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Under what circumstances would the existence of the initial high costs justify infant industry protection?
What policies do these countries seem to have in common? Does their experience lend support for the infant industry argument or help to argue against it?
Why shouldn't we restrict imports of goods that are produced with badly paid labor? Why is or isn't this argument valid?
uppose that demand and supply are exactly as described in problem 3. Calculate the effects on the government's objective of a tariff of 5 per unit.
Why does the production subsidy produce a greater gain in welfare than the tariff? What would the optimal production subsidy be?
What would be the effect on the real income distribution within the economy if there were a substantial tariff levied on manufactured goods?
Why are they so common, especially in agriculture, among the industrialized countries such as the United States and the members of the European Union?
The United States simultaneously limits imports of ethanol for fuel. What is the effective rate of protection on the process of turning corn into ethanol?
What would be the effective rate of protection on bicycles in China if China places a 50 percent tariff on bicycles, which have a world price of $200?
We have focused on the case of trade involving only two countries. What could we say about the pattern of production and trade in this case?
Japanese labor productivity is roughly the same as that of the United States in the manufacturing sector. What is wrong with this argument?
What can you say about the efficiency of world production and the division of the gains from trade between Home and Foreign in this case?
Graph the relative demand curve along with the relative supply curve. What is the equilibrium relative price of apples?
What is the opportunity cost of apples in terms of bananas? In the absence of trade, what would the price of apples in terms of bananas be? Why?
Discuss trade among East Asian nations. More than that, East Asian countries do an increasing share of their trade with each other. Explain why?
When the value of the U.S. dollar falls in relation to the currencies of other nations, what do you think will happen to the quantity of U.S.
Why can you think of some ways by which a nation can gain at the expense of other nations from trade restrictions?
If nations gain from international trade, why do you think most of them impose some restrictions on the free flow of international trade?
How do international economic relations differ from interregional economic relations? In what way are they similar?
How can a government eliminate or reduce a budget deficit? How can a nation eliminate or reduce a balance-of-payments deficit?
What do you predict would happen to the quantity of imports of a commodity if its price to domestic consumers rose (for example, as result of a tax on imports)?
Compare the contents of the microeconomic parts of your principles text with the contents of Part One and Part Two of this text.
Why does the trade between the United States and Brazil and Argentina follow the prediction of the gravity model?
Why do you recall the concepts of inflation, recession, growth? marginal propensity to consume, multiplier, accelerator? monetary policy, fiscal policy?
Why do you recall the concepts of demand, supply, and equilibrium? Do you recall the meaning of the elasticity of demand? perfect competition? factor markets?