Exam 56: International Trade Restrictions

Preferential trade agreements have a beneficial trade-diversion effect when they reduce prices for traded goods and stimulate the volume of international trade.

Tariffs are considered to be a popular tax in the first world countries, who justify them on the basis of the revenue they generate for government spending.

Protection is rarely withdrawn from infant industries because such firms are necessary to ensure creation of domestic jobs.

Agreements to abolish most barriers to trade among nations are known as:

When barriers to trade are imposed, we should expect some groups to be harmed at the expense of other groups.

Many economists believe that the collapse of world trade and the depression in the 1930s were linked by a decrease in real income caused by producing on the basis of comparative advantage.

As a result of the government procurement policy in the U.S.:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 35.2 According to Figure 35.2, if the world price per bushel of wheat is $25, what is the domestic production?

If average costs of production decline with increases in output for a particular firm:

In order to protect key industries, some countries impose taxes on their exports instead of imports, mainly because it is easier to collect taxes from the export industry.

The infant industry argument is that:

Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market.The firm caters to the global market and earns a profit of $10 million.Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million.Although a government subsidy allows Flettner to enter the helicopter market, the company is unable to reap profits in the long run.Which of the following could have led to this outcome?

The figure below shows the demand (D)and supply (S)curves of cocoa in the U.S. Figure 35.4 According to Figure 35.4, the no-trade equilibrium price and quantity of cocoa in the U.S.market are:

Which of the following statements about international trade restrictions is true?

Protection from foreign competition benefits domestic producers in the protected industry at the expense of domestic consumers.

If the world price of a good is lower than its domestic equilibrium price, the country will:

Which of the following statements about an increasing-returns-to-scale industry is not true?

Subsidies are payments made by the government of a country to:

When dealing with strategic trade policy, one practical problem for government is the likelihood of retaliation by the foreign government.

Protection provided to the infant industries is rarely withdrawn because: