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UCI Econ / IS 13 Homework 2 (100 points) Question and Answers

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UCI Econ / IS 13 Homework 2 (100 points) Due: Check Syllabus for due date For MC Please use F288 Scantron to submit your answers For SA part, please write or type your answer on a separate sheet. Multiple Choice (1 point each) Identify the choice that best completes the statement or answers the question. _d 1. The nation of Pineland forbids international trade. In Pineland, you can buy 1 pound of fish for 2 pounds of pineapples. In other countries, you can buy 1 pound of fish for 1.5 pounds of pineapples. These facts indicate that a. Pineland has a comparative advantage, relative to other countries, in producing fish. b. other countries have a comparative advantage, relative to Pineland, in producing pineapples. c. the price of pineapples in Pineland exceeds the world price of pineapples. d. if Pineland were to allow trade, it would import fish. _d 2. The price of sugar that prevails in international markets is called the a. export price of sugar. b. import price of sugar. c. comparative-advantage price of sugar. d. world price of sugar. a 3. If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price, a. the country will be an exporter of the good. b. the country will be an importer of the good. c. the country will be neither an exporter nor an importer of the good. d. Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither. d 4. Assume, for Canada, that the domestic price of tomatoes without international trade is higher than the world price of tomatoes. This suggests that, in the production of tomatoes,lOMoARcPSD|1141657 a. Canada has a comparative advantage over other countries and Canada will export tomatoes. b. Canada has a comparative advantage over other countries and Canada will import tomatoes. c. other countries have a comparative advantage over Canada and Canada will export tomatoes. d. other countries have a comparative advantage over Canada and Canada will import tomatoes. _b 5. When a country that imported a particular good abandons a free-trade policy and adopts a notrade policy, a. producer surplus increases and total surplus increases in the market for that good. b. producer surplus increases and total surplus decreases in the market for that good. c. producer surplus decreases and total surplus increases in the market for that good. d. producer surplus decreases and total surplus decreases in the market for that good. Figure 9-1 The figure illustrates the market for wool in Scotland. 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Quantity Price Domestic supply A World price B G D H F C Domestic demandlOMoARcPSD|1141657 _c 6. Refer to Figure 9-1. From the figure it is apparent that a. Scotland will experience a shortage of wool if trade is not allowed. b. Scotland will experience a surplus of wool if trade is not allowed. c. Scotland has a comparative advantage in producing wool, relative to the rest of the world. d. foreign countries have a comparative advantage in producing wool, relative to Scotland. _c 7. Refer to Figure 9-1. With trade, total surplus in the Scotland wool market amounts to a. 312.5. b. 367.0. c. 467.5. d. 495.0

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