WorksheetsIB International Economics - Free trade diagrams +
Total questions: 21
Worksheet time: 15mins
Is there a country who has a absolute advantage in the production of cloth?
Yes, China.
Yes, India.
No
Is there a country who has a absolute advantage in the production of shoes?
Yes, China.
Yes, India.
No
Is there a country who has a comparative advantage in the production of shoes?
Yes, China.
Yes, India.
No
Based on this table, if these two countries trade with each other, what should each country make?
South Korea makes all of the TV sets and Japan makes all the cars
South Korea makes all of the cars and Japan makes all of the TV sets
South Korea makes all TV sets and Japan gives up 50 TV sets in favor of 25 cars.
Japan makes all of the cars and South Korea shifts half of its car production to TVs
In the case presented above, should there be a specialization of production?
Yes. China in shoes. India in clothes.
Yes, India in shoes. China in clothes.
No
Based on this table, which statement BEST describes the situation?
Germany has an absolute advantage in both products, but Greece should still specialize in fish.
Germany has an absolute advantage in motorcycles, and Greece has an absolute advantage in fish.
Germany has an comparative advantage in motorcycles, but Greece has an absolute advantage in both products.
In this particular case, neither side would benefit from specializing more in one of the particular products.
With free trade, prices will ...
Decrease from PE to P1
Increase from P1 to PE
Not change
With free trade, quantity consumed will ...
Increase from Q1 to QE
Increase from Q1 to Q2
Not change
Increase from QE to Q2
With free trade, quantity imported will be ...
Q1QE
Q1Q2
QEQ2
Zero
With free trade, local production will ...
Decrease from QE to Q1
Decrease from Q2 to Q1
Increase from QE to Q2
Not change
Taiwanese baseballs sell in the US for $10, but an identical domestically made one sells for $12.50. If the US government imposes a 20% tariff on Taiwanese baseballs, what would be the result?
Since the Taiwanese ball would still be cheaper, there would be little to no change.
Since the Taiwanese ball is now more expensive, US sales will likely increase.
Since the Taiwanese ball will now sell at the same price as the US ball, sales will likely equalize.
Since the Taiwanese ball is now more expensive, the US will begin exporting balls to Taiwan.
How would you represent the imposition of a tariff?
S (world) would shift upwards
S (world) would shift downwards
S (domestic) would shift upwards
S (domestic) would shift downwards
How would you represent the imposition of a subsidy?
S (world) would shift upwards
S (world) would shift downwards
S (domestic) would shift upwards
S (domestic) would shift downwards
With a tariff, ...
Prices would increase and local production increase
Prices would increase and local production decrease
Prices would decrease and local production decrease
