Exam 5: Nontariff Trade Barriers

Consider Figure 5.5.With free trade,Mexicans produce 4 TVs,consume 24 TVs,and import 20 TVs.

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.

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

Export subsidies levied by foreign governments on products in which the United States has a comparative disadvantage:

Which trade restriction stipulates the percentage of a product's total value that must be produced domestically in order for that product to be sold domestically?

Sporadic (distress)dumping would occur if domestic orange producers dispose of an excess quantity of oranges,resulting from an abnormally large harvest,by selling them at lower prices abroad than at home.

Figure 5.4.Venezuelan Calculator Market -Consider Figure 5.4.The increase in Venezuelan producer surplus under the production subsidy totals:

A subsidy granted to import-competing producers is intended to lead to increased domestic production and decreased imports for the home country.

A firm that faces problems of falling sales and excess productive capacity might resort to international dumping if it:

With a quota placed on imported sugar,increased domestic demand leads to increased sugar imports but not to higher sugar prices.

If the Australian government imposes a domestic content requirement of 75 percent on autos,at least 25 percent of an auto's value must be produced in a foreign country if that auto is to be sold in Australia.

Local content laws are consistent with the principle of import substitution,in which domestic production replaces the importation of goods from abroad.

Concerning the restrictive impact of an import quota,assume there occurs an increase in the domestic demand for the import product.As long as the quota falls short of what would be imported under free market conditions,the economy's adjustment to the increase in demand would take the form of:

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.After the quota is levied,the price of apples in Sweden will equal:

Figure 5.4.Venezuelan Calculator Market -Consider Figure 5.4.The cost of the production subsidy to the Venezuelan government totals:

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)}. As a result of the subsidy Mexican steel producers gain ____ of producer surplus.

Consider Figure 5.5.The Japanese export quota's revenue effect totals $1200.

For most nations,the ratio of imports to total purchases in the public sector is much higher than in the private sector.

Import quotas tend to lead to all of the following except:

A global import quota permits a specified number of goods to be imported each year,but does not specify where the product is shipped from and who is permitted to import.