Krugman_TB_ch11

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Unformatted text preview: here. Question Status: revious Edition P 28) efer to the above table. Suppose the U.S. government (but not Europe) offers a $10 million subsidy? R Answer: this case Airbus would decide not to enter the market since it knows Boeing will, and that therefore In its own production will entail a loss of $5 million. Question Status: revious Edition P 29) efer to the above table. How could the U.S. government justify its decision to offer a subsidy to a profitable R and successful business? Answer: could point out that this $10 million pump-priming expenditure results in a profit of $110 million. If It Boeing paid a marginal income tax of 20%, this would net the government $55 million, which is more than 5 times the original subsidy, so that the decision may be justified not only in terms of benefit/cost considerations, but even interms of pure budgetary terms. Question Status: revious Edition P 11.2 Globalization and Low-Wage Labor 1) n todayʹs world markets, poor developing countries tend to rely primarily on exports of I A) gricultural products. a B) rimary products. p C) ineral products. m D) anufactured products. m E) one of the above. N Answer: D Question Status: revious Edition P 6 2) n the second half of the 1990s a rapidly growing movement focused on the harm caused by international I trade to A) and owners in poor countries. l B) apital owners in rich industrialized countries. c C) and owners in rich industrialized countries. l D) roduction workers in both rich and poor countries. p E) one of the above. N Answer: D Question Status: revious Edition P 3) he Ricardian model of comparative advantage lends support to the argument that T A) rade tends to worsen the conditions of unskilled labor in rich countries. t B) rade tends to worsen the conditions of owners of capital in rich countries. t C) rade tends to worsen the conditions of workers in poor countries. t D) rade tends to worsen the conditions of workers in rich countries. t E) one of the above. N Answer: E Question Status: revious Edition P 4) ost developing countries oppose including l...
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This note was uploaded on 02/27/2013 for the course ECON 205 taught by Professor None during the Spring '13 term at Pomona College.

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