Exam 5: Nontariff Trade Barriers

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?

Domestic content legislation applied to autos would tend to:

Figure 5.3 illustrates the apple market for Sweden,assumed to be a "small" country that is unable to affect the world price.S_Sweden is the domestic supply and D_Sweden is the domestic demand.S_Sweden+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:

What are the intent and impact of domestic content requirements?

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.

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 5.3 illustrates the apple market for Sweden,assumed to be a "small" country that is unable to affect the world price.S_Sweden is the domestic supply and D_Sweden is the domestic demand.S_Sweden+Quota is Sweden's supply schedule with an import quota. Figure 5.3.Sweden's Apple Market -Consider Figure 5.3.If the Swedish government auctions import licenses to the highest bidder in a competitive market,it could realize revenues of up to:

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

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

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.

Consider Figure 5.5.The deadweight welfare loss to Mexico,as a result of the Japanese export quota,totals $1200.

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 total cost of the subsidy to the Mexican government equals:

A firm would increase profits from dumping if it charges a lower price at home,where demand is inelastic,and a higher price abroad where demand is elastic.

For the United States,the Buy American Act has tended to increase consumer surplus for U.S.buyers of protected merchandise.

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:

Figure 5.3 illustrates the apple market for Sweden,assumed to be a "small" country that is unable to affect the world price.S_Sweden is the domestic supply and D_Sweden is the domestic demand.S_Sweden+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.

During periods of growing demand,a tariff more effectively restricts the volume of imports than an equivalent import quota.

Predatory dumping would occur if Toyota Inc.of Japan sells autos to U.S.consumers at lower prices than to Japanese consumers in order to put Chrysler Inc.out of business.

A producer successfully practicing international dumping would charge:

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