Practice
Answer first, then reveal. Anything you mark Unsure or Missed goes to your review queue.
19 of 19 have the textbook's official worked answer.
- 1
Explain how a tariff reduction causes an increase in the equilibrium quantity of imports and a decrease in the equilibrium price. Hint: Consider the Work It Out "Effects of Trade Barriers."
- 2
Explain how a subsidy on agricultural goods like sugar adversely affects the income of foreign producers of imported sugar.
- 3
Explain how trade barriers save jobs in protected industries, but only by costing jobs in other industries.
- 4
Explain how trade barriers raise wages in protected industries by reducing average wages economy-wide.
- 5
How does international trade affect working conditions of low-income countries?
- 6
Do the jobs for workers in low-income countries that involve making products for export to high-income countries typically pay these workers more or less than their next-best alternative?
- 7
How do trade barriers affect the average income level in an economy?
- 8
How does the cost of “saving” jobs in protected industries compare to the workers’ wages and salaries?
- 9
Explain how predatory pricing could be a motivation for dumping.
- 10
Why do low-income countries like Brazil, Egypt, or Vietnam have lower environmental standards than high-income countries like the Germany, Japan, or the United States?
- 11
Explain the logic behind the “race to the bottom” argument and the likely reason it has not occurred.
- 12
What are the conditions under which a country may use the unsafe products argument to block imports?
- 13
Why is the national security argument not convincing?
- 14
Assume a perfectly competitive market and the exporting country is small. Using a demand and supply diagram, show the impact of increasing standards on a low-income exporter of toys. Show the tariff's impact. Is the effect on toy prices the same or different? Why is a standards policy preferred to tariffs?
- 15
What is the difference between a free trade association, a common market, and an economic union?
- 16
Why would countries promote protectionist laws, while also negotiate for freer trade internationally?
- 17
What might account for the dramatic increase in international trade over the past 50 years?
- 18
How does competition, whether domestic or foreign, harm businesses?
- 19
What are the gains from competition?