Exam 5: Nontariff Trade Barriers

Figure 5.3 illustrates the apple market for Sweden,assumed to be a "small" country that is unable to affect the world price.SSweden is the domestic supply and DSweden is the domestic demand.SSweden+Quota is Sweden's supply schedule with an import quota. Figure 5.3.Sweden's Apple Market -Consider Figure 5.3.As a result of the quota,Sweden's consumer surplus:

Compared to an import quota,an equivalent tariff may provide a less certain amount of protection for home producers since:

Subsidies to domestic firms may lead to

An example of a nontariff trade barrier would be

Describe some of the differences between tariffs and quotas?

An elimination of nontariff barriers on apples tends to increase apple imports,reduce profits of import-competing apple producers,and generate job losses for domestic apple workers.

The United Auto Workers union attempted to win the approval of legislation that would moderate the practice of foreign sourcing on the part of American auto manufacturers.Which of the following best represents this legislation?

Which trade restriction stipulates the percentage of a product's total value that must be produced domestically in order for that product to be sold domestically?

If the U.S.demand for Korean steel is price elastic,an export subsidy granted to Korean steel firms will increase Korea's export revenue.

Today most industrial countries protect their industries via global import quotas rather than selective import quotas.

Figure 5.2 illustrates the revenue and cost conditions of ABC Inc.which sells calculators in Canada and France. Figure 5.2.International Dumping -Consider Figure 5.2.Compared with the total revenue and total profit that ABC Inc.realizes in the absence of dumping,with dumping the firm attains a:

Figure 5.1 illustrates the steel market for Mexico,assumed to be a "small" country that is unable to affect the world price.Suppose the world price of steel is given and constant at $200 per ton.Now suppose the Mexican steel industry is able to obtain trade protection. Figure 5.1.Alternative Nontariff Trade Barriers Levied by a "Small" Country -Consider Figure 5.1.Suppose the Mexican government provides a subsidy of $200 per ton to its steel producers,as indicated by the supply schedule SM (with subsidy).??The quantity of imports equals:

Import quotas can yield revenue for the domestic government if it auctions import licenses to the highest bidder in a competitive market.

Figure 5.6 Domestice Supply and demand for Wine - US -Consider Figure 5.6.In the global market for wine,the EU is willing to supply as much wine as the US demands at $8 per bottle.What will happen to the price of a bottle of wine in the US if a quota of 15 bottles of wine is imposed?

A subsidy granted to import-competing producers results in a welfare loss to the economy by an amount equal to the protective effect plus the consumption effect.

A firm that faces problems of falling sales and excess productive capacity might resort to international dumping if it:

Antidumping duties result in an increase in consumer surplus.

A licensing requirement,or an unreasonable standard regulating the safety or quality of a product that is imported into a country,is called a

With a quota placed on imported sugar,increased domestic demand leads to increased sugar imports but not to higher sugar prices.

Suppose the government grants a subsidy to domestic producers of an import-competing good.The subsidy tends to result in deadweight losses for the domestic economy in the form of the: