Question 1

If import licenses are auctioned off to domestic importers in a competitive market, their scarcity value (revenue effect) accrues to:

Accepted Answer

A)  Foreign corporations 
B)  Foreign workers 
C)  Domestic corporations 
D)  The domestic government 
A)  Foreign corporations 
B)  Foreign workers 
C)  Domestic corporations 
D)  The domestic government

Question 2

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.

Accepted Answer

A) True 
 B)False

Question 3

During the 1980s, U.S. steel-using companies (Caterpillar) actively supported the U.S. government's negotiation of voluntary export agreements with foreign steel-exporting countries.

Accepted Answer

A) True 
 B)False

Question 4

Export quotas, placed on Japanese auto shipments to the United States in the 1980s, led to rising prices of both Japanese autos and U.S.-produced autos purchased by the U.S. consumer.

Accepted Answer

A) True 
 B)False

Question 5

Figure 5.4 illustrates the calculator market for Venezuela, assumed to be a "small" country that is unable to affect the world price. SS1U1B1VenezuelaS1U1B0 is the domestic supply schedule and DS1U1B1VenezuelaS1U1B0 is the domestic demand schedule.
Figure 5.4. Venezuelan Calculator Market
  
-Consider Figure 5.4. The cost of the production subsidy to the Venezuelan government totals:

Accepted Answer

A)  $32 
B)  $40 
C)  $48 
D)  $54 
A)  $32 
B)  $40 
C)  $48 
D)  $54

Question 6

Figure 5.3 illustrates the apple market for Sweden, assumed to be a "small" country that is unable to affect the world price. SS1U1B1SwedenS1U1B0 is the domestic supply and DS1U1B1SwedenS1U1B0 is the domestic demand. SS1U1B1Sweden+QuotaS1U1B0 is Sweden's supply schedule with an import quota.
Figure 5.3. Sweden's Apple Market
  
-Consider Figure 5.3. The quota's revenue effect equals:

Accepted Answer

A)  $1.60 
B)  $2.40 
C)  $3.20 
D)  $4.00 
A)  $1.60 
B)  $2.40 
C)  $3.20 
D)  $4.00

Question 7

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:

Accepted Answer

A)  Fall in revenue of $18; fall in profits of $15 
B)  Fall in revenue of $18, fall in profits of $18 
C)  Rise in revenue of $18, rise in profits of $15 
D)  Rise in revenue of $18, rise in profits of $18 
A)  Fall in revenue of $18; fall in profits of $15 
B)  Fall in revenue of $18, fall in profits of $18 
C)  Rise in revenue of $18, rise in profits of $15 
D)  Rise in revenue of $18, rise in profits of $18

Question 8

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 overall deadweight welfare loss to Mexico equals:

Accepted Answer

A)  $200 
B)  $400 
C)  $600 
D)  $800 
A)  $200 
B)  $400 
C)  $600 
D)  $800

Question 9

Suppose the United States and Japan enter into a voluntary export agreement in which Japan imposes an export quota on its automakers. The $\underline {  \text { largest }  }$ share of the export quota's "revenue effect" would tend to be captured by:

Accepted Answer

A)  The U.S. government 
B)  Japanese automakers 
C)  American auto consumers 
D)  American autoworkers 
A)  The U.S. government 
B)  Japanese automakers 
C)  American auto consumers 
D)  American autoworkers

Question 10

Figure 5.5 illustrates the television market for Mexico, assumed to be a small country that is unable to affect the world price. SS1U1B1MexicoS1U1B0 is the domestic supply schedule and DS1U1B1MexicoS1U1B0 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.

Accepted Answer

A) True 
 B)False

Question 11

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
  
-Referring to Figure 5.1, suppose the Mexican government imposes an import quota equal to 2 tons of steel. If the Mexican government auctions import licenses to the highest foreign bidder, the $\underline {  \text { overall }  }$ welfare loss of the quota to Mexico equals:

Accepted Answer

A)  $200 
B)  $400 
C)  $600 
D)  $800 
A)  $200 
B)  $400 
C)  $600 
D)  $800

Question 12

A main factor behind the president's decision to extend relief to steel firms in the form of trigger prices was that:

Accepted Answer

A)  Dumping complaints can be time consuming and expensive to implement 
B)  The Tokyo Round outlawed the granting of subsidies to steel firms 
C)  Trigger prices involve zero deadweight welfare loss for the economy 
D)  Orderly marketing agreements were too costly to administer 
A)  Dumping complaints can be time consuming and expensive to implement 
B)  The Tokyo Round outlawed the granting of subsidies to steel firms 
C)  Trigger prices involve zero deadweight welfare loss for the economy 
D)  Orderly marketing agreements were too costly to administer

Question 13

Is a tariff-rate quota a two-tier tariff? Why?

