Economics 10a Chapter Notes - Chapter 9: Market Power, Takers, Unfair Competition

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silverantelope552

10 Feb 2014

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If the world price of textiles is higher than the domestic price, then the country will export textiles once trade is permitted. If domestic price is low, the country is more likely to have comparative advantage in producing that good. D and the equilibrium without trade (moves domestic quantity demanded from q1 quantity supplied from q1. S: a tariff makes domestic sellers better off by raising the domestic price, but domestic buyers are worse off. Area d represents deadweight loss from overproduction of textiles. S: when the tariff raises the price that domestic consumers have to pay, it encourages them to reduce consumption of the good from q1. D: benefits of free trade, increased variety of goods, lower costs through economies of scale some goods can be produced at low cost only if they are produced in large quantities (economies of scale)

Related Questions

Suppose the market for oranges in a small country is closed to international trade. The domestic price is $3 per lb, at which 10,000 lbs are bought and sold in the country, while the world price is $4 per lb. If the country opens up to free trade with the world, the domestic quantity demanded at the world price will be 8,000 lbs, and the domestic quantity supplied at the world price will be 12,000 lbs.

A. Which of the following statements is true?

a. The country will become an importer of oranges because it has a comparative advantage in the production of oranges

b. The country will become an exporter of oranges because it has a comparative advantage in the production of oranges

c. The country will become an importer of oranges because the world has a comparative advantage in the production of oranges

d. The country will become an exporter of oranges because the world has a comparative advantage in the production of oranges

B. At what price (per lb.) will oranges be bought and sold in the country after opening up to trade?

a. $3

b. $4

c. $3.5

C. After opening up to trade, the level of exports/imports for the country will be:

a. 8,000 lbs.

b. 12,000 lbs.

c. 10,000 lbs.

d. 4,000 lbs.

D. How much (in $) is the net gain from trade for this country in opening up to free trade?

coralbadger702

25. If a country has a comparative advantage in producing wooden furniture, then with free trade:

A. The country will import wooden furniture

B. Producer surplus in the market for wooden furniture will increase.

C. Consumer surplus in the market for wooden furniture will increase.

D. The domestic quantity supplied will be less than the domestic quantity demanded.

turquoisealpaca637

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 _____.

5 percent

B.	13 percent

9 percent

36 percent

bluetortoise611

Economics 10a Chapter Notes - Chapter 9: Market Power, Takers, Unfair Competition

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