EBK MICROECONOMICS
2nd Edition
ISBN: 9780134458496
Author: List
Publisher: VST
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Question
Chapter 8, Problem 11Q
To determine
Reasons making open trade controversial.
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A primary reason why nations conduct international trade is because
Will a country import or export products for which it has a comparative advantage? Explain.
In a PPC graph, if free trade makes the budget line become flatter and the comparative advantage good is on the y - axis, what has free trade done to the country's terms of trade?
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- There are two countries in the world, A and B, which trade only two goods, shirts and pants. Under autarky, shirts are cheaper in Country A than in Country B, whereas the pants are more expensive in Country A. Suppose that the world price of shirts lies above the two countries' autarky prices. BothCountry A and Country B will only produce shirts when the opportunity to trade exists.Answer true, false, or uncertain. Please briefly explain your answerarrow_forwardDescribe using a diagram how international trade occurs. Based on the Hecsher-Ohlin theory, describe using a diagram how international trade occurs.arrow_forwardUse comparative advantage, two countries and two goods, to explain why every country can be better off from international trade.arrow_forward
- From the trade model, we found that in most cases, trade creates value. Where do we see that conclusion in the Supply and Demand model? You should be able to answer this in a few sentences.arrow_forwardIf a country produces more food and electronics than another country does it have a comparative advantage?arrow_forwardHow does specialization and trade benefit both individuals and nations?arrow_forward
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