47. If nations trade on the basis of comparative advantage A) a nation can gain

Question

47. If nations trade on the basis of comparative advantage A) a nation can gain only at the expense of trading partners B) exporting nations gain and importing nations lose. C) importing nations gain and exporting nations lose. D) all trading partners mutually gain. 48The introduction ofa tariff will be expected to reduce imports. A) B) ) increase the prices of exports but have no effect on the level of imports. reduce the prices of exports but have no effect on the level of imports. D) increase exports. E) increase imports. 49. Frederic Bastiat's, "A Petition From the Candlemakers", presents a satirical view of protectionism because A) it pictures the sun as an unfair foreign competitor B) it argues the government should ban all imports. C it makes consumer preferences for foreign products the source of trade problems. E) it makes a joke of budget deficits, the source of all trade problems. 50. A tariff is best described as a A) tax on exported goods. a tax on a good that is imported. payment by the government to domestic producers to improve their competitive position in world markets. D) transfer payment.

Explanation / Answer

47. D) All trading partners mutually gains.

A country has a comparative advantage in producing that good if the opportunity cost of producing that good is lower in that country as compared to another country. Each country produce good in which it has comparative advantage so both countries get benefit from trade.

48. A) Reduces imports

Tariff is tax on imported goods when tariff is imposed then price of commodity rises for the consumers so they demand less foreign goods. As a result, imports reduces

50. B) a tax on good that is imported.

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