Principles Of Economics, Student Value Edition
12th Edition
ISBN: 9780134079288
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: Prentice Hall
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Question
Chapter 33, Problem 5.1P
To determine
The arguments against CAFTA-DR.
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Comment on the following statement:
"The United States is more productive in most activities than are most of other countries because it has an absolute advantage in the production of most goods and services. Therefore we should restrict international trade as it only benefits other countries at the expense of the United States."
Suppose the nation of Isoland is an importer of textiles and is looking for a way to raise government revenue. The following graph shows the effect of a tariff on textile imports.
Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including both imported and domestically produced textiles). Compared to the free trade scenario, the quantity of textiles consumed in Isoland will **FALL/REMAIN UNCHANGED/RISE** , and the quantity produced in Isoland will **FALL/REMAIN UNCHANGED/RISE** under a textile consumption tax.
The following table shows the effect of an import tariff on the nation of Isoland. Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption.
Which of the following is true of foreign trade zones?
These are areas that are physically outside U.S. soil but are considered to be inside U.S. commerce.
Goods entering foreign trade zones are subject to duty until they leave the zones.
Federal government has made it mandatory for U.S. companies to set up manufacturing plants within the foreign trade zones.
Companies that have set up manufacturing plants within the foreign trade zones are free from paying duty on defective materials.
Chapter 33 Solutions
Principles Of Economics, Student Value Edition
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