Question 1

The practice of Canadian firms dumping their products in Sweden poses a problem for economic policymakers since dumping tends to:

Accepted Answer

A)  Favor Swedish consumers over Canadian consumers 
B)  Favor Swedish producers over Canadian producers 
C)  Become widespread as firms operate at full productive capacity 
D)  Result in firms charging prices above the total costs of production

Question 2

By limiting the amount of foreign sourcing,local content laws are viewed as a means of jobs preservation for domestic workers.

Accepted Answer

A) True 
 B)False

Question 3

-Consider Figure 5.1.With free trade,the quantity of steel imported by Mexico equals:

Accepted Answer

A)  2 tons 
B)  4 tons 
C)  6 tons 
D)  8 tons

Question 4

For years the U.S.government levied quotas on inexpensive oil imported from the Middle East.The quotas led to cost increases for U.S.consumers totaling $3 billion for oil products.An apparent justification for this policy was that:

Accepted Answer

A)  U.S. oil companies and workers deserved higher incomes 
B)  U.S. oil was of superior quality and merited higher prices 
C)  One should not be too dependent on foreign suppliers of crucial resources 
D)  The U.S. government needed the quota revenue to balance its budget

Question 5

A firm suffering idle plant capacity would minimize losses by selling its product abroad at a lower price than at home,provided that the foreign price more than covers average variable cost.

Accepted Answer

A) True 
 B)False

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  Domestic producers of the imported good being harmed 
B)  Domestic consumers of the imported good being harmed 
C)  Prices increasing in the importing country 
D)  Prices falling in the exporting country

Question 8

Describe some of the differences between tariffs and quotas?

Accepted Answer

The answer of Describe some of the differences between tariffs...

Question 9

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

Accepted Answer

A)  Foreign corporations 
B)  Foreign workers 
C)  Domestic corporations 
D)  The domestic government

Question 10

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.If the Swedish government