+consider H(home country) and F(the trade partner) as two large
economies. Export biased growth in country H will
Improve terms of trade of country F
+a country cannot produce a mix of products with a higher value than
where
The isovalue line is tangent to the prod. poss. frontiers
+a country will be able to consume a bundle which is not attainable
solely from domestic production only if
The world terms of trade differ from domestic relative costs
+the offer curve of Nation shows
The nations demand for imports and supply of exports
+exports prices must rise for a nation to increase in exports because
the nation
All of the above
+if two countries with diminishing returns and different marginal rates
of substitution between two products were to engage in trade, then
 the marginal rate of substitution of both would become equal
+during the 19th century, economic growth of the major trading
countries was biased toward manufacturers and away from food. The
less developed countries of that time were not exporters of food. From
this information, we would expect to observed
falling terms of trade for the less developed countries
+production possibility frontiers shifts out….?
Biased growth
+a large country experiencing import biased growth will tend to
experience
 improving terms of trade
+what is “immiserizing growth” ?
export-biased growth that worsens term of trade so that a country is
worse off
+what would be the effects of an export subsidy on natural gas
imposed by Russia?
relative world supply of gas rises and relative world demand falls
+what would be the effects of an import tariff on steel imposed by the
US?
Relative world supply of steel falls and real world demand rises
~japan primarily exports manufactured goods (M) while importing raw
materials such as food and oil (R) Supposing that relative prices are
expressed as PmPs and relative quantity as QM/QR, consider the
following hypothetical situations
(i) a war in middle east disrupts oil supply
(ii) korea develops the ability to produce automobiles that can sell in
Canada and the US
(iii) US engineers develop a fusion reactor that replace fossil fuel
electricity plants and decreases the demand for raw material
(iv) a harvest failure in Russia
+which of the above shifts the RS curve to the right?
(i), (ii) & (iv)
+which of the above shifts the RD curve to the right?
(ii) & (iii)
+in which of the above causes does japans term of trade deteriorate
(i), (ii) & (iv)
+intra-industry trade will tend to dominate trade flows when which of
the following exists?
small differences between relative country factor availabilities
+intra-industry trade is most common in the trade patterns of
industria countries of western europe
+if a nation exports twice as much of a differentiated product than it
imports, its intra-industry index (Grubel-…) is equal to  0,67
+internal economies of scale arise when the cost per unit
 falls as the average firm grows larger
+international trade based on external scale economies in both
countries is likely to be carried out by
A relatively large number of price competing firms
+which of the following is not the reason for external economies of
scale?
large fixed costs
+A product is produced in a monopolistically competitive industry with
scale economies. If this Industry exists in two countries with similar
endowments, and these two countries engage in trade one with the
other, then we would expect
the country with a relative abundance of the factor of a production
in which production of the product is intensive will export this product
+two countries engaged in trade in products with no scale economies,
produced under conditions of perfect competition, are likely to be
engaged in
inter-industry trade
+the larger the number firms in a monopolistic competition situation
the higher is the price charge
+in industries in which there are scale economies, the variety of goods
that a country can produce is constrained by
the size of the market
+it was found that when the united states imposed steel quotas, this
caused harm not only to steel consumers, but also to many producers
for whom steel is an important input. This insight
suggest that steel production is an infant industry in the US
+if a small country were to levy a tariff on its imports, then this would
decrease the country’s economic welfare
+an important difference between tariffs and quotas is that tariffs
generate the tax revenue for the government
+if Slovenia were a small country in world trader then if it imposes a
large series of tariffs on many of its imports, this would
have no effect on its terms of trade
+if Slovenia were a large country in world trade, then if instituted
large set of subsidies for its exports, this,
 deteriorate its terms of trade
+import tariff of TL 10 per unit imported good imposed by a large
country:
increase the price of this goods in the importing country by less than
TL10 and lowers export prices
+which of the cases below is a example of internal economies of scale
rather than external economies of scale~?
(i) most musical instruments in the US are produced by dozens of
factories in Ellehart, India
(ii) All Hondas sold in the US are either imported or produced in
Marywille, Ohio
(iii) All airframes for Airbus, Europe is only produce of large aircraft are
assembled in Toulose, France
(iv) Hartford, commecticed is the insurance capital of the northeast US
(ii) & (iii)
+a monopoly firm engaged in international trade will
Equate marginal costs with marginal revenues in both domestic and
foreign market
~simit ayran tablo
+based on the above table in autarky
 Bulgaria produces 2 simits and 2 Ayrans
+based on the above table, judging from autarky conditions, which
country has comparative advantage in which goods
Neither country has comparative advantage in any good
+based on the above table, if Bulgaria completely specialized in simits,
Romania produces no simits and 7 Ayrans
+based on the above table, if Bulgaria completely specialized in simits
and if the world terms of trade were established at 3,5 simits=3,5
ayrans, which country would enjoy agains from trade as compared to
autarky situation?
both countries gain equally
~(tablo) small nation produce at Q1 and consumers at D1 under free
trade conditions. The nation imporses a tariff on its import commodity
(good x) and ends up production at Q2 and consuming at D2
+GDP evaluated at international prices after the tariff represented by
V1
+the consumption distortion loss created by the tariff is represented by
 The movements from D1 to D2
+the production distortion loss created by the tariff is represented by
The shifts of the budget constraint from U2 to U1
~above figure shows the partial effects in a small country of a %100
tariff on imports which have a world supply shown by Sworld. Calculate
the welfare effects and answer the below questions on the answer
sheet.
+what is the TL value of the change in producer surplus? Is it an
increase or decrease?
15 increase
+what is the TL value of the production distortion loss?
5 decrease
~large offers subsidy on exports where by world price falls from Pw to
Ps* and domestic price increases letters designating the related areas
answer the following questions on the answer sheets
+calculate the welfare loss associated with the government subsidy on
exports
-d-e-f
+which of the following is not source of welfare loss consequent to the
imposition of tariff?
Tax revenue from tariffs, redistributed government expenditures
+factors tend to be specific to certain uses and products
In the short run
+empirical observations on actual North-South trade patterns tend to
Support the validity of the Heckscher-Ohlin Model
+if relative to its trade partners Gambinia has m…workers but little
land and even less produce capital, then following the specific factor
model in order to help the countries economic welfare Gambinion gov.
should
Protect the manufacturing sector
+international trade has strange effects on income distribution
therefore international trade
Will tend to hurt some groups in each trading country
+tastes of individuals are represented by
The indifference curve
+when the production possibility frontier shifts out relatively more in
one direction we have
Biased growth
+if two countries were very different in their relationship factor
availabilities, then we would not expect which of the following to be
empirically supported?
The Heckscher-Ohlin theorem
+export prices must rise for a nation to increase in exports because the
ration
Faces increasing opportunity cost in production
+external economies of scale arise when the cost per unit
Falls as the industry grows larger rises as the average firm grows
larger
+in the 2 factor, 2 goods Heckscher-Ohlin Model, a change from autarky
(no trade) to tarde
 will tend to make the wages in both countries more similar
+suppose that there are two factors, capital and land asn that the
Canada is relatively land and owned while European Union is relatively
capital endowed according to the Heckscher-Ohlin
European capitalist should support a Canadian European free trade
agreement