Exam 5: Nontariff Trade Barriers

-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??. As a result of the subsidy Mexican steel producers gain ____ of producer surplus.

The imposition of a domestic content requirement by the United States would cause consumer surplus for Americans to:

Compared to an import quota,an equivalent tariff may provide a less certain amount of protection for home producers since:

Import quotas can yield revenue for the domestic government if it auctions import licenses to the highest bidder in a competitive market.

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

Suppose the government grants a subsidy to domestic producers of an import-competing good.The subsidy tends to result in deadweight losses for the domestic economy in the form of the:

A firm granting lifetime employment to its workers has the incentive to engage in international dumping during periods of business recession and excess production capacity.

The margin of dumping equals the amount by which the foreign price is greater than the domestic price,or the amount by which the foreign price exceeds the cost of production.

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 increase in Venezuelan producer surplus under the production subsidy totals:

Is a tariff-rate quota a two-tier tariff? Why?

An import quota is a physical restriction on the quantity of goods that may be imported during a specified time period.

-Consider Figure 5.1.Suppose the rest of the world voluntarily agrees to reduce steel shipments to Mexico vis-a-vis an export quota equal to 2 tons. Assuming Mexican importers behave as monopoly buyers while foreign exporters behave as competitive sellers,the overall welfare loss of the quota to Mexico is:

-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 overall deadweight welfare loss to Mexico equals:

An effective Buy American law results in deadweight welfare losses for the United States in the form of the protective effect and consumption effect.

Although the Tokyo Round of international trade negotiations reduced the Buy-American restrictions of the U.S.government,many state governments have maintained restrictive Buy-American policies.

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

-Consider Figure 5.1.Suppose the rest of the world voluntarily agrees to reduce steel shipments to Mexico vis-a-vis an export quota equal to 2 tons. Assuming Mexican importers behave as competitive buyers while foreign exporters behave as monopoly sellers,the overall welfare loss of the quota to Mexico is:

The United Auto Workers union attempted to win the approval of legislation that would moderate the practice of foreign sourcing on the part of American auto manufacturers.Which of the following best represents this legislation?

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

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.At the free-trade price of $0.60 per pound,Sweden's consumer surplus totals $____ and producer surplus totals $____.