ee-trade benefitsTtion to the positive welfare effects that free trade has on an economy, there are a variety of other benefits of international tradeng scenario:Thout free trade, Sapphira has market power as a local producer. Once free trade is implemented in the local economy, Sapphirager able to raise its prices above competitive levels.vious scerrepresents which of the following benefits of free trade?D An enhanced flow of ideasIncreased variety of goodsIncreased competitionLower costs through economies of scaleGrade It NowSav

hout free trade, Sapphira has market power as a local producer. Once free trade is implemented in the local economy, Sapphira er able to raise its prices above competitive levels. lous scenario represents which of the following benefits of free trade? An enhanced flow of ideas Increased variety of goods Increased competition Lower costs through economies of scale

hout free trade, Sapphira has market power as a local producer. Once free trade is implemented in the local economy, Sapphira er able to raise its prices above competitive levels. lous scenario represents which of the following benefits of free trade? An enhanced flow of ideas Increased variety of goods Increased competition Lower costs through economies of scale

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: International Trade

Section: Chapter Questions

Problem 2.6P

See similar textbooks

Similar questions

Does intra-industry trade contradict the theory of comparative advantage?
True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
If opening up to free trade would benefit a nation, then why do nations not just eliminate their trade barriers, and not bother with international trade negotiations?
Table 33.15 shows how the average costs of production for semiconductors (the chips In computer memories) change as the quantity of semiconductors built at that factory increases. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors? 50,000 semiconductors? 30,000 semiconductors? Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.
Why might intra-industry trade seem surprising from the point of view of comparative advantage?
How do trade barriers affect the average Income level in an economy?
Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply (s) for cameras In Thailand and Japan is described by the following functions: QsT=-5+14P QsJ=-10+14P QdT=60-P QdJ=80-P P is the price measured in a common currency used in both countries, such as the Thai Baht. Compute the equilibrium price (P) and quantities in each country without trade. Now assume that free trade occurs. The free-trade price goes to 56.36 Baht. Who exports and Imports cameras and in what quantities?
If trade barriers hurt the average worker in an economy (due to lower wages), why does government create trade barriers?
What factors does Paul Krugman identity that supported expanding international trade in the 1800s?
Are the gains from international trade more likely to be relatively more important to large or small countries?
Trade has income distribution effects. For example, suppose that because of a government-negotiated reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you expect this pattern of trade to increase or decrease jobs and wages in the paint industry in Germany? The alarm clock industry in Germany? The paint industry in Czech Republic? The alarm clock industry in Czech Republic? What has to happen for there to be no increase in total unemployment in both countries?