7-1 What are the major reasons for the skepticism of many developing nations regarding the
comparative-advantage principle and free trade?
The theory of comparative advantage maintains that all nations can enjoy the benefits of free trade if
6-1 To what extent have the traditional arguments that justify protectionist barriers actually been
incorporated into U.S. trade legislation?
Alexander Hamiltons Report on Manufacturers was one of the first protective arguments for tariffs to
5.2 How does the revenue effect of an import quota differ from that of a tariff?
The tariffs revenue effect represents the governments collections of duty (Carbaugh, 2013, p. 122).
This is calculated by multiplying the number of imports by the tariff. Thi
4.2 What methods do customs appraisers use to determine the values of commodity imports?
Another customs valuation problem stems from variations in the methods used to determine a
commoditys value (Carbaugh, 2013, p.108). There is free-on-board (FOB) valu
3.2 Explain how the international movement of products and of factor inputs promotes an equalization
of the factor prices among nations.
The process of factor-price equalization redirects demand away from the scare resource towards the
abundant resource i
The basic questions concerning modern trade theory are:
(1) What constitutes the basis for trade?
(2) At what terms of trade are products exchanged in the world market?
(3) What are the gains from international trade in terms of production and consumption
1.1. What factors explain why the worlds trading nations have become increasingly interdependent,
from an economic and political view-point, during the post-World War II era?
Interdependence is a reflection of the historical evolution of the worlds econom