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.Suppose the rest of the world can supply apples to Sweden at a price of $0.60 per pound.With free trade,Sweden produces ____ pounds of apples and imports ____ pounds of apples.

If the Japanese demand for computers is elastic and the Canadian demand for computers is inelastic,a profit-maximizing firm would charge a higher price to Canadian buyers than to Japanese buyers.

A subsidy granted to import-competing producers is often preferred to an import tariff on the grounds that it results in a smaller deadweight welfare loss and allows consumption to remain unchanged.

Concerning international dumping,many economists argue that "fair value" should be based on

According to U.S.trade law,which of the following is/are illegal in American markets?

Tariffs and quotas on imports tend to involve larger sacrifices in national welfare than would occur under domestic subsidies.This is because,unlike domestic subsidies,import tariffs and quotas:

For the United States,corporate average fuel economy standards (CAFÉ) provide a minimum limit on the number of gallons of gas that an automobile can consume per mile driven.

The result of antidumping duties is to impose a floor on foreign prices.

A subsidy granted to an import-competing producer shifts its supply schedule outward to the right.

Import tariffs and import quotas yield identical protection effects,consumption effects,redistribution effects,and revenue effects.

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.With free trade,Mexico's consumer surplus and producer surplus respectively equal:

Excessive sea transport and freight regulations are examples of nontariff trade barriers.

A tariff-rate quota tends to result in

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 rest of the world voluntarily agrees to reduce steel shipments to Mexico vis-a-vis an export quota equal to 2 tons.??Assuming Mexican importers behave as monopoly buyers while foreign exporters behave as competitive sellers,the overall welfare loss of the quota to Mexico is:

The margin of dumping equals the amount by which the foreign price is greater than the domestic price,or the amount by which the foreign price exceeds the cost of production.

Figure 5.5 illustrates the television market for Mexico,assumed to be a small country that is unable to affect the world price.SMexico is the domestic supply schedule and DMexico is the domestic demand schedule.Suppose that Japan can supply televisions to Mexico at a price of $100 per set. Figure 5.5.Mexico's Television Market -Consider Figure 5.5.Assuming that the revenue effect of the export quota accrues to Japanese firms,the overall welfare loss to Mexico equals $2100 as a result of the quota.

A firm granting lifetime employment to its workers has the incentive to engage in international dumping during periods of business recession and excess production capacity.

Assume the U.S.has a competitive advantage in producing calculators,while the rest of the world has a competitive advantage in steel.Suppose the U.S.and the rest of the world enter into an agreement to lower import quotas below existing levels on calculators and steel.Which of the following would least likely occur for the U.S.? Rising levels of:

If a tariff and an import quota lead to equivalent increases in the domestic price of steel,then:

When increases in nonrestraint supply offset part of the cutback in shipments that occur under an export quota,the overall inefficiency loss for the importing country is less than that which would have occurred in the absence of nonrestrained exports.