ch02_15_condensed

ch02_15_condensed - Micro 101, Chapter 15 1 Chapter 15...

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Micro 101, Chapter 15 1 Chapter 15 Objectives : 1. Explain why nations should specialize in production of goods in which they have a comparative advantage 2. Understand reasons why not full specialization 3. Understand why comparative advantage differs across nations - natural resources, inertia 4. Identify winners and losers from free trade 5. Evaluate arguments for A protectionism @ - tariffs (taxes) - quotas (direct limit on imports) - both raise domestic price above world price ex. U.S. sugar price 20x higher also steel, quotas on autos Countries tend to specialize in goods with ____________ advantage without ___________: $ if different opportunity _______________, specialization and exchange can benefit all countries $ true even if one country holds ____________ advantage in everything
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Micro 101, Chapter 15 2 $ consumers naturally buy from country with _____________ advantage $ that country = s industries respond, naturally produce more of that good and less of others $ should government prevent this? Comparative advantage for countries Q: Should we let bargain imports into our country? $ Principle of comparative advantage extends across borders (David Ricardo, 1817) -recall: depends on relative opportunity costs -to trade, do not need any _________ advantage $ Improved ________ from specialization and trade -with same resources, world can have more of at least one good without decreasing __________ of any good Why not full specialization? $ high _________ costs $ partners of very different sizes $ increasing ____________ costs $ government barriers to trade
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Micro 101, Chapter 15 3 $ Free trade vs. A Fair trade @ (= A trade barriers @ ) $ most economists believe: - protectionism is usually _____________:
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This note was uploaded on 03/26/2008 for the course ECON 101 taught by Professor Brentkreider during the Spring '07 term at Iowa State.

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ch02_15_condensed - Micro 101, Chapter 15 1 Chapter 15...

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