ECON 235 Section 1_Spring 2022 Practice Exam 3

a. Suppose that the international relative price of cloth goes up. How will this affect the trade line and optimal level of consumption in the cloth exporting country? How would this impact the production in the exporting country? Show on the graph and explain (don’t worry about numbers). b. Is this change in the international relative price an improvement or deterioration in the terms of trade of the rest of the world? According to your graph, does the rest of the world gain or lose well-being? Explain!

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Suppose each worker in Home can produce 12 wheat or 4 TVs. Assume that Home has 10 workers. Suppose each worker in Foreign can produce 8 wheat or 2 TVs. Assume that Foreign has 20 workers. a. What is the no-trade relative price of TVs in Home and Foreign respectively?b. Which country has an absolute advantage in the production of wheat? Whichcountry has a comparative advantage in the production of wheat?c. Use two graphs (one for Home and one for Foreign) to display productionpossibilities along with indifference curves and label no-trade equilibria and a trade equilibrium constructed by you. (Assume that positive quantities of both goods are consumed in both countries in all equilibria). Pick your own numbers for the relative price in the trade equilibrium and for quantities consumed in the trade and no-trade equilibria for both countries.d. What is the real wage in units of wheat in Home in the no-trade and in your proposed trade equilibrium?e. Calculate the gains from trade for Home…

In reference to tariffs, What is the reason that U.S. imposes tariffs? why the U.S. imposes tariffs on imports?

International Trade-End of Chapter Problem Evaluate the following statement: is it true, false, or uncertain? "The United States can produce more tomatoes and avocados compared to Mexico, therefore there is no need for the United States to trade with Mexico for these goods." The statement is true. The United States has an absolute advantage in the production of both avocadoes and tomatoes. Due to this efficiency, it cannot benefit from trade with Mexico. The statement is false. Even though the United States has an absolute advantage in the production of both avocadoes and tomatoes, Mexico will still have a comparative advantage in one of these. Therefore, trade can be beneficial to both. O The statement is uncertain. There is not enough information on the opportunity cost of producing each good for both countries. Therefore we cannot pass a valid conclusion.

The price of solar panels in Estonia is $150.00, while the world price is $100.00. Using the graph below, answer the below questions: Total surplus after Estonia opens trade with the world? Net change in total surplus after Estonia opens trade with the world? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

Which of the following tends to be observed if a country increases its tariffs on imports? a. The demand for imports tends to increase. b. The demand for exports tends to decrease. c. This will lead to an increase in the current account. d. This will lead to a decrease in the financial account.

If the United States produces 8 automobiles and Canada produces 2 automobiles and the United States produces 8 units of lumber and Canada produces 4 units of lumber, should the U. S. trade with Canada? If so, what should be imported and what should be exported?

Predict what each of the following events would do to the terms of trade of the importing country and the exporting country, other things being equal. a. A blight destroys a large part of the coffee beans produced in the world. There will be favourable change in the terms of trade of coffee exporters, unfavourable change for coffee importers. b. The Koreans cut the price of the steel they sell to Canada. There will be favourable change in the terms of trade for Canada and unfavourable change in the terms of trade for Korea. c. General inflation of 4 percent occurs around the world. There will be unpredictable change in the terms of trade for the importing country and unpredictable change in the terms of trade for the exporting country. d. Violation of OPEC output quotas leads to a sharp fall in the price of oil. There will be change in terms of trade for oil exporters, and change in terms of trade for oil importers. unpredictable unfavourable favourable

Based on the information from the previous graph, the absent international trade surplus is (_________).  Part II.  When South Africa adjusts its trade policy to allow free trade of limes, the price of one ton of limes in South Africa becomes $800. At this price, (_____)tons of limes will be demanded in South Africa, and(____)tons will be supplied by domestic suppliers. Therefore, South Africa will export(____)tons of limes. Part III.   Using the info from previous tasks, complete the following to analyze the welfare effect of allowing free trade:     With free trade (dollars) Consumer Surplus= Producer Surplus=   WIthout free trade (dollars) Consumer Surplus= Producer Surplus=

Choose four countries. One country in North America, another country in Central America, another country in the Caribbean and another country in South America and indicate, using the gravity model, which factors should increase or reduce trade between those countries. After that, choose a country in Europe and indicate, using the Gravity Model, how the intensity of trade changes with five countries. You must take into account the concept of the gravity model and the factors that affect trade such as language, culture, trade agreements, among others. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

4) You just overheard your friend say the following: “Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade.” How would you respond?

If the United States produces 8 automobiles and Canada produces and Canada produces 2 automobiles, and the United States produces 8 units of lumber and Canada produces 4 units of lumber, should Canada trade with the U.S.? If so, what should be imported and what should be exported?

Suppose that Bangladesh, a relatively poor, agricultural nation with a low level of technological development, has been able to improve its technology since it joined a free-trade agreement. Which of the following benefits of international trade describes this free-trade benefit that Bangladesh enjoys? a. Increased competition b.Increased variety of goods c.Lower unit costs through economies of scale d. Enhanced flow of ideas   Bangladesh has been able to improve its technology through imports due to its adherence to a multilateral approach to trade restrictions that has dramatically reduced average tariffs among member nations and is known as the ______________. a. North America Free Trade Agreement (NAFTA) b. General Agreement on Tarrif and Trade (GATT) c. World Trade Organization (WTO)

Please mark the following statements True or False and explain why in one or two sentences. 1. A country is less productive in every kind of product, and then it will only be hurt in trade. 2. Free trade with countries that pay low wages still benefits high-wage countries. 3. The growth in the international service trade is stagnant due to the difficulty in transportation. 4. Even without a retaliatory tariff, introducing a tariff may still hurt domestic welfare.

3. Heckscher-Ohlin theory, Stolper-Samuelson theorem, and opinions about free trade Suppose Serbia becomes a member of the European Union. As a result, Serbia's exports of textiles (which are intensive in labor) and its imports of wheat (which are intensive in land) both increase. According to the Heckscher-Ohlin theory, Serbia is abundant in Consistent with the Heckscher-Ohlin theory and the Stolper-Samuelson theorem, which of the following groups in Serbia will support its membership in the European Union? Check all that apply. Workers in textile production Capital owners in textile production Capital owners in wheat production Farmers

County A will export       ["bikes", "cars", "nothing"]  and import       ["bikes", "cars", "nothing"]  because       ["Country A has a gomparative advantage in cars", "Country A has a comparative advantage in bikes", "Country B has an absolute advantage in both goods"]  . County B will export       ["bikes", "cars", "nothing"] and import       ["bikes", "cars", "nothing"] because       ["Country A has a gomparative advantage in cars", "Country A has a comparative advantage in bikes", "Country B has an absolute advantage in both goods so Country A has nothing to trade with Country B"]  .