Question 1

Related to the Economics in Practice on p.679: If the candle makers in the petition were able to gain protection for their industry,the French economy would most likely

Accepted Answer

If the candle makers were able to gain protection for their industry, it would most likely result in higher prices for candles as they would not face competition from foreign candle makers. This would lead to a decrease in consumer surplus and potentially increase producer surplus for the candle makers that were protected, but it would also result in an overall loss of economic welfare for the French economy. In the long run, it could also lead to a decrease in efficiency as the protected candle makers may become complacent and not strive to improve their production methods or innovate.

Question 2

According to some environmental groups,free trade policies are potentially harmful to the environment.

Accepted Answer

Some environmental groups argue that free trade can lead to increased consumption, production, and transportation of goods, all of which can have negative impacts on the environment such as increased greenhouse gas emissions, habitat destruction, and pollution.

Question 3

Protection is often temporary to help infant industries.

Accepted Answer

The answer of Protection is often temporary to help infant...

Question 4

Free trade decreases world production and consumption.

Accepted Answer

Free trade generally leads to an increase in world production and consumption as it allows for countries to specialize and trade goods and services more efficiently.

Question 5

It is a valid argument that industries need to be protected from foreign competition because foreign wages are substantially lower than wages paid to U.S.workers.

Accepted Answer

While protecting industries from foreign competition due to lower foreign wages might protect domestic jobs in the short term, it can lead to inefficiencies, higher prices for consumers, and retaliation from other countries. Economic theory and practice suggest that free trade generally benefits countries by allowing them to specialize in industries where they have a comparative advantage.

Question 6

Free trade allows the people of a country to consume outside their production possibility frontier.

Accepted Answer

Free trade allows countries to specialize in producing goods and services at which they have a comparative advantage and import goods and services that they cannot produce efficiently. By doing so, consumers have access to more goods and services at lower prices, which allows them to consume beyond their country's production possibility frontier.

Question 7

Refer to the information provided in Figure 19.5 below to answer the questions that follow.
  Figure 19.5
-Refer to Figure 19.5.The domestic price of oil is $130 per barrel.This country imports 14 million barrels if the world price of oil is

Accepted Answer

If the domestic price is $130 per barrel and the world price is $120, the country would import oil because it is cheaper to buy from the world market than to produce domestically.

Question 8

Related to the Economics in Practice on p.679: Satirist Frederic Bastiat's essay arguing for a quota on sunlight in order to protect domestic candle makers suggests that it is pointless to

Accepted Answer

Bastiat's satire points out the absurdity of protecting industries that cannot compete effectively by limiting the availability of a necessary resource, in this case sunlight. It is a criticism of protectionist policies that go against the principles of free trade and economic efficiency.

Question 9

Protection makes the people of a country better off.

Accepted Answer

Protection, in the context of trade policies like tariffs and quotas, can lead to higher prices for consumers, inefficiencies in domestic industries, and retaliation from other countries, which can overall negatively impact the economic welfare of a country's population.

Question 10

Refer to the information provided in Figure 19.5 below to answer the questions that follow.
  Figure 19.5
-Refer to Figure 19.5.The domestic price of oil is $130 per barrel.If the world price of oil is $135 per barrel,this country will

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 11

Refer to the information provided in Figure 19.5 below to answer the questions that follow.
  Figure 19.5
-Refer to Figure 19.5.The domestic price of oil is $130 per barrel,and the world price of oil is $120 per barrel.If the domestic government imposes a tariff of $________ per barrel,it will eliminate all oil imports and achieve tariff revenues of $________.

Accepted Answer

A tariff of $10 per barrel will raise the world price to match the domestic price, eliminating the price advantage of imports and thus eliminating imports entirely, resulting in zero tariff revenue.

Quiz 19: International Trade, comparative Advantage, and Protectionism