Most economics textbooks do not mention kickbacks since they assume: . Government officials are altruistic and do their best to help voters. Consumers are rational and respond to incentives. O Property rights are well defined Consumers spend their own money purchasing items they consume. In order for a kickback to take place: O Rich people must have more political power than poor. O Government officials must be corrupt (but those in private business may be honest O Someone must have the authority & responsibility to decide how to spend money of others. O Those in private business must be corrupt (but government officials may be honest). cenario 9-1 The before-trade domestic price of tomatoes in the United States is $500 per ton. The work rice of tomatoes is $400 per ton. The U.S. is a price-taker in the tomatoes market. Refer to Scenario 9-1. If trade in tomatoes is allowed, the price of tomatoes in the United States omer surplus to decrease. O will be unat could increase or de unaffected; this cannot be determined. will decrease, and this will cause consumer surplus to increase. . Previous If Haiti has a comparative advantage over other countries in producin sugar, but other countries have an absolute advantage over Haiti in producing sugar. If trade in sugar is allowed, Haiti will either export sugar or export sugar, but it is not clear from the given information. will export sugar. would have nothing to gain either from exporting or importing sugar. O will import sugar, Next The price of a good that prevails in a home market if international trade is prevented is called the domestic price, autarky price or price without trade. O relative price O absolute price. comparative price. O world price. Next By definition, a country has a comparative advantage in a product if the world price is O higher than that country's domestic price without trade. O equal to that country's domestic price without trade. O lower than that country's domestic price without trade. O not subject to manipulation by organizations that govern international trade . Next " Previous if the world price of textiles is lower than Vietnam's domestic price of textiles without trade, then Vietnam O should produce just enough textiles to meet its domestic demand. has a comparative advantage in textiles, O should refrain altogether from producing textiles, should import textiles. * Previous A numerical restriction on amount of a good imported is called a O tariff, trade tax. O quota O supply tax. Previous