1) If the world price is below the domestic “no-trade” equilibrium price, then w
ID: 2429411 • Letter: 1
Question
1) If the world price is below the domestic “no-trade” equilibrium price, then with international trade:
the domestic shortage can be eliminated by rationing.
2) The Dutch Disease had occurred in Netherlands because:
the currency of Netherlands depreciated in the international market.
3) Domestic firms often claim that foreign firms have an unfair advantage because foreign workers are willing to work for very low wages.
False
4) Many economists believe that the collapse of world trade and the depression in the 1930s were linked by a decrease in real income caused by producing on the basis of comparative advantage.
False
According to Figure 21.1, if the international price of the good is P1, which of the following statements is true?
There is an excess supply in the domestic market by the amount Q4 - Q2.
6) Since individual consumers do not know how much of the price they pay for a commodity is due to trade protection, consumers rarely lobby their political representatives to eliminate protection and reduce prices.
False
8) Protection is rarely withdrawn from infant industries because such firms are necessary to ensure creation of domestic jobs.
Refer to Figure 21.1. If the government imposes a tariff such that the price of the good in the domestic market is P2 when the international price is P1:
the quantity of the good exported by the domestic country declines.
9) Employers and workers in the protected industry know that the consequences of protection are principally:
higher prices for their output, lower profits for owners, and higher wages for workers.
10) Which of the following is a tool of commercial policy?
Tariff
11) Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.
the domestic surplus can be exported to the rest of the world. Price 3-A P2 ?. Pi Q1 02 3 05 QuantityExplanation / Answer
1) a) The domestic surplus can be exported to the rest of the world.
2) b) The price of the commodities manufactured by the Netherlands declined in the international market. The price of commodities manufactured by the nation decreased and also the number of goods imported increased.
3) True, Domestic firms and people who call for creating a level laying field claim this. They think that the government should take steps to perceive the advantage of the foreign firms.
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