Chapter 32: Q. 32.4LO (page 710)
Identify key international agreements and organizations that adjudicate trade disputes among nations.
A border dispute is a confrontation over an impropriety (even one that is threatening, probable, or imminent).
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Why do you suppose that infant-industry firms that have developed from novel products imports their governments to exact policies aimed at restraining parallel imports.
Refer to your answers to Problem when answering the following questions.
a. Which one of the following rates of exchange of modems for flash memory drives will be acceptable to both nations: (i) modems for flesh drive; (ii) modem for flash drive; or (iii) flash drive for modems? Explain.
b. Suppose that each nation decides to use all available resources to produce only the good for which it has a comparative advantage and to engage in trade at the single feasible rate of exchange you identified in part (a). Prior to specialization and trade, residents of South Shore chose to produce and consume modems per hour and flash drives per hour, and residents of East Isle chose to produce and consume modems per hour and flash drives per hour. Now, residents of South Shore agree to export to Fast Isle the same quantity of South Shore's specialty good that Fast Isle residents were consuming prior to engaging in international trade. How many units of East Isle's specialty good does South Shore import from East Isle?
c. What is South Shore's hourly consumption of modems and flash drives after the nation specializes and trades with East Isle? What is East Isles hourly consumption of modems and flash drives after the nation specializes and trades with South Shore?
d. What consumption gains from trade are experienced by South Shore and East Isle?
Some critics of the North American Free Trade Agreement (NAFTA) suggest that firms outside NAFTA nations sometimes shift unassembled inputs to Mexico, assemble the inputs into final goods there, and then export the final product to the United States in order to take advantage of Mexican trade preferences. What term describes what these critics are claiming is occurring with regard to U.S.-Mexican trade as a result of NAFTA? Explain your reasoning.
Understand common arguments against free trade.
Consider Figure 32-3. What is the effect on U.S. textile consumers' total expenditures of the imposition of the quota that generates a movement from point E1 to point E2?
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