12 Question 12When trade occurs within the same industry it is calledO fair tradeO comparative advantage tradeO interindustry tradeintra-industry trade

Trade refers to the intentional exchange of goods or services between various economic actors. Since…

Answered: Question 12 When trade occurs within…

Question 12 When trade occurs within the same industry it is called O fair trade comparative advantage trade O interindustry trade intra-industry trade

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 14RQ: What are the two main sources of economic gains from intra-industry trade?

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Concept explainers

Protective Tariffs

A tariff is a kind of tax that is charged on exported and imported items. It means tariff is charged on both kinds of goods i.e., exported and imported. However, some goods may be exempted from this kind of tariff. Protective Tariffs refer to the charges which a country charged on imported goods to protect its domestic market. It also protects countries Industrialists in their Production. So, that their markets remain intact and do not get dumped by outside supply.

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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?
Why might intra-industry trade seem surprising from the point of view of comparative advantage?
Are the gains from international trade more likely to be relatively more important to large or small countries?
Does intra-industry trade contradict the theory of comparative advantage?
How do trade barriers affect the average Income level in an economy?
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?
Consider two countries: South Korea and Taiwan. Taiwan can produce one million mobile phones per day at the cost of 10 per phone and South Korea can produce 50 million mobile phones at 5 per phone. Assume these phones are the same type and quality and there is only one price. What is the minimum price at which both countries will engage in trade?
What are the two main sources of economic gains from intra-industry trade?