BAIB3004 Week 3 Group Competition

The country Autarka does not allow international trade.

In Autarka, you can buy a wool suit for 3 ounces of

gold. Meanwhile, in neighboring countries, you can buy

the same suit for 2 ounces of gold. This suggests that

• Autarka has a comparative advantage in

  producing suits and would become a suit

  exporter if it opened up trade.

• Autarka has a comparative advantage in

  producing suits and would become a suit

  importer if it opened up trade.

• Autarka does not have a comparative advantage

  in producing suits and would become a suit

  exporter if it opened up trade.

• Autarka does not have a comparative advantage

  in producing suits and would become a suit

  importer if it opened up trade.

The nation of Openia allows free trade and exports

steel. If steel exports were prohibited, the price of

steel in Openia would be _________, benefiting steel _________.

• higher; consumers

• lower; consumers

• higher; producers

• lower; producers

When the nation of Ectenia opens itself to world

trade in coffee beans, the domestic price of coffee

beans falls. Which of the following describes the

situation?

• Domestic production of coffee rises, and Ectenia

  becomes a coffee importer.

• Domestic production of coffee rises, and Ectenia

  becomes a coffee exporter.

• Domestic production of coffee falls, and Ectenia

  becomes a coffee importer.

• Domestic production of coffee falls, and Ectenia

  becomes a coffee exporter.

When a nation opens itself to trade in a good and

becomes an importer,

• producer surplus decreases, but consumer

  surplus and total surplus both increase.

• producer surplus decreases, consumer surplus

  increases, and so the impact on total surplus is

  ambiguous.

• producer surplus and total surplus increase, but

  consumer surplus decreases.

• producer surplus, consumer surplus, and total

  surplus all increase.

Match Question - please refer to the answer sheet.

A country with a trade deficit is necessarily experiencing negative economic growth.

• True

• False

Imposing tariffs on imported goods will unequivocally benefit domestic producers in the long run.

• True

• False

Please identify two UK ports known for their strategic locations and diverse cargo handling capabilities.

Which sector is known as the UK's largest service export?

Name one of the UK's Crown Dependencies that has a special trading relationship with the EU.