Question 1

Which of the following is the least efficient method of allocating import licenses by the government?

Accepted Answer

A) Fixed favoritism 
B) A competitive auction 
C) Resource-using application procedures 
D) A free lottery 
A) Fixed favoritism 
B) A competitive auction 
C) Resource-using application procedures 
D) A free lottery

Question 2

Evidence shows that governments usually impose the same import duties on the import of similar goods even if the goods fall under different product categories.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true of a quota:

Accepted Answer

A) Imposition of a quota causes domestic prices to fall below world prices. 
B) Imposition of a quota by a country causes the world price of the good imported by this country to rise. 
C) A quota is a quantitative restriction on imports. 
D) A quota is always more efficient than a tariff. 
A) Imposition of a quota causes domestic prices to fall below world prices. 
B) Imposition of a quota by a country causes the world price of the good imported by this country to rise. 
C) A quota is a quantitative restriction on imports. 
D) A quota is always more efficient than a tariff.

Question 4

The figure given below shows the domestic demand (Dd) and supply (Sd) curves of mopeds in a country before an import quota is imposed by the government. After the imposition of quota, the total available supply curve becomes Sd + QQ.   After the quota is imposed, the domestic consumers:

Accepted Answer

A) gain $7.5 million. 
B) lose $21.25 million. 
C) lose $82.5 million. 
D) gain $97.75 million. 
A) gain $7.5 million. 
B) lose $21.25 million. 
C) lose $82.5 million. 
D) gain $97.75 million.

Question 5

Under which of the following situations will a tariff imposed by a country fail to reduce imports by as much as expected?

Accepted Answer

A) The current tariff rate is less than the prohibitive tariff rate. 
B) The foreign export quantity supplied of the good imported by this country is more responsive to changes in the world price than was expected. 
C) The domestic supply of the import-competing products is more price-elastic than was expected. 
D) The domestic quantity demanded of the imported product is less responsive to price changes than was expected. 
A) The current tariff rate is less than the prohibitive tariff rate. 
B) The foreign export quantity supplied of the good imported by this country is more responsive to changes in the world price than was expected. 
C) The domestic supply of the import-competing products is more price-elastic than was expected. 
D) The domestic quantity demanded of the imported product is less responsive to price changes than was expected.

Question 6

Which of the following NTBs may generate revenue for the government?

Accepted Answer

A) Government procurement 
B) Voluntary export restraint 
C) Import quota 
D) Domestic content requirement 
A) Government procurement 
B) Voluntary export restraint 
C) Import quota 
D) Domestic content requirement

Question 7

Compared to a tariff, a quota gives the government a better control over the quantity of imports.

Accepted Answer

A) True 
 B)False

Question 8

The figure given below shows the market for MP3 players in a small country. Dd and Sd are the domestic demand and domestic supply curves of the MP3 players before the imposition of the quota. (Sd + QQ) is the total available domestic supply curve after the quota has been imposed. How many MP3 players can be imported from abroad after the quota is imposed?

Accepted Answer

A) 2 million. 
B) 5 million 
C) 12 million 
D) 17 million 
A) 2 million. 
B) 5 million 
C) 12 million 
D) 17 million

Question 9

The figure given below shows the domestic demand (Dd) and supply (Sd) curves of mopeds in a country before an import quota is imposed by the government. After the imposition of quota, the total available supply curve becomes Sd + QQ.   After the quota is imposed by the government, the domestic producers:

Accepted Answer

A) lose $2.5 million. 
B) gain $27.5 million. 
C) gain $42.5 million. 
D) lose $80 million. 
A) lose $2.5 million. 
B) gain $27.5 million. 
C) gain $42.5 million. 
D) lose $80 million.

Question 10

The world as a whole is better off, if the trading partners of a nation respond by raising their trade barriers when this country raises its own trade barriers.

Accepted Answer

A) True 
 B)False

Question 11

Government procurement practices can restrict imports if the purchasing processes are heavily biased toward products with large local content.

Accepted Answer

A) True 
 B)False

Question 12

The figure given below shows the market for MP3 players in a small country. Dd and Sd are the domestic demand and domestic supply curves of the MP3 players before the imposition of the quota. (Sd + QQ) is the total available domestic supply curve after the quota has been imposed. According to the figure, how much revenue can the government expect to receive if the import licenses are auctioned?

