Trade Theory Suggests That Japan Would Gain from a Subsidy

question 44

Multiple Choice

Trade theory suggests that Japan would gain from a subsidy the United States provides its grain farmers if the gains to Japanese consumers of wheat products more than offsets the losses to Japanese wheat farmers. This would occur as long as Japan

• A) is a net importer in bilateral trade flows with the United States.
• B) is a net importer of wheat.
• C) has a comparative advantage in wheat.
• D) has an absolute advantage in producing wheat.
• E) is involved in intra-industry trade with the United States.

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Definitions:

Renovate

The process of restoring or improving a building, room, or structure to make it more attractive, functional, or to bring it up to current standards.

Marginal Product Curve

A graphical representation showing how the addition of a single unit of resource alters the total output of a good or service.

Total Product

The total output of goods and services produced by a firm or industry over a specific period.

Marginal Product

The additional output that is produced by using one more unit of a particular input, holding all other inputs constant.