Accepted Answer

Yes. It allows a specified num

Question 14

In certain industries, Japanese employers do not lay off workers. Therefore, they sometimes have excess supplies of goods that they cannot sell on the home market without lowering prices. To hold down losses, they sell goods in overseas markets at prices well beneath those in Japan. This practice is best referred to as:

Accepted Answer

A)  Orderly marketing 
B)  Trigger pricing 
C)  Domestic content pricing 
D)  Dumping 
A)  Orderly marketing 
B)  Trigger pricing 
C)  Domestic content pricing 
D)  Dumping

Question 15

By limiting the amount of foreign sourcing, local content laws are viewed as a means of jobs preservation for domestic workers.

Accepted Answer

A) True 
 B)False

Question 16

Figure 5.3 illustrates the apple market for Sweden, assumed to be a "small" country that is unable to affect the world price. SS1U1B1SwedenS1U1B0 is the domestic supply and DS1U1B1SwedenS1U1B0 is the domestic demand. SS1U1B1Sweden+QuotaS1U1B0 is Sweden's supply schedule with an import quota.
Figure 5.3. Sweden's Apple Market
  
-Consider Figure 5.3. Assume that Swedish import companies behave as competitive buyers while foreign export companies behave as a monopoly seller. Compared to free trade, Sweden's import quota results in domestic welfare:

Accepted Answer

A)  Gains totaling $3.20 
B)  Gains totaling $4.80 
C)  Losses totaling $3.20 
D)  Losses totaling $4.80 
A)  Gains totaling $3.20 
B)  Gains totaling $4.80 
C)  Losses totaling $3.20 
D)  Losses totaling $4.80

Question 17

Figure 5.5 illustrates the television market for Mexico, assumed to be a small country that is unable to affect the world price. SS1U1B1MexicoS1U1B0 is the domestic supply schedule and DS1U1B1MexicoS1U1B0 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.

Accepted Answer

A) True 
 B)False

Question 18

A subsidy granted to an import-competing producer imposes a deadweight loss on the domestic economy equal to the redistribution effect plus consumption effect.

Accepted Answer

A) True 
 B)False

Question 19

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?

Accepted Answer

A)  increase to $15 
B)  increase to $10 
C)  stay the same at $8 
D)  decrease to $5 
A)  increase to $15 
B)  increase to $10 
C)  stay the same at $8 
D)  decrease to $5

Question 20

For an export quota applied to manufactured goods, foreign exporters tend to capture only a negligible share of the quota's revenue effect.

Accepted Answer

A) True 
 B)False

If import licenses are auctioned off to domestic importers in a competitive market, their scarcity value (revenue effect) accrues to:

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.

During the 1980s, U.S. steel-using companies (Caterpillar) actively supported the U.S. government's negotiation of voluntary export agreements with foreign steel-exporting countries.

Export quotas, placed on Japanese auto shipments to the United States in the 1980s, led to rising prices of both Japanese autos and U.S.-produced autos purchased by the U.S. consumer.

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:

Suppose the United States and Japan enter into a voluntary export agreement in which Japan imposes an export quota on its automakers. The $\underline { \text { largest } }$ share of the export quota's "revenue effect" would tend to be captured by:

A main factor behind the president's decision to extend relief to steel firms in the form of trigger prices was that:

Is a tariff-rate quota a two-tier tariff? Why?

By limiting the amount of foreign sourcing, local content laws are viewed as a means of jobs preservation for domestic workers.

A subsidy granted to an import-competing producer imposes a deadweight loss on the domestic economy equal to the redistribution effect plus consumption effect.

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?

For an export quota applied to manufactured goods, foreign exporters tend to capture only a negligible share of the quota's revenue effect.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Exchange-Rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

International Banking: Reserves, Debt, and Risk

Filters

Exam 5: Nontariff Trade Barriers

If import licenses are auctioned off to domestic importers in a competitive market, their scarcity value (revenue effect) accrues to:

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.

During the 1980s, U.S. steel-using companies (Caterpillar) actively supported the U.S. government's negotiation of voluntary export agreements with foreign steel-exporting countries.

Export quotas, placed on Japanese auto shipments to the United States in the 1980s, led to rising prices of both Japanese autos and U.S.-produced autos purchased by the U.S. consumer.

Suppose the United States and Japan enter into a voluntary export agreement in which Japan imposes an export quota on its automakers. The largest ‾\underline { \text { largest } } largest ​ share of the export quota's "revenue effect" would tend to be captured by:

A main factor behind the president's decision to extend relief to steel firms in the form of trigger prices was that:

Is a tariff-rate quota a two-tier tariff? Why?

By limiting the amount of foreign sourcing, local content laws are viewed as a means of jobs preservation for domestic workers.

A subsidy granted to an import-competing producer imposes a deadweight loss on the domestic economy equal to the redistribution effect plus consumption effect.

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?

For an export quota applied to manufactured goods, foreign exporters tend to capture only a negligible share of the quota's revenue effect.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Exchange-Rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

International Banking: Reserves, Debt, and Risk

Filters

Suppose the United States and Japan enter into a voluntary export agreement in which Japan imposes an export quota on its automakers. The $\underline { \text { largest } }$ share of the export quota's "revenue effect" would tend to be captured by: