Exam 5: Nontariff Trade Barriers

Figure 5.4 illustrates the calculator market for Venezuela,assumed to be a "small" country that is unable to affect the world price.SVenezuela is the domestic supply schedule and DVenezuela is the domestic demand schedule. Figure 5.4.Venezuelan Calculator Market -Consider Figure 5.4.The production subsidy results in an overall welfare loss for Venezuela totaling:

An orderly marketing agreement is a market-sharing pact negotiated by trading nations,and its effect is to moderate the intensity of international competition.

Throughout the world,governments auction quota licenses

Government subsidies may take the form of all of these EXCEPT:

An effective Buy American law would tend to increase U.S.producer surplus at the expense of U.S.consumer surplus.

A domestic content requirement placed on automobiles would tend to result in

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.The government of Mexico collects 50 percent of the export quota's revenue effect,or $600,in the form of tax revenue.

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.Compared to free trade,the Japanese export quota leads to an increase in Mexican consumer surplus of $3150.

Local content laws stipulate the maximum percentage of a product's total value that must be produced domestically for that product to be sold domestically.

Voluntary export restraint agreements typically apply to all of the world's exporting nations rather than only the most important exporting nations.

Similar to import tariffs,quotas on imports result in

For the United States,antidumping laws tend to result in

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.IF the US imposes a quota of 15 bottles of wine what will happen to consumer surplus?

From the perspective of the American public as a whole,export subsidies levied by overseas governments on goods sold to the United States:

According to U.S.trade law,dumping is defined as selling a product at a price that is greater than fair value.

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

To the extent that domestic importing companies organize as a monopoly buyer,and foreign exporting companies behave as competitive sellers,the importing companies capture the revenue effect of a quota.

The imposition of a tariff on imported steel for the home country results in:

An import quota tends to reduce the overall welfare of the importing nation by an amount equal to the protective effect,consumption effect,and the portion of the revenue effect that is captured by the domestic government.

According to the cost-based definition of dumping,dumping begins to occur when a firm sells a product at a price that is less than average variable cost.