Question 1

Subsidies to domestic firms may lead to

Accepted Answer

A)  An increase in prices 
B)  Higher volume of exports 
C)  Higher volume of imports 
D)  Increase in welfare of the trading partner 
A)  An increase in prices 
B)  Higher volume of exports 
C)  Higher volume of imports 
D)  Increase in welfare of the trading partner B

Question 2

Figure 5.1.Alternative Nontariff Trade Barriers Levied by a "Small" Country  
-Consider Figure 5.1.Suppose instead that the Mexican government provides a subsidy of $200 per ton to its steel producers,as indicated by the supply schedule SM (with subsidy). As a result of the subsidy,the welfare loss to Mexico due to inefficient domestic production equals:

Accepted Answer

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

Question 3

Describe some of the differences between tariffs and quotas?

Accepted Answer

Tariffs and quotas differ in their revenue effects and restrictive impacts on the volume of trade.While quotas are easier to administer and manage,they do not provide the government with revenue.

Question 4

Figure 5.1.Alternative Nontariff Trade Barriers Levied by a "Small" Country  
-Consider Figure 5.1.With free trade,the quantity of steel imported by Mexico equals:

Accepted Answer

A)  2 tons 
B)  4 tons 
C)  6 tons 
D)  8 tons 
A)  2 tons 
B)  4 tons 
C)  6 tons 
D)  8 tons

Question 5

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 Mexican steel importers behave as monopoly buyers and foreign exporters behave as competitive sellers,the 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 6

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.

Accepted Answer

A) True 
 B)False

Question 7

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.

Accepted Answer

A) True 
 B)False

Question 8

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

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 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 10

In the post-World War II era,Nontariff trade barriers have decreased in importance relative to tariff barriers.

Accepted Answer

A) True 
 B)False

Question 11

The distribution of an import quota's revenue effect depends on the relative concentration of bargaining power between foreign exporters and domestic importers.

Accepted Answer

A) True 
 B)False

Question 12

Although the Tokyo Round of international trade negotiations reduced the Buy-American restrictions of the U.S.government,many state governments have maintained restrictive Buy-American policies.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

To the extent that a local content requirement forces firms to locate production in a high-cost nation,product price rises and consumer surplus falls.

Accepted Answer

A) True 
 B)False

Question 16

A voluntary export agreement

Accepted Answer

A)  Typically applies only to the world's most important exporting nation(s) 
B)  Typically applies only to the world's least important exporting nation (s) 
C)  Is always more restrictive on trade than a tariff or import quota 
D)  All of the above 
A)  Typically applies only to the world's most important exporting nation(s) 
B)  Typically applies only to the world's least important exporting nation (s) 
C)  Is always more restrictive on trade than a tariff or import quota 
D)  All of the above

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

Figure 5.2 illustrates the revenue and cost conditions of ABC Inc.which sells calculators in Canada and France.
Figure 5.2.International Dumping  
-Referring to Figure 5.2,consider if ABC Inc.sells 27 calculators at a price of $5 each,realizing profits totaling $54.Of this quantity,ABC Inc.sells ____ calculators in Canada and realizes revenues totaling $____; the firm sells ____ calculators in France and realizes revenues totaling $____.

Accepted Answer

A)  15,$35,9,$45 
B)  15,$45,9,$35 
C)  21,$105,6,$30 
D)  21,$30,6,$105 
A)  15,$35,9,$45 
B)  15,$45,9,$35 
C)  21,$105,6,$30 
D)  21,$30,6,$105

Question 20

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.At the free-trade price of $0.60 per pound,Sweden's consumer surplus totals $____ and producer surplus totals $____.

Accepted Answer

A)  $10.80,$2.40 
B)  $14.60,$3.90 
C)  $24.20,$1.80 
D)  $32.40,$2.30 
A)  $10.80,$2.40 
B)  $14.60,$3.90 
C)  $24.20,$1.80 
D)  $32.40,$2.30

Subsidies to domestic firms may lead to

Describe some of the differences between tariffs and quotas?

Figure 5.1.Alternative Nontariff Trade Barriers Levied by a "Small" Country -Consider Figure 5.1.With free trade,the quantity of steel imported by Mexico equals:

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.

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 5.1.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 S_{M (with subsidy)}. The overall deadweight welfare loss to Mexico equals:

In the post-World War II era,Nontariff trade barriers have decreased in importance relative to tariff barriers.

The distribution of an import quota's revenue effect depends on the relative concentration of bargaining power between foreign exporters and domestic importers.

Although the Tokyo Round of international trade negotiations reduced the Buy-American restrictions of the U.S.government,many state governments have maintained restrictive Buy-American policies.

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

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

To the extent that a local content requirement forces firms to locate production in a high-cost nation,product price rises and consumer surplus falls.

A voluntary export agreement

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.

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 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

Subsidies to domestic firms may lead to

Describe some of the differences between tariffs and quotas?

Figure 5.1.Alternative Nontariff Trade Barriers Levied by a "Small" Country -Consider Figure 5.1.With free trade,the quantity of steel imported by Mexico equals:

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.

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 5.1.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:

In the post-World War II era,Nontariff trade barriers have decreased in importance relative to tariff barriers.

The distribution of an import quota's revenue effect depends on the relative concentration of bargaining power between foreign exporters and domestic importers.

Although the Tokyo Round of international trade negotiations reduced the Buy-American restrictions of the U.S.government,many state governments have maintained restrictive Buy-American policies.

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

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

To the extent that a local content requirement forces firms to locate production in a high-cost nation,product price rises and consumer surplus falls.

A voluntary export agreement

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.

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 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

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 S_{M (with subsidy)}. The overall deadweight welfare loss to Mexico equals: