If the US is not the low opportunity cost producer of sugar and we eliminate all
ID: 1121880 • Letter: I
Question
If the US is not the low opportunity cost producer of sugar and we eliminate all quotas and tariffs on sugar we would expect_____.
don't have an absolute advantage.
have the lowest opportunity cost.
have the lowest monetary price.
have the highest opportunity cost.
Which of the following is not listed in the textbook as a key benefit of international trade?
Average incomes in the US have declined while average incomes in Mexico and Canada have increased.
The US economy has grown significantly.
Mexico have enjoyed higher level of growth while growth rates in the US and Canada have been negative.
Mexico and Canada have experienced lower incomes and American consumers have had to pay higher prices for basic goods and services.
Restrictions on trade may be important to support domestic industries that are vital to national defense.
Restrictions on trade may be important to support new companies that are not yet able to compete with well-developed international suppliers.
Restriction on imports and prices may be needed to prevent international suppliers from charging artificially low prices to drive domestic producers out of business and the raise their prices to take advantage of consumers.
Tariffs and quotas may be needed by some foreign countries have an absolute advantage and therefor it is not possible to gain from trading with them.
Since the US signed the North American Free Trade Agreement with Canada and Mexico ____.
The new equilibrium price of corn to fall and for US consumers to pay less for corn.
The new equilibrium price of corn to rise and for US consumers to pay less for corn.
The new equilibrium price for corn to fall and international consumers to pay more for corn.
The new equilibrium price for corn to rise and US consumers to pay more for corn.
Which of the following arguments are not among those that economists consider sometimes relevant in considering trade restrictions?
Mexico and China are beating America at trade.
Imports from Mexico and China have no impact on US employment and jobs.
Imports from Mexico and China have not contributed to lower average standards of living in the US.
Imports from Mexico and China have led to lower quality US automobiles.
If the US has a comparative advantage in the production of corn and it starts to export more corn to the world where they don't produce corn we would expect____.
Larger-scale production leading to more gains and income.
Markets becoming more competitive and thus encouraging producers to make better products for lower prices.
Encouraging government to adopt institutions that will more effectively benefit investment and economic growth.
The elimination of low paying jobs and their replacement with high paying jobs.
Economic theory and real world evidence suggests that____.
The price US consumers pay for sugar to fall and the quantity demanded to remain unchanged.
the price US consumers pay for sugar to rise as domestic producers are forced out of business.
the price US consumers pay for sugar to fall and the quantity of sugar consumed to go up.
the price US consumers pay for sugar to remain unchanged but they will consume more thanks to the new imports.
Comparative advantage suggests we gain from trade when we buy from producers who _____.
If the US imposes a quota on the number of brooms that can be imported from international producers we would expect_____.
the price of brooms to fall until the amount by which quantity supplied exceeded quantity demanded equaled the amount of the quota.
the price of brooms to rise to the point where quantity demanded exceeded quantity supplied by the amount of the quota.
the price of brooms to fall to the point where quantity demanded exceeded quantity supplied by the amount of the quota.
the price of brooms to rise until the amount by which quantity supplied exceeded quantity demanded equaled the amount of the quota.
If we lower trade barriers we would expect our country to _____.
be cable to consume more goods and services.
experience a decrease in the standard of living.
If the US imposes a tarrif on imports of cars then we would expect _____.
the price of cars to move higher but still remain below the equilibrium price if all imports were banned.
the price of cars to remain unchanged but the supply curve to shift to the right increasing consumption.
the price of cars to fall toward the equilibrium price that would exist if there was no international trade.
the price of cars to rise to a point where quantity supplied exceeded quantity demanded.
loose all jobs in the industries we once had.
not have any change in its consumption and income
a.don't have an absolute advantage.
b.have the lowest opportunity cost.
c.have the lowest monetary price.
d.have the highest opportunity cost.
Explanation / Answer
Question 1
If the US is not the low opportunity cost producer of sugar and all quotas and tariffs would be eliminated on sugar then in that case the opportunity cost of producing sugar (which is low due to these barriers) will rise up further and it will be seen that with same set of resources, United States is not producing the greater quantity of sugar relative to the rest of the world which implies that it do not have an absolute advantage.
The correct answer is the option (a).
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