Economics 1021A/B Lecture 7: Chapter 7 - Global markets in action

56 views7 pages

lavendersardine611

29 Nov 2016

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

mariameelguendou and 38538 others unlocked

ECON 1021A/B Full Course Notes

Verified Note

94 documents

Document Summary

Because we trade with people in other countries, the goods and services that we can buy and consume are not limited by what we can produce. Imports are the good and services that we buy from people in other countries. Exports are the goods and services we sell to people in other countries. The fundamental force that generates trade between nations is comparative advantage. The basis for comparative trade is divergent opportunity costs between countries. National comparative advantage as the ability of a nation to perform an activity or produce a good or service at a lower opportunity cost than any other nation. The opportunity cost of producing a t-shift is lower in china than in canada, so china has a comparative advantage in producing t-shirts. The opportunity cost of producing a regional jet is lower in. Canada than in china, so canada has a comparative advantage in producing regional jets.

Related Questions

I need help with this!!!

International trade can improve efficiency in the use of global resources to make all parties better off. If no one can deny the power of comparative advantage and gains from trade, then why do we continue to resist? Trade happens because we want to sell goods to people in other countries, and we want to buy stuff that is produced in other countries. With individual decision makers acting in self-interest, do you think anyone is watching out for the global economy?

http://www.bbc.co.uk/news/business-29572475 (Links to an external site.)

TITLE: BENEFITS OF TRADE Trade among nations has been growing faster than the total world GDP. The growth of U.S. exports and imports relative to the U.S. GDP parallels this global trend. Today, exports constitute more than 10 per cent of total national production. In some countries, trade accounts for a much higher share of total economic activity.

Tasks: Consider the table below for the neighbouring nations of Northland and West Coast. The table lists the maximum feasible hourly rates of the production of pastries if no sandwiches are produced and the maximum feasible hourly rates of the production of sandwiches if no pastries are produced. Assume that the opportunity costs of producing these goods are constant in both nations.

Product	Northland	West Coast
Pastries (per hour)	50,000	100,000
Sandwiches (per hour)	25,000	200,000

a. Based on the data provided, what is the opportunity cost of producing pastries and sandwiches in Northland?

b. What is the opportunity cost of producing pastries and sandwiches in West Coast?

c. Which nation has a comparative advantage in producing pastries and which nation has a comparative advantage in producing sandwiches?

d. Suppose the two nations choose to specialize in producing the goods for which both have a comparative advantage. Both agree to trade at a rate of exchange of one pastry for one sandwich. At this rate of exchange, what are the maximum numbers of pastries and sandwiches that both could agree to trade?

tanhyena895

Question 1

In 2003, the ________ ruled that U.S. tariffs on steel imported from the EU were unfair and allowed the EU to issue retaliatory tariffs on U.S. products.

World Trade Organization

United Nations

European Central Bank

International Human Rights Commission

Question 2

The idea of the U.S.-Canadian Free-Trade Agreement that ________ barriers to trade including tariffs and quotas between the United States and Canada by 1998 was to increase the amount that the United States exports to Canada and the amount that the United States imports from Canada.

increased all

removed some

removed all

increased some

Question 3

According to the theory of comparative advantage, a country should specialize and ________ goods with ________ opportunity cost.

import; the lowest

import; negative

export; the lowest

export; the highest

Question 4

A quota is a restriction on imports.

True

False

Question 5

If Holland decreases subsidies to its tulip growers, the price of tulips in the United States will rise.

True

False

Question 6

According to comparative advantage, trade between two countries allows ________ of the trading countries to use its resources most efficiently.

only the smaller

only the larger

neither

each

Question 7

________ U.S. president(s) who has/have held office since GATT was signed has argued for free-trade policies, yet each one has used his powers to protect various sectors of the economy.

Only one

No

Every

Only 3

Question 8

In 1991, the European Union began the process of forming the

		largest free-trade zone in the world.
		only continental military force in the world.
		first international trade agreement in the world.
		first unified currency in the world.

Question 9
1. The Smoot-Hawley tariff set off an international trade war in the
  
  1930s.
  
  1950s.
  
  1970s.
  
  1990s.
  
  Please help me with these questions Thank you.

magentadeer293

Economics 1021A/B Lecture 7: Chapter 7 - Global markets in action

ECON 1021A/B Full Course Notes

Document Summary

Get access

Related Documents

Economics 1021A/B Lecture Notes - Trade Route, Fundamental Interaction, Comparative Advantage

Economics 1021A/B Lecture Notes - Lecture 13: Trade Route, Comparative Advantage, Fundamental Interaction

Economics 1021A/B Study Guide - Final Guide: Trade Restriction, Absolute Advantage, Deadweight Loss