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63.
The production possibilities curves illustrated in Figure 35.2 reveal that
64.
Using Figure 35.2, the opportunity cost of producing 1 pair of golf shoes in the United States is
65.
Based on the comparative cost ratios implied in Figure 35.2, it is clear that
66.
Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico. These two curves
indicate that
67.
Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico. These two curves
indicate that
68.
Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico. These two curves
indicate that
69.
Refer to Figure 35.4 for the production possibilities curve for Chile:
Chile's production and consumption of wine and wheat without trade are represented by point A. Suppose that
Chile has a comparative advantage in the production of wine compared to the United States and
specialization and trade take place between the two countries. The most likely new combination of wine and
wheat available to Chile would be
70. The amount of good A given up for good B in trade is the
71. The terms of trade between two countries refer to
73. If the terms of trade between any two countries lie somewhere between their respective opportunity costs, then
the effects of trade will include
The terms of trade are based on opportunity cost being a measure of how much of one good must be given up
to get a fixed amount of another good; the terms of trade should be between domestic and foreign opportunity
costs. The domestic country would not buy abroad if it costs less to produce domestically, nor would it sell
abroad if it could receive more income from selling domestically.
75. Suppose Canada can produce either 300 tons of paper or 200 HDTVs, and India can produce either 200
tons of paper or 100 HDTVs. The terms of trade between the two countries will lie between
A. 1/2 and 2/3 of an HDTV per ton of paper.
76. Assume Belgium can produce 5 units of good X or 2 units of good Y. Germany can produce 4 units of good X
or 3 units of good Y. What would be the terms of trade between Belgium and Germany for 1 unit of good Y?
77. Assume Ireland can produce 4 units of good X or 2 units of good Y. France can produce 3 units of good X or 9
units of good Y. What would be the terms of trade between Ireland and France for 1 unit of good X?
78. Assume Saudi Arabia can produce 4 units of good X or 3 units of good Y. Tunisia can produce 5 units of good
X or 8 units of good Y. What would be the terms of trade between Saudi Arabia and Tunisia for 1 unit of good
Y?
79. With regard to international trade,
80.
Based on the information in Table 35.1, assume China and the United States have the same amount of
resources with which to produce soybeans and computers and they produce no other goods. The opportunity
cost of producing 1 ton of soybeans in the United States is
81.
Based on the information in Table 35.1, assume China and the United States have the same amount of
resources with which to produce soybeans and computers and they produce no other goods. The opportunity
cost of producing 1 computer in China is
82.
Based on the information in Table 35.1, assume China and the United States have the same amount of
resources with which to produce soybeans and computers and they produce no other goods. From the
information in Table 35.1, it is clear that
83.
Based on the information in Table 35.1, assume China and the United States have the same amount of
resources with which to produce soybeans and computers and they produce no other goods. The output of
computers and soybeans would be greatest if
84.
Based on the information in Table 35.1, assume China and the United States have the same amount of resources
with which to produce soybeans and computers and they produce no other goods. For trade to be mutually
beneficial for both countries, the terms of trade will be such that 1 ton of soybeans will exchange for
85.
Based on the information in Table 35.1, assume China and the United States have the same amount of
resources with which to produce soybeans and computers and they produce no other goods. For trade to
be mutually beneficial for both countries, the terms of trade will be such that 1 computer will exchange for
86. Suppose that Brazil has a comparative advantage in coffee and Mexico has a comparative advantage in
tomatoes. Which of the following groups would be worse off if these countries specialize and trade?
87. Producers of paper products are most likely to be in favor of
88. Which group is most likely to be adversely affected by the importation of foreign steel?
89. As trade restrictions are eliminated, increased imports
90. The elimination of import restrictions will
A. Alter the mix of output from export industries toward domestic industries.
91. Trade restrictions
A. Reduce the gains from trade for the country as a whole.
92. If we add together all the gains from specialization and trade and then subtract all the losses, the net result
would be
A. Zero: the gains and losses would cancel out.
93. International trade
A. Causes prices of products to rise because of the transportation costs.
94. If trade is mutually beneficial, then increasing trade
A. Increases the welfare of producers that compete with importers.
95. Increased trade restrictions
A. Increase a trade deficit in the short run.
96. Which of the following groups has an interest in encouraging free trade?
97. Which of the following is not a reason to restrict trade?
