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Chapter 5: International Trade

Expert-verified
Macroeconomics
Pages: 191 - 233

12 Questions for Chapter 5: International Trade

  1. In 2015, the United States proposed a tariff on steel imports from China. Steel is input in a large number and variety of U.S. industries. Explain why political lobbying to eliminate these tariffs is more likely to be effective than political lobbying to eliminate tariffs on consumer goods such as sugar or clothing.

    Found on Page 222
  2. Suppose the world price of butter is $0.50 per pound and the domestic price in autarky is $1.00 per pound. Use a diagram similar to Figure 5-10 to show the following.

    Found on Page 216
  3. Why do you think it was profitable for Li & Fung to go beyond brokering exports to becoming a supply chain manager, breaking down the production process and sourcing the inputs from various suppliers across many countries?

    Found on Page 223
  4. Due to a strike by truckers, trade in food between the United States and Mexico is halted. In autarky, the price of Mexican grapes is lower than that of U.S. grapes. Using a diagram of the U.S. domestic demand curve and the U.S. domestic supply curve for grapes, explain the effect of the strike on the following.

    Found on Page 211
  5. In the United States, the opportunity cost of 1 ton of corn is 50 bicycles. In China, the opportunity cost of 1 bicycle is 0.01 tons of corn.

    Found on Page 203
  6. Explain the following patterns of trade using the Heckscher–Ohlin model.

    Found on Page 204
  7. What effect do you think the strike will have on Mexican grape producers? Mexican grape pickers? Mexican grape consumers? U.S. grape pickers?

    Found on Page 212
  8. Suppose the government imposes an import quota rather than a tariff on butter. What quota limit would generate the same quantity of imports as a tariff of $0.50 per pound?

    Found on Page 216
  9. Over the years, the WTO has increasingly found itself adjudicating trade disputes that involve not just tariffs or quota restrictions but also restrictions based on quality, health, and environmental considerations. Why do you think this has occurred? What method would you, as a WTO official, use to decide whether a quality, health, or environmental restriction is in violation of a free-trade agreement?

    Found on Page 222
  10. What principle do you think underlies Li & Fung’s decisions on how to allocate production of a good's inputs and its final assembly among various countries?

    Found on Page 223

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