ECON 102 Lecture Notes - Lecture 9: Market Power, Comparative Advantage, Opportunity Cost
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1. An import tariff
a. lowers the domestic price of the exported good below the world price. |
b. keeps the domestic price of the exported goods the same as the world price. |
c. raises the domestic price of the imported good above the world price |
d. lowers the domestic price of the imported good below the world price. |
2. Which two accounts are included in the balance of payments:
a. current account and the reserve account. |
b. current account and the trade account. |
c. current account and the capital account. |
d. trade account and the capital account. |
3. A producer has a comparative advantage in the production of a good when the producer:
a. has a production cost that is less than sales revenue. |
b. has the highest cost of production compared to any other producer. |
c. is comparatively more efficient at producing the good than it is at producing anything else. |
d. specializes through the use of an assembly line. |
4. According to the Fischer effect, if the "real" rate of interest in a country is 4 percent and expected annual inflation is 9 percent, the "nominal" interest rate will be _____.
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C. 9 percent |
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D. 36 percent |
1. If we know that Canada exports maple syrup, we can conclude that maple syrup consumers in Canada are worse off than they would be in the absence of trade.
Is the statement true or false?
2. When a country opens up to trade in a good for which it has a comparative advantage, and the country begins to export the good, we can conclude that:
a. |
The domestic price will fall after trade opens up. |
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b. |
The total surplus for this good will increase as a result of opening up the market to international trade. |
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c. |
Opening the market to international trade will create a deadweight loss. |
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d. |
Both buyers and sellers in that country will be better off as a consequence of opening up the market to international trade. |