ECON 214 InQuizitive Assignment 12 solutions complete answers

ECON 214 InQuizitive Assignment 12 solutions complete answers 

 

Which of these scenarios is the best example of dumping?

 

If the United States imposes new tariffs on foreign car imports, domestic manufacturers will sell more cars.

 

Give your answer as a negative number if the trade deficit decreased.

 

The graph below depicts the impact of a tariff in the market for shoes. If a nation initially participates in free trade and enjoys a price of $100 per pair of shoes, then a 20% shoe tariff would reduce the welfare of domestic consumers by the total of areas A, B, PS, and T.

 

Of these areas representing a loss to domestic consumers, click on the area(s) that do notrepresent a gain to any other group.

 

Drag each nation to its correct position in the graph, to show the total value of U.S. goods exported to and imported from that nation in 2014.

 

Considering only the nations in the figure below, the largest U.S. trade surplus for 2014 is with China.

 

Two isolated nations, Alphaland and Betaton, are considering opening their borders to trade with each other. Both nations consume only two goods: salt and pepper. Alphaland can produce either 80 tons of salt per day or 5 tons of pepper per day, while Betaton can produce either 3 tons of salt per day or 1 ton of pepper per day. Which trade ratios would make both nations better off?

 

If Mexico and the United States faced these opportunity cost, then to benefit from trade Mexico should specialize in producing –. That is, –would use some of the oil it produces and export the rest to – in exchange for sugar. In order for the trade to be beneficial to both nations, the trade ratio must be between 2 and – tons of sugar per barrel of oil.

 

The figure below depicts the impact of a quota in the market for tablet computers. Assume that a nation initially participates in free trade and enjoys a world price of PW = $160 per pair of tablet computer, but then an import quota equal to 5,000 – 3,000 = 2,000 is imposed, consequently reducing the welfare of domestic consumers by the total of areas A, B, PS, and F, which comes to $330,000. How much of that domestic consumer welfare will be captured by domestic producers?

 

Fill in the blanks to complete the passage about Nicaragua’s economy.

 

To grow its way out of poverty, Nicaragua has established “free zones” where companies can produce goods for – and avoid the various corporate taxes that apply to goods produced for the – market. Several U.S. – companies have taken advantage of the opportunity to manufacture goods in an environment with reduced production costs. But while these businesses employ Nicaraguan –, Nicaraguan – receive little benefit, since the goods being produced are not available to them.

 

Imagine that the government of France imposes a tariff on imported wineglasses. (You may assume there was no tariff on wineglasses previously.) Which of these consequences would you expect to result from the new tariff?

 

Please complete the following passage concerning the U.S. balance of trade, based on the figure.

 

Since at least 1975, the United States has had a – balance of trade, also known as a –. However, it is clear that this trend is driven primarily by only one of the components of U.S. trade. If the distinction is made between the trade of goods versus the trade of services, it turns out that the United States enjoys a trade surplus for –, but a trade deficit for –.

 

Suppose Mexico’s opportunity cost for producing 1 unit of food is 3 units of clothing and the United States’ opportunity cost for producing 1 unit of food is 0.5 units of clothing. Trade at a ratio of 1:1 is beneficial to both countries. How beneficial would it be for Mexico if the trading ratio were 1 unit of clothing for every 2 units of food?

 

Fill in the blanks to complete the passage about trade barriers to protect infant industries.

 

One argument for trade barriers is that domestic industries sometimes need trade protection – develop the capacity to compete internationally. Unfortunately, however, for –reasons, trade barriers are harder to – than they are to –.

 

The tiny isolationist nations of Lorland and Zhangia are considering opening their borders to trade with each other. Both nations produce only two goods: smoothies and sandals. Currently, a worker in Lorland can produce 2 smoothies per day or 8 sandals per day, while a worker in Zhangia can produce 1 smoothie per day or 5 sandals per day. Using this information, please match each nation and good to the most accurate description.

 

Match each of the following motivations for trade restrictions to the most relevant caveat discouraging such restrictions.

 

This figure depicts the growth of U.S. trade for services only between 1960 and 2014, as a percentage of U.S. GDP. Please label the “exports” and “imports” lines appropriately.

 

Of these areas representing a loss to domestic consumers, click on the area(s) that do not represent a gain to any other group.

 

Suppose that a small island nation, Runau, had the imports and exports shown in the table for 2014 and 2015. By how much did its trade deficit change?

 

Which of these are reasons for the intense increase in international trade that has occurred over the last 70 years?

 

Of these areas representing a loss to domestic consumers, click on the area(s) that would become a gain to foreign producers if the tariff were replaced with a quota for the same quantity of imports.

 

Imagine a world with two countries, Amicia and Franconia, where people consume only cake and pie. Assume that an Amician worker takes 1.5 hours to make a cake and 1.5 hours to make a pie. Further, assume that a Franconian worker takes only 1 hour to make a cake but 2 hours to make a pie. Fill in the blanks to complete the table showing the opportunity cost of each production activity for each country.

 

Fill in the blanks to complete the passage about import quotas.

 

A quota, like a tariff, has the effect of – imports. However, a quota is different in that it imposes – cost on the supplier. For this reason, suppliers will sometimes accept “voluntary” – to avoid having their goods be subject to –.

 

The figure shows the 2014 export and import totals (in billions of dollars) for trade between the United States and selected other nations. Calculate the U.S. trade balance with Mexico. For a surplus, enter a positive number; for a deficit, enter a negative number.

 

When nations specialize their production processes and engage in international trade, firms in those economies are able to enjoy lower per-unit costs as production expands.

 

Imagine that the United States and Mexico produce only sugar and oil. The United States can produce a barrel of oil at an opportunity cost of 2 tons of sugar, whereas Mexico can produce a barrel of oil at an opportunity cost of 3 tons of sugar. Fill in the blanks to complete the passage.

 

How does a country’s business cycle generally affect the international trade balance?

 

Fill in the blanks to complete the passage about the U.S. trade balances in goods and services.

 

From the graphs, it is evident that the United States imports about 50% more in – than it exports, but exports about 50% more in – than it imports. It is also evident, from a comparison of the vertical scales, that the United States imports almost – as much in goods as in services and that it exports a little over – as much in goods as in services.

 

Fill in the blanks to complete the passage about the effects of trade barriers.

 

Trade barriers protect domestic – from foreign –, but the protection comes at the expense of –, who pay higher prices for the same goods. The effect is much the same as if a tax had been imposed to transfer money from – to – consisting of producers in a single industry.

 

Fill in the blanks to complete the following passage concerning the North American Free Trade Agreement.

 

The United States signed the North American Free Trade Agreement, or NAFTA, in –. This agreement eliminated nearly all – among the United States, Mexico, and –. Since its signing, real U.S. imports and exports with both nations have –.

 

Suppose that Japan is considering placing trade restrictions on imports of U.S. pharmaceuticals. It could choose either a tariff or a quota, which would be designed to reduce imports by the same quantity. Which of these groups would be indifferent between the tariff and the quota?

 

Please complete the following passage concerning globalization.

 

Between 1970 and 2013, world merchandise trade – in real terms. Is this because nations are simply producing more? –, because world trade equaled 11% of world GDP in 1970 but – by 2013.

 

Match each good to its status in U.S. trade with Canada and Mexico.

 

Which of these statements regarding U.S. trade are true?

 

Which items represent the United States’s main service exports?

 

If the tiny nation of Lorland devotes all its resources to strawberries, it can produce 16 strawberries per day. If it devotes all its resources to balloons, it can produce 80 balloons per day. These are the only goods that Lorland can produce. What is the opportunity cost of 1 balloon in Lorland?

 

Currently, the United States has free trade agreements in force with how many nations?