then subtract all the losses, the net result would be
positive, a net gain for the world and for each country.
Which of the following groups has an interest in encouraging free trade?
workers in export industries
Which of the following is not a reason to restrict trade?
concern about high prices for consumers
The infant industry argument can be justified because
a new industry may be difficult to start in the face of existing foreign competition.