Accepted Answer

A) $20 million 
B) $50 million 
C) $120 million 
D) $170 million 
A) $20 million 
B) $50 million 
C) $120 million 
D) $170 million

Question 13

A small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T-shirt and domestic production rises to 15 million T-shirts per year. If the import licenses are allocated based on fixed favoritism, how much will be gained by the importers with the quota licenses?

Accepted Answer

A) $40 million 
B) $70 million 
C) $200 million 
D) $240 million 
A) $40 million 
B) $70 million 
C) $200 million 
D) $240 million

Question 14

Which of the following is true of a voluntary export restraint (VER)?

Accepted Answer

A) A voluntary export restraint ensures that foreign exporting firms are unable to exercise monopoly power. 
B) A voluntary export restraint usually requires that the foreign exporting firms act like a cartel, restricting sales and raising prices. 
C) A voluntary export restraint generates more revenue for the government than a tariff or quota. 
D) Voluntary export restraints have only been used by the poor and developing nations to protect their domestic industries. 
A) A voluntary export restraint ensures that foreign exporting firms are unable to exercise monopoly power. 
B) A voluntary export restraint usually requires that the foreign exporting firms act like a cartel, restricting sales and raising prices. 
C) A voluntary export restraint generates more revenue for the government than a tariff or quota. 
D) Voluntary export restraints have only been used by the poor and developing nations to protect their domestic industries.

Question 15

Show graphically and explain the effects of imposition of a quota by a small country under competitive conditions. The quota rights are given away for free to a fixed set of import distributor firms in the country.

Accepted Answer

@#IMG-DLM& According to the figure, the domestic p

Question 16

One of the reasons that protectionists and government officials may favor using a quota instead of a tariff is:

Accepted Answer

A) quotas generate more revenue for the government than tariffs. 
B) quotas ensure that the quantities of imports are strictly limited. 
C) quotas create less market distortions than tariffs. 
D) quotas give less power to politicians than tariffs. 
A) quotas generate more revenue for the government than tariffs. 
B) quotas ensure that the quantities of imports are strictly limited. 
C) quotas create less market distortions than tariffs. 
D) quotas give less power to politicians than tariffs.

Question 17

The figure given below shows the market for MP3 players in a small country. Dd and Sd are the domestic demand and domestic supply curves of the MP3 players before the imposition of the quota. (Sd + QQ) is the total available domestic supply curve after the quota has been imposed. The quota on MP3 players will cause domestic producers to:

Accepted Answer

A) gain $150 million. 
B) lose $100 million. 
C) gain $110 million. 
D) lose $120 million. 
A) gain $150 million. 
B) lose $100 million. 
C) gain $110 million. 
D) lose $120 million.

Question 18

Most or all of the mark-up revenue from a quota will be captured by the government if the government auctions off import licenses.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is NOT true of nontariff barriers to imports?

Accepted Answer

A) Nontariff barriers can limit imports with greater certainty than tariffs. 
B) Unlike tariffs, the nontariff barriers do not increase the price of the imported goods in the domestic markets. 
C) Some nontariff barriers create uncertainty about the conditions under which imports will be permitted. 
D) Like tariffs, nontariff barriers also result in a net welfare loss in a small country. 
A) Nontariff barriers can limit imports with greater certainty than tariffs. 
B) Unlike tariffs, the nontariff barriers do not increase the price of the imported goods in the domestic markets. 
C) Some nontariff barriers create uncertainty about the conditions under which imports will be permitted. 
D) Like tariffs, nontariff barriers also result in a net welfare loss in a small country.

Question 20

What are NTBs? Discuss any three forms of NTBs other than quotas and VERs.

Accepted Answer

Nontariff barriers to imports (NTBs) are

Which of the following is the least efficient method of allocating import licenses by the government?

Evidence shows that governments usually impose the same import duties on the import of similar goods even if the goods fall under different product categories.

Which of the following is true of a quota:

The figure given below shows the domestic demand (D_d) and supply (S_d) curves of mopeds in a country before an import quota is imposed by the government. After the imposition of quota, the total available supply curve becomes S_d + Q_Q. After the quota is imposed, the domestic consumers:

Under which of the following situations will a tariff imposed by a country fail to reduce imports by as much as expected?

Which of the following NTBs may generate revenue for the government?

