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Comparative & Absolute Advantage
WTO
Tariffs & Quotas
Subsidies & Admin Barriers
Vocabulary
100
Adam Smith, also known as the Father of Classical Economics created this economic theory.
What is absolute advantage?
100
The WTO has this many members.
What is 164?
100
A tariff is a _______ change, so it causes a _____________ the supply curve.
What is price and movement along?
100
Imposing a subsidy makes the supply curve shift ______ (up, down, left, right) by ____________
What is down, by the amount of the subsidy?
100
________ are made with the intention to sell abroad, while _________ are bought abroad for domestic use
What are Exports and Imports
200
If countries specialize according to this theory, global production and competition will increase.
What is the theory of comparative advantage?
200
The WTO says tariffs are ok, as long as this happens.
What is they are uniform or the same?
200
With tariffs, the government, domestic producers, and domestic labor are better off for these three reasons.
What is increased income, increased quantity sold at a higher price, and increased employment due to domestic supply?
200
The US accusing Chinese gluten imports of harboring the toxic chemical melamine, is an example of this administrative barrier.
What is health and safety regulation.
200
A payment by the government per unit of good that is exported is called this.
What is an export subsidy
300
This country has a comparative advantage in luxury cars: http://www.econpage.com/202/handouts/ppc/compadv1.GIF (The flatter slope has a comparative advantage in the x or y good)?
What is Country X?
300
The WTO dislikes when countries try to rebuff trade and protect domestic industry, which is also known as this.
What is trade protectionism?
300
Imposing a quota makes the supply curve shift ______ (up, down, left, right) by ____________
What is right, by the amount (quantity) of the quota?
300
Government subsidies can cause these two situations regarding their overall effect on global allocation.
What is increasing domestic quantity produced and still importing, and increasing domestic quantity produced enough to export.
300
This is the loss of domestic consumption that occurs when a tariff or quota is imposed on a country.
What is consumer deadweight loss?
400
If Turkmenistan can produce 400 tons of cotton and 1200 tons of natural gas, and China can produce 6000 tons of natural gas and 2000 tons of cotton, this country has the comparative advantage in cotton.
What is NEITHER! Both have the same comparative advantage so should not trade.
400
These two barriers to trade are illegal under WTO rules.
What are subsides (on NON-AGRICULTURAL GOODS) and export quotas.
400
If a quota of 300,000 units is imposed on a country where domestic producers used to produce 100,000 units and consumption is now 600,000 units, this is the change in domestic production.
What is 200,000 units?
400
Subsidies are directly neutral and indirectly detrimental to consumers for these reasons.
What are no change in consumption or price, but increased taxes.
400
______ is the absence of trade which means __________
What is Autarky, self sufficient
500
Finland can produce 100 herring and 20 smelts. Sweden can produce 200 herring and 50 smelts. This country has the comparative advantage in smelts.
What is Sweden?
500
Banana Republics are a result of over specialization, which is often the basis of this argument in favor of trade protection.
What is allowing developing countries to diversify.
500
A country imposes a $80 tariff on imports. If the new quantity produced by domestic consumers is 50,000 units and the new amount produced by foreign producers is 110,000 units, this amount is the government revenue.
What is $4,800,000?
500
According to the graph, these are imports before and after a subsidy is imposed.
What is Q4 - Q1 and Q4 - Q2
500
This is the reason that Germany and France trade
What is interdependence?