Exam 15: International Trade Policy

When a foreign firm sells its exports at a lower price than its cost of production, the firm is

Suppose that elimination of tariffs on agricultural products means that 1,000 farm workers lose jobs that pay an average of $20,000 per year. At the same time, because of the importation of relatively cheaper foreign vegetables, 150 million consumers save $2 per year on their grocery bills. a) What is the total income lost by farm workers because of the free trade? b) What is the total dollar amount saved by all consumers combined? c) Which is greater, the lost income or the consumer savings? Do the benefits of free trade out-weigh the costs in this simple example? d) Which group is most likely to become politically involved over the issue of removing the tariffs, the farm workers or the consumers? Why?

The U.S.-Colombia Trade Promotion Agreement was signed on November 22, 2006, in Washington, D.C. This comprehensive trade agreement eliminated tariffs and other barriers to goods and services. Currently, no U.S. agricultural exports enjoy tariff -free access to the Colombian market. If the United States has a comparative advantage in agricultural, which of the following is true?

Over the past 80 years, the United States has reduced its average tariff rate so today it is less than 5 percent.

An import quota is

In 2007, European Union EU) negotiators have offered to cut tariffs for Latin American bananas to avoid ʺbanana wars.ʺ What are the effects of a cut in tariffs?

Dumping occurs when a foreign firm_________ .