International Economics
16th Edition
ISBN: 9781305887633
Author: Robert Carbaugh
Publisher: Cengage Learning
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Chapter 2, Problem 9SQ
To determine
Explain the terms ‘production gains’ and ‘consumption gains’.
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A- What is the difference between Absolute and Comparative Advantage.
B- Describe the methods of entering the international Business World.
C- Describe the types of Trade restrictions.
D-What is the International Monetary Fund.
Think about your own interests, skills, and opportunities. In what areas do you potentially have a comparative advantage over your peers or co-workers? Are there goods or services you could provide to others more efficiently? How could you maximize your advantages to achieve positive gains from trade in your daily exchanges and relationships?
Explain how is the production structure (i.e. which goods are produced) affected in each country by opening up to trade. Is this consistent with the empirical evidence we observe in reality? How can this model be modified to produce a less stark result?
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- Which one of the below describes a situation where one country's production cost are lower than the rest of other countries? a) absolute advantage, b) fair advantage, c) comparative advantage, d) relative advantagearrow_forwardWho are the winners and losers of the free trade between two countries? Can free trade between the two countries make consumers of both countries better off? In answering this question, consider discussing: How are you and your household connected to the global economy? Which imported goods and services do you buy? Are your consumption patterns based on comparative advantage? How do US trade patterns, based on comparative advantage, contribute to income inequality in the US, according to the Heckscher-Ohlin model? How has trade affected international income inequality? What were some recent tariffs? Who really pays the cost of tariffs?arrow_forwardWhat type's of goods and services should the United States produce based on its comparative advantage and the concept of specialization and trade?arrow_forward
- The theories of absolute and comparative advantage have been offered as an economic rationale for trade between and among regions and countries. Compare and contrast the two concepts. Which of the two do you think is more important for explaining the growth in global trade during the last 25 years? Why” The size of a country’s population and the associated age distribution can be causal factors for economic growth. Why is the size of the population important to economic development? Can size be a disadvantage? Why is age distribution important?arrow_forwardGive ALL effects and explain with ALL DIAGRAMS. Suppose there is an increase in labor in a large country. What are the effects on growth, trade, and overall welfare of the country?arrow_forwardExplain how economic growth and international trade increase consumption possibilities.arrow_forward
- If a country closes off to trade and notices that the number of firms in an industry doubles in size, what economic theory would help us explain this phenomenon? A. Stolper-Samuelson. B. Melitz. C. Ricardian. D. Cournot. Explain your answer in up to 200 words and using a diagramarrow_forwardSome groups of nations are forming trade blocs, like North America or Europe. Are regional trade blocs good for global trade or not?arrow_forwardHow does specialization and trade benefit both individuals and nations?arrow_forward
- Is it possible for a country to gain from trade even when it has lower productivity than its trading partner in the production of all goods? Is it possible for a country to gain from trading with a country that has much lower wages than it does itself? Use numerical examples to explain your answers to these questions.arrow_forwardIn the United States, about 6 million manufacturing jobs disappeared in the first decade of the 21st century. What factors other than free trade and foreign competition might explain that?arrow_forwardWhich is not a benefit from specialization and trade? Multiple Choice World output is increased. The range of goods and suppliers is increased. There is more competition. All of these are benefits from specialization and trade.arrow_forward
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