Compared to a tariff, a quota gives the government a better control over the quantity of imports.

The world as a whole is better off, if the trading partners of a nation respond by raising their trade barriers when this country raises its own trade barriers.

Government procurement practices can restrict imports if the purchasing processes are heavily biased toward products with large local content.

Which of the following is true of a voluntary export restraint (VER)?

Show graphically and explain the effects of imposition of a quota by a small country under competitive conditions. The quota rights are given away for free to a fixed set of import distributor firms in the country.

One of the reasons that protectionists and government officials may favor using a quota instead of a tariff is:

Most or all of the mark-up revenue from a quota will be captured by the government if the government auctions off import licenses.

Which of the following is NOT true of nontariff barriers to imports?

What are NTBs? Discuss any three forms of NTBs other than quotas and VERs.

International Economics Is Different

The Basic Theory Using Demand and Supply

Why Everybody Trades: Comparative Advantage

Trade: Factor Availability and Factor Proportions Are Key

Who Gains and Who Loses From Trade

Scale Economies, Imperfect Competition, and Trade

Growth and Trade Part II: Trade Policy

Analysis of a Tariff

Arguments for and Against Protection

Pushing Exports

Trade Blocs and Trade Blocks

Trade and the Environment

Trade Policies for Developing Countries

Multinationals and Migration: International Factor Movements

Payments Among Nations

The Foreign Exchange Market

Forward Exchange and International Financial Investment

What Determines Exchange Rates

Government Policies Toward the Foreign Exchange Market

International Lending and Financial Crises

How Does the Open Macroeconomy Work

Internal and External Balance With Fixed Exchange Rates

Floating Exchange Rates and Internal Balance

National and Global Choices: Floating Rates and the Alternatives

Filters

Exam 9: Nontariff Barriers to Imports

Which of the following is the least efficient method of allocating import licenses by the government?

Evidence shows that governments usually impose the same import duties on the import of similar goods even if the goods fall under different product categories.

Which of the following is true of a quota:

The figure given below shows the domestic demand (Dd) and supply (Sd) curves of mopeds in a country before an import quota is imposed by the government. After the imposition of quota, the total available supply curve becomes Sd + QQ. After the quota is imposed, the domestic consumers:

Under which of the following situations will a tariff imposed by a country fail to reduce imports by as much as expected?

Which of the following NTBs may generate revenue for the government?

Compared to a tariff, a quota gives the government a better control over the quantity of imports.

The world as a whole is better off, if the trading partners of a nation respond by raising their trade barriers when this country raises its own trade barriers.

Government procurement practices can restrict imports if the purchasing processes are heavily biased toward products with large local content.

Which of the following is true of a voluntary export restraint (VER)?

Show graphically and explain the effects of imposition of a quota by a small country under competitive conditions. The quota rights are given away for free to a fixed set of import distributor firms in the country.

One of the reasons that protectionists and government officials may favor using a quota instead of a tariff is:

Most or all of the mark-up revenue from a quota will be captured by the government if the government auctions off import licenses.

Which of the following is NOT true of nontariff barriers to imports?

What are NTBs? Discuss any three forms of NTBs other than quotas and VERs.

International Economics Is Different

The Basic Theory Using Demand and Supply

Why Everybody Trades: Comparative Advantage

Trade: Factor Availability and Factor Proportions Are Key

Who Gains and Who Loses From Trade

Scale Economies, Imperfect Competition, and Trade

Growth and Trade Part II: Trade Policy

Analysis of a Tariff

Arguments for and Against Protection

Pushing Exports

Trade Blocs and Trade Blocks

Trade and the Environment

Trade Policies for Developing Countries

Multinationals and Migration: International Factor Movements

Payments Among Nations

The Foreign Exchange Market

Forward Exchange and International Financial Investment

What Determines Exchange Rates

Government Policies Toward the Foreign Exchange Market

International Lending and Financial Crises

How Does the Open Macroeconomy Work

Internal and External Balance With Fixed Exchange Rates

Floating Exchange Rates and Internal Balance

National and Global Choices: Floating Rates and the Alternatives

Filters

The figure given below shows the domestic demand (D_d) and supply (S_d) curves of mopeds in a country before an import quota is imposed by the government. After the imposition of quota, the total available supply curve becomes S_d + Q_Q. After the quota is imposed, the domestic consumers: