Economics

David Begg, Gianluigi Vernasca, Stanley Fische

Chapter 29

International trade - all with Video Answers

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Chapter Questions

Problem 1

(a) Why does the composition of African and Asian trade differ in the table below? (b) Which pattern do you expect in the UK? Why?
Merchandise trade patterns, $\mathbf{2 0 0 8}$, (\% of region's exports)

Majid Borumand

Majid Borumand

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Problem 2

Which of the following statements is correct? (a) Now that services account for over 80 per cent of GDP in most developed countries, trade in goods cannot be the major part of the world trade. (b) International trade in services is not possible. (c) The only reason that trade in goods remains so important is that countries import goods, add a bit and then re-export them.

Haricharan Gupta

Haricharan Gupta

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Problem 3

A country with uniformly low productivity should prevent foreign competition.Discuss.

Vaibhav Jain

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Problem 3

Essay question Over the last 60 years, international trade has grown much more quickly than world output. How can this occur? Can it go on indefinitely?

Vaibhav Jain

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Problem 4

Common fallacies Why are these statements wrong? (a) British producers are becoming uncompetitive in everything. (b) Buy British and help Britain.

Vaibhav Jain

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Problem 4

Give two examples of non-tariff barriers. Draw a diagram to illustrate their effect on domestic producers and consumers.

Vaibhav Jain

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Problem 5

Wine, cars, steel sheeting: which have a high index of intra-industry trade? Why?

Vaibhav Jain

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Problem 6

Refer to the table below, which shows exports of the countries as a percentage of their GDP. Is it true that large countries gain proportionately less from world trade than small countries? Why?

Daniel Cisneros

Daniel Cisneros

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Problem 7

Usually, participating in the world economy leaves a country better-off, even though there may be winners and losers within the country. (a) Will workers with skills useful to the export industries be better or worse off when a country opens up to international trade? (b) What about workers in industries whose output is now displaced by imports? (c) Could technical progress in the export industry then ever leave a country worse off? Why, or why not?

Majid Borumand

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Problem 8

To preserve its heritage, a country bans exports of works of art. (a) Is this better than an export tax? (b) Who gains and loses from the ban? (c) Does it encourage young domestic artists?

Vaibhav Jain

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Problem 9

A small country cannot infl uence the price of any of the goods that it trades. What is the optimum tariff level on its imports?

Vaibhav Jain

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Problem 10

Discuss the infant industry argument for a tariff on imports.

Akash M

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Problem 11

How can an export subsidy, which promotes international trade, be protectionist? Illustrate your answer with a diagram.

Vaibhav Jain

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Problem 12

A perfectly competitive industry faces domestic demand $q_{d} 5100-p$ and has the industry supply curve $q_{s} 5401 p$. (a) If the world price is $£ 50$, what is the value of net exports? (b) If the world price is $£ 20$, what is the value of net exports? (c) In the absence of trade, what is the equilibrium domestic price? (d) At a world price of $£ 20$, suppose the government levies a tariff of $£ 5$ per unit. Calculate the value of tariff revenue and the total value of the two deadweight loss triangles.

EA

Erwin Antoni

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