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Exam 17: A: International Trade

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Question 1

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Answer the following questions regarding international trade:(a) What is the common myth regarding the benefits from international trade?(b) What is the associated implication arising from this myth?(c) What is the true benefit from international trade?

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(a) It is a common myth that the greates...

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Question 2

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Explain the myth behind why buying Canadian and how this does or does not improve the Canadian economy.

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A common myth is that it is better for C...

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Question 3

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In 2016, what were the top five exporting nations (measured in dollars)?

The next three questions refer to the information in the following table. (a) What would price and quantity be if the market were closed to international trade? What would the domestic and foreign quantity supplied be if it were open to international trade and the world price was $2?(b) If the world price was $2 and a tariff of $1 were placed on the product, what would be the total revenues going to domestic producers, foreign producers (after-tax), and the government? Explain.(c) Given a world price of $2, what would be the difference in the total revenue received by foreign producers with a $1 per unit tariff compared with a quota of 200 units?

How does relaxing the assumption of constant costs affect the comparative advantage argument for trade?

Evaluate the argument: "Restricting imports from other nations will save Canadian jobs."

What is the problem associated with the importing of goods by high-income nations from low-income nations? Explain how consumer organisations in high-income nations have tried to circumvent this problem.

Which is more effective in blocking imports, a tariff or a quota?

Explain and evaluate the validity of the self-sufficiency argument for trade protection.

The following table shows the domestic quantity demanded (Q_D) and quantity supplied (Q_S) of soybeans in Canada and Brazil at various prices (in Canadian dollars). (a) Complete the above table by indicating the size of exports or imports for each country at each price.(b) Suppose Canada and Brazil are closed economies.What is the domestic price of soybeans in Canada? What is the domestic price of soybeans in Brazil?(c) Suppose Canada and Brazil are the only countries in a two-nation world.What is the world price of soybeans? Is Canada an exporter or an importer at the world price? Is Brazil an exporter or an importer at the world price?

Suppose that by devoting all of its resources to the production of X, nation L can produce 40 X.By devoting all of its resources to Y it can produce 20 Y.Comparable figures for nation M are 15 X and 15 Y.According to the principle of comparative advantage, which nation will specialize in which product? What are the limits to the terms of trade?

Answer the next three questions on the basis of the following production possibilities data for Francia and Galacia.All data are in tons. (a) If trade occurs between Francia and Galacia, which nation should export what product? Why?(b) What are the limits of the terms of trade between Francia and Galacia?(c) Assume that prior to specialization and trade, Francia and Galacia chose production possibility "C." Now each specializes according to comparative advantage.What will be the resulting gains from trade? Explain your answer.

What is the problem with protecting industries in Canada from the dumping of foreign products on the domestic market?

Identify the four basic types of trade barriers and describe each of them.

Critique the argument that trade protection is needed to protect Canadian jobs.

The next three questions refer to the information in the following table. (a) What would price and quantity be if the market were closed to international trade? What would the domestic and foreign quantity supplied be if it were open to international trade and the world price was $4?(b) If the world price was $4 and a tariff of $2 were placed on the product, what would be the total revenues going to domestic producers, foreign producers (after-tax), and the government? Explain.(c) Given a world price of $4, what would be the difference in the total revenue received by foreign producers with a $2 per unit tariff compared with a quota of 20,000 units?

Evaluate this argument for a trade barrier: "Canada needs protection from cheap foreign labour."

"The international flow of goods helps compensate for the international immobility of resources." Analyze and explain.

What are Canada's top four exports and imports?

What are the economic benefits of free trade?