1. We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.
Is the statement true or false?
2. Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run. This observation helps to explain why many economists are skeptical about the:
a. Unfair-competition argument.
b. Infant-industry argument.
c. national-security argument.
d. Jobs argument
3. Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade:
a. U.S. citizens benefit from lower software prices, increasing consumer surplus in the market.
b. U.S. producers benefit from higher software prices, increasing producer surplus in the market.
c. U.S. software producers are harmed since the price that these producers receive will decline as the price falls to the world price.
d. total surplus in this market will remain unchanged, as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers.
1. We can conclude that international trade is beneficial because, regardless of whether the country imports or exports a good, the overall increase in well-being outweighs the losses associated with trade.
Is the statement true or false?
2. Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run. This observation helps to explain why many economists are skeptical about the:
a. Unfair-competition argument.
b. Infant-industry argument.
c. national-security argument.
d. Jobs argument
3. Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade:
a. U.S. citizens benefit from lower software prices, increasing consumer surplus in the market.
b. U.S. producers benefit from higher software prices, increasing producer surplus in the market.
c. U.S. software producers are harmed since the price that these producers receive will decline as the price falls to the world price.
d. total surplus in this market will remain unchanged, as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers.
