International Trade - Assessment

Answer the following questions:

1. Explain why Canada produces relatively more ice hockey players and the United States produces relatively more baseball players.

2. Bananas, coffee and Eucalyptus oil could be produced in the United States, although production would be very costly. Explain in terms of opportunity costs why the United States is better off importing such goods.

3. Apply the concepts of opportunity costs and comparative advantage to the following problem. The Netherlands can produce in one day 4 drill presses or 8 embroidered tablecloths. Using the same amount of resources, Portugal can produce either 2 drill presses or 7 embroidered tablecloths. Which country should specialize in drill presses and import tablecloths, and why? Which country should specialize in tablecloths and import drill presses and why?

4. Explain why the United States no longer has a comparative advantage in the production of shoes.

5. Identify the benefits when a trade barrier such as sugar or automobile import quotas is eliminated.

6. Describe how your daily life would be different if people in the United States did not trade with people in other countries.