Question 1

Under the Multifiber Arrangement,the United States can export only limited quantities of textiles and apparel to Taiwan,Hong Kong,South Korea,and China.

Accepted Answer

A) True 
 B)False

Question 2

When voluntary export limits are imposed on the world's chief exporter

Accepted Answer

A)  The exports of the non-restrained suppliers may be stimulated 
B)  A trade diversion effect may occur 
C)  Both a and b 
D)  None of the above 
A)  The exports of the non-restrained suppliers may be stimulated 
B)  A trade diversion effect may occur 
C)  Both a and b 
D)  None of the above

Question 3

-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 ?w?th s?bs?d??.
The quantity of imports equals:

Accepted Answer

A)  1 ton 
B)  2 tons 
C)  3 tons 
D)  4 tons 
A)  1 ton 
B)  2 tons 
C)  3 tons 
D)  4 tons

Question 4

Local content laws stipulate the maximum percentage of a product's total value that must be produced domestically for that product to be sold domestically.

Accepted Answer

A) True 
 B)False

Question 5

-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 ?w?th s?bs?d??.
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

Question 6

Figure 5.5 illustrates the television market for Mexico, assumed to be a small country that is unable to affect the world price. SM???c? is the domestic supply schedule and DM???c? 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 deadweight welfare loss to Mexico,as a result of the Japanese export quota,totals $1200.

Accepted Answer

A) True 
 B)False

Question 7

The purpose of international dumping is to decrease a firm's costs and increase its profits,compared to what would be realized in the absence of dumping.

Accepted Answer

A) True 
 B)False

Question 8

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 9

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 10

To the extent that subsidies granted to exporting firms reduce the foreign price of their goods,the subsidizing country's terms of trade worsen.

Accepted Answer

A) True 
 B)False

Question 11

Figure 5.4 illustrates the calculator market for Venezuela, assumed to be a "small" country that is unable to affect the world price. SV?n? ??l? is the domestic supply schedule and DV?n? ??l? is the domestic demand schedule.
Figure 5.4. Venezuelan Calculator Market
  
-Consider Figure 5.4.The production subsidy results in an overall welfare loss for Venezuela totaling:

Accepted Answer

A)  $8 
B)  $12 
C)  $16 
D)  $20 
A)  $8 
B)  $12 
C)  $16 
D)  $20

Question 12

Figure 5.5 illustrates the television market for Mexico, assumed to be a small country that is unable to affect the world price. SM???c? is the domestic supply schedule and DM???c? 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.Suppose that the governments of Mexico and Japan negotiate a voluntary export agreement in which Japanese TV exports to Mexico are limited to 8 units.Under the quota,the price of TVs in Mexico equals $250 while Mexicans produce 10 TVs and purchase 18 TVs.

Accepted Answer

A) True 
 B)False

Question 13

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 14

-Referring to Figure 5.1,suppose the Mexican government imposes an import quota equal to 2 tons of steel.
If foreign exporters behave as monopoly sellers,and Mexican importers behave as competitive buyers,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 15

-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 16

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

Accepted Answer

A) True 
 B)False

Question 17

Figure 5.3 illustrates the apple market for Sweden, assumed to be a "small" country that is unable to affect the world price. SSw?d?n is the domestic supply and DSw?d?n is the domestic demand. SSw?d?n?Q??t? is Sweden's supply schedule with an import quota.
Figure 5.3. Sweden's Apple Market
  
-Consider Figure 5.3.The quota leads to a deadweight welfare loss for Sweden of an amount equaling:

Accepted Answer

A)  $0.80 
B)  $1.60 
C)  $2.40 
D)  $3.20 
A)  $0.80 
B)  $1.60 
C)  $2.40 
D)  $3.20

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

Figure 5.5 illustrates the television market for Mexico, assumed to be a small country that is unable to affect the world price. SM???c? is the domestic supply schedule and DM???c? 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 20

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

Accepted Answer

A)  Can charge higher prices in markets that are elastic to price changes 
B)  Earns revenues on foreign sales that at least cover variable costs 
C)  Can sell at that price where domestic and foreign demand elasticities equate 
D)  Is able to force foreign prices below marginal production costs 
A)  Can charge higher prices in markets that are elastic to price changes 
B)  Earns revenues on foreign sales that at least cover variable costs 
C)  Can sell at that price where domestic and foreign demand elasticities equate 
D)  Is able to force foreign prices below marginal production costs

Under the Multifiber Arrangement,the United States can export only limited quantities of textiles and apparel to Taiwan,Hong Kong,South Korea,and China.

When voluntary export limits are imposed on the world's chief exporter

-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 ?w?th s?bs?d??. The quantity of imports equals:

Local content laws stipulate the maximum percentage of a product's total value that must be produced domestically for that product to be sold domestically.

-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 ?w?th s?bs?d??. As a result of the subsidy,the welfare loss to Mexico due to inefficient domestic production equals:

The purpose of international dumping is to decrease a firm's costs and increase its profits,compared to what would be realized in the absence of dumping.

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.

To the extent that subsidies granted to exporting firms reduce the foreign price of their goods,the subsidizing country's terms of trade worsen.

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

-Referring to Figure 5.1,suppose the Mexican government imposes an import quota equal to 2 tons of steel. If foreign exporters behave as monopoly sellers,and Mexican importers behave as competitive buyers,the overall welfare loss of the quota to Mexico equals:

-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:

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.

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

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

Balance-of-payments Adjustments

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

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Exam 5: Nontariff Trade Barriers

Under the Multifiber Arrangement,the United States can export only limited quantities of textiles and apparel to Taiwan,Hong Kong,South Korea,and China.

When voluntary export limits are imposed on the world's chief exporter

-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 ?w?th s?bs?d??. The quantity of imports equals:

Local content laws stipulate the maximum percentage of a product's total value that must be produced domestically for that product to be sold domestically.

-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 ?w?th s?bs?d??. As a result of the subsidy,the welfare loss to Mexico due to inefficient domestic production equals:

The purpose of international dumping is to decrease a firm's costs and increase its profits,compared to what would be realized in the absence of dumping.

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.

To the extent that subsidies granted to exporting firms reduce the foreign price of their goods,the subsidizing country's terms of trade worsen.

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

-Referring to Figure 5.1,suppose the Mexican government imposes an import quota equal to 2 tons of steel. If foreign exporters behave as monopoly sellers,and Mexican importers behave as competitive buyers,the overall welfare loss of the quota to Mexico equals:

-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:

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.

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

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

Balance-of-payments Adjustments

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