Bartleby Sitemap - Textbook Solutions
All Textbook Solutions for Principles of Economics 2e
What are the conditions under which a country may use the unsafe products argument to block imports?Why is the national security argument not convincing?Assume a perfectly competitive market and the exporting country is small. Using a demand and supply diagram, show the impact of increasing standards on a low-income exporter of toys. Show the tariffs impact. Is the effect on toy prices the same or different? Why is a standards policy preferred to tariffs?What is the difference between a free trade association, a common market, and an economic union?Why would countries promote protectionist laws, while also negotiate for freer trade internationally?What might account for the dramatic increase in international trade over the past 50 years?How does competition, whether domestic or foreign, harm businesses?What are the gains from competition?Who does protectionism protect? From what does it protect them?Name and define three policy tools for enacting protectionism.How does protectionism affect the price of the protected good in the domestic market?Does international trade, taken as a whole, increase the total number of jobs, decrease the total number of jobs, or leave the total number of jobs about the same?Is international trade likely to have roughly the same effect on the number of jobs in each individual industry?How is international trade, taken as a whole, likely to affect the average level of wages?Is international trade likely to have about the same effect on everyones wages?What are main reasons for protecting infant industries? Why is it difficult to stop protecting them?What is dumping? Why does prohibiting it often work better in theory than in practice?What is the race to the bottom scenario?Do the rules of international trade require that all nations impose the same consumer safety standards?What is the national interest argument for protectionism with regard to certain products?Name several of the international treaties where countries negotiate with each other over trade policy.What is the general trend of trade barriers over recent decades: higher, lower, or about the same?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?Who gains and who loses from trade?Why is trade a good thing if some people lose?What are some ways that governments can help people who lose from trade?Show graphically that for any tariff, there is an equivalent quota that would give the same result. What would be the difference, then, between the two types of trade barriers? Hint: It is not something you can see from the graph.From the Work It Out Effects of Trade Barriers, you can see that a tariff raises the price of imports. What is interesting is that the price rises by less than the amount of the tariff. Who pays the rest of the tariff amount? Can you show this graphically?If trade barriers hurt the average worker in an economy (due to lower wages), why does government create trade barriers?Why do you think labor standards and working conditions are lower in the low-income countries of the world than in countries like the United States?How would direct subsidies to key industries be preferable to tariffs or quotas?How can governments identify good candidates for infant industry protection? Can you suggest some key characteristics of good candidates? Why are Industries like computers not good candidates for infant industry protection?Microeconomic theory argues that it is economically rationale (and profitable) to sell additional output as long as the price covers the variable costs of production. How is this relevant to the determination of whether dumping has occurred?How do you think Americans would feel if other countries began to urge the United States to increase environmental standards?Is it legitimate to impose higher safety standards on imported goods that exist in the foreign country where the goods were produced?Why might the unsafe consumer products argument be a more effective strategy (from the perspective of the importing country) than using tariffs or quotas to restrict imports?Why might a tax on domestic consumption of resources critical for national security be a more efficient approach than barriers to imports?Why do you think that the GAIT rounds and, more recently, WTO negotiations have become longer and more difficult to resolve?An economic union requires giving up some political autonomy to succeed. What are some examples of political power countries must give up to be members of an economic union?What are some examples of innovative products that have disrupted their industries for the better?In principle, the benefits of international trade to a country exceed the costs, no matter whether the country is importing or exporting. In practice, it is not always possible to compensate the losers in a country, for example, workers who lose their jobs due to foreign imports. In your opinion, does that mean that trade should be inhibited to prevent the losses?Economists sometimes say that protectionism is the second-best choice for dealing with any particular problem. What they mean is that there is often a policy choice that is more direct or effective for dealing with the problem—a choice that would still allow the benefits of trade to occur. Explain why protectionism is a second-best choice for helping workers as a group helping industries stay strong protecting the environment advancing national defenseTrade 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?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?You have just been put in charge of trade policy for Malawi. Coffee is a recent crop that is growing well and the Malawian export market is developing. As such, Malawi coffee is an infant industry. Malawi coffee producers come to you and ask for tariff protection from cheap Tanzanian coffee. What sorts of policies will you enact? Explain.The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 34.6 and Table 34.7. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell? What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell? Sketch two supply and demand diagrams, one for each country, in the situation before trade. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade. If the Land of Submarines imposes an anti- dumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country. Does your general answer change if the Land of Submarines imposes an import quota of 70?Exercise A1 Name three kinds of graphs and briefly state when is most appropriate to use each type of graph.Exercise A2 What is slope on a line graph?Exercise A3 What dome slices of a pie chart represent?Exercise A4 Why is a bar chart the best way illustrate comparisons?Exercise A5 How does the appearance of positive slope differ from negative slope and from zero slope?Exercise B1 What point is preferred along an indifference Curve?Exercise B2 Why do indifference curves slope down?Exercise B3 Why are indifference curves sleep on the left and flatter on the right?Exercise B4 How many indifference curves does a person have?Exercise B5 How can you tell which indifference calves represent higher or lower levels of utility?Exercise B6 What is a substitution effect?Exercise B7 What is an income effect?Exercise B8 Does the income effect involve a change in income? Explain.Exercise B9 Does a change in price both an income effect and a substitution effect? Does a change in income have income effect and a substitution effect?Exercise B10 Would you expect, in some cases, to see only an income effect or only a substitution effect? Explain.Exercise B11 Which is larger, the income effect or the substitution effect?Exercise D6 What is on the axes of an expenditure-output diagram?Exercise D7 What does the 45-degree line show?Exercise D8 What determines the slope of a consumption function?Exercise D9 What is the marginal propensity to consume, and how is it related to the marginal propensity to import?Exercise D10 Why are the investment function, the government spending function, and the export function all drawn as flat lines?Exercise D11 Why does the import function slope down? What is the marginal propensity to import?Exercise D12 What are the components on which the aggregate expenditure function is based?Exercise D13 Is the equilibrium in a Keynesian cross diagram usually expected to be at or near potential GDP?Exercise D14 What is an inflationary gap? A recessionary gap?Exercise D15 What is the multiplier effect?Exercise D16 Why are savings, taxes, and imports referred to as leakages in calculating the multiplier effect?Exercise D17 Will an economy with a high multiplier be more stable or less stable than an economy with a low multiplier in response to changes in the economy or in government policy?Exercise D18 How do economists use the multiplier?Exercise D19 What does it mean when the aggregate expenditure line crosses the 45-degrss line? In other words, how would you explain the intersection in words?Exercise D20 Which model, the AD/AS or the AE model better explains the relationship between rising price levels and GDP? Why?Exercise D21 What are some reasons that the economy might be in a recession, and what is the appropriate government action to alleviate the recession?Exercise D22 What should the government do to relieve inflationary pressures if the aggregate expenditure is greater than potential GDP?Exercise D23 Two counties are in a recession. Country A has an MPC of 0.8 and Country B has an MPC of 0.6. In which country will government spending have the greatest impact?Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long—term impacts of such policies on the economy?Exercise D25 What role does government play in stabilizing the economy and what are the tradeoffs that must be considered?Exercise D26 If there is a recessionary gap of 100 billion, should the gamut increase spending by 100 billion to close the gap? Why? Why not?Exercise D27 What other changes in the economy can be evaluated using the multiplier?