Chapter 9 - International Trade

Question 1

World Price

Answer 1

The price of a good that prevails in the world market for that good.

Question 2

If the world price is higher than the domestic price, then the country will ______

Answer 2

Export

Question 3

If the world price is lower than the domestic price, then the country will ______

Answer 3

Import

Question 4

A country has a comparative advantage in producing a good if the domestic price is _____ than the world price.

Answer 4

Lower

Question 5

Where small economies’ actions have little to no affect on the world price of a good, they are known as “________.” This means they will import or export at the world price.

Answer 5

“Price takers”

Question 6

When free trade is allowed & a country exports, producers are _______ off, & consumers are ______ off.

Answer 6

Better, worse

Question 7

Trade raises economic well-being, gains of winners _____ losses of the losers.

Answer 7

Exceeds

Question 8

When a country allows free trade & imports, domestic consumers are ______ off & producers are _____ off.

Answer 8

Better, worse

Question 9

Tariff

Answer 9

Tax on goods produced abroad & sold domestically - reduces quantity of imports & moves domestic market closer to equilibrium without trade.

Question 10

Economies of Scale

Answer 10

Some goods produced at low cost only if produced in large quantities.