Question 1

An effective Buy American law would tend to increase U.S.producer surplus at the expense of U.S.consumer surplus.

Accepted Answer

A) True 
 B)False

Question 2

Assume the U.S.has a competitive advantage in producing calculators,while the rest of the world has a competitive advantage in steel.Suppose the U.S.and the rest of the world enter into an agreement to lower import quotas below existing levels on calculators and steel.Which of the following would least likely occur for the U.S.? Rising levels of:

Accepted Answer

A)  Consumer surplus for American buyers of steel 
B)  Producer surplus for American steelmakers 
C)  Production in the American calculator industry 
D)  Producer surplus for American calculator producers 
A)  Consumer surplus for American buyers of steel 
B)  Producer surplus for American steelmakers 
C)  Production in the American calculator industry 
D)  Producer surplus for American calculator producers

Question 3

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.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 4

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.As a result of the quota,Sweden's consumer surplus:

Accepted Answer

A)  Increases by $6 
B)  Increases by $8 
C)  Decreases by $6 
D)  Decreases by $8 
A)  Increases by $6 
B)  Increases by $8 
C)  Decreases by $6 
D)  Decreases by $8

Question 5

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's revenue effect equals:

Accepted Answer

A)  $1.60 
B)  $2.40 
C)  $3.20 
D)  $4.00 
A)  $1.60 
B)  $2.40 
C)  $3.20 
D)  $4.00

Question 6

With a tariff on auto imports,increased domestic demand leads to a fall in the number of autos imported and a rise in the number of autos produced domestically.

Accepted Answer

A) True 
 B)False

Question 7

Voluntary export restraint agreements typically apply to all of the world's exporting nations rather than only the most important exporting nations.

Accepted Answer

A) True 
 B)False

Question 8

Today most industrial countries protect their industries via global import quotas rather than selective import quotas.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  Lower the welfare of all Americans 
B)  Lead to increases in U.S. consumer surplus 
C)  Encourage U.S. production of competing goods 
D)  Encourage U.S. workers to demand higher wages 
A)  Lower the welfare of all Americans 
B)  Lead to increases in U.S. consumer surplus 
C)  Encourage U.S. production of competing goods 
D)  Encourage U.S. workers to demand higher wages

Question 10

Domestic content legislation applied to autos would tend to:

Accepted Answer

A)  Support wage levels of American autoworkers 
B)  Lower auto prices for American autoworkers 
C)  Encourage American automakers to locate production overseas 
D)  Increase profits of American auto companies 
A)  Support wage levels of American autoworkers 
B)  Lower auto prices for American autoworkers 
C)  Encourage American automakers to locate production overseas 
D)  Increase profits of American auto companies

Question 11

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 12

Empirical studies show that because voluntary export quotas are typically administered by exporting countries,foreign exporters tend to:

Accepted Answer

A)  Raise their export prices, thus capturing much of the quota's revenue effect 
B)  Lower their export prices, thus losing much of the quota's revenue effect 
C)  Raise their export prices, thus selling more goods overseas 
D)  Lower their export prices, thus selling fewer goods overseas 
A)  Raise their export prices, thus capturing much of the quota's revenue effect 
B)  Lower their export prices, thus losing much of the quota's revenue effect 
C)  Raise their export prices, thus selling more goods overseas 
D)  Lower their export prices, thus selling fewer goods overseas

Question 13

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.With international dumping,ABC Inc.sells ____ calculators to Canadian buyers at a price of $____ and ____ calculators to French buyers at a price of $____.

Accepted Answer

A)  15, $4, 12, $7 
B)  15, $7, 12, $4 
C)  9, $5, 15, $6 
D)  9, $6, 15, $5 
A)  15, $4, 12, $7 
B)  15, $7, 12, $4 
C)  9, $5, 15, $6 
D)  9, $6, 15, $5

Question 14

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.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 cost of the production subsidy to the Venezuelan government totals:

Accepted Answer

A)  $32 
B)  $40 
C)  $48 
D)  $54 
A)  $32 
B)  $40 
C)  $48 
D)  $54

Question 17

A main factor behind the president's decision to extend relief to steel firms in the form of trigger prices was that:

Accepted Answer

A)  Dumping complaints can be time consuming and expensive to implement 
B)  The Tokyo Round outlawed the granting of subsidies to steel firms 
C)  Trigger prices involve zero deadweight welfare loss for the economy 
D)  Orderly marketing agreements were too costly to administer 
A)  Dumping complaints can be time consuming and expensive to implement 
B)  The Tokyo Round outlawed the granting of subsidies to steel firms 
C)  Trigger prices involve zero deadweight welfare loss for the economy 
D)  Orderly marketing agreements were too costly to administer

Question 18

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:

Accepted Answer

A)  Permit less efficient home production 
B)  Distort choices for domestic consumers 
C)  Result in higher tax rates for domestic residents 
D)  Redistribute revenue from domestic producers to consumers 
A)  Permit less efficient home production 
B)  Distort choices for domestic consumers 
C)  Result in higher tax rates for domestic residents 
D)  Redistribute revenue from domestic producers to consumers

Question 19

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

Accepted Answer

A)  The quota results in efficiency reductions but the tariff does not 
B)  The tariff results in efficiency reductions but the quota does not 
C)  They have different impacts on how much is produced and consumed 
D)  They have different impacts on how income is distributed 
A)  The quota results in efficiency reductions but the tariff does not 
B)  The tariff results in efficiency reductions but the quota does not 
C)  They have different impacts on how much is produced and consumed 
D)  They have different impacts on how income is distributed

Question 20

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

Accepted Answer

A) True 
 B)False

An effective Buy American law would tend to increase U.S.producer surplus at the expense of U.S.consumer surplus.

With a tariff on auto imports,increased domestic demand leads to a fall in the number of autos imported and a rise in the number of autos produced domestically.

Voluntary export restraint agreements typically apply to all of the world's exporting nations rather than only the most important exporting nations.

Today most industrial countries protect their industries via global import quotas rather than selective import quotas.

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

Domestic content legislation applied to autos would tend to:

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.

Empirical studies show that because voluntary export quotas are typically administered by exporting countries,foreign exporters tend to:

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.

A main factor behind the president's decision to extend relief to steel firms in the form of trigger prices was that:

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:

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

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

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

Exam 5: Nontariff Trade Barriers

An effective Buy American law would tend to increase U.S.producer surplus at the expense of U.S.consumer surplus.

With a tariff on auto imports,increased domestic demand leads to a fall in the number of autos imported and a rise in the number of autos produced domestically.

Voluntary export restraint agreements typically apply to all of the world's exporting nations rather than only the most important exporting nations.

Today most industrial countries protect their industries via global import quotas rather than selective import quotas.

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

Domestic content legislation applied to autos would tend to:

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.

Empirical studies show that because voluntary export quotas are typically administered by exporting countries,foreign exporters tend to:

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.

A main factor behind the president's decision to extend relief to steel firms in the form of trigger prices was that:

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:

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

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

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