Consider a small open economy that produces computers and textiles. The world price of computers is greater than the country’s autarky price of computers and the world price of textiles is less than the county’s autarky price of textiles. With free tradeGroup of answer choicesThere is excess demand for computers in the domestic economy, so computers are importedThere is excess supply of computers in the domestic economy, so computers are exportedThere is excess supply of textiles in the domestic economy, so textiles are importedNone of the other options

Consider a small open economy that produces computers and textiles. The world price of computers is less than the country’s autarky price of computers and the world price of textiles is greater than the county’s autarky price of textiles. A tariff levied on imports of computers willGroup of answer choicesDecrease the producer surplus of domestic computer producersDecrease the consumer surplus of domestic computer consumersDecrease the producer surplus of foreign computer producersNone of the other options

Multiple Choice QuestionA country experiences a trade surplus under which of the following conditions?Multiple choice question.When it imports more goods and services than it exportsWhen it exports more services than it does goodsWhen it exports more goods and services than it importsWhen it exports more goods than it does services

Given the information in the table above, if the Home economy suffered a meltdown, and theUnit Labor Requirements doubled to 20 for cloth and 40 for widgets then home shouldA) export widgets and import cloth.B) export cloth.C) export widgets.D) export both and import nothing.E) export and import nothing.6. Trade between two countries can benefit both countries ifA) each country enjoys superior terms of trade.B) each country has a more elastic demand for the imported goods.C) each country has a more elastic supply for the exported goods.D) each country produces a wide range of goods for export.E) each country exports that good in which it has a comparative advantage.

1) If the ratio of price of cloth (PC) divided by the price of food (PF) increases in theinternational marketplace, thenA) all countries would be better off.B) the terms of trade of cloth exporters will improve.C) the terms of trade of food exporters will improve.D) the terms of trade of all countries will improve.E) the terms of trade of cloth exporters will worsen.

A small, open economy decides to replace most of its existing tariffs with quotas that result in identical volumes of imports. As a result, its welfare will Group of answer choicesdefinitely decreasedecrease or remain the samedefinitely increaseincrease or remain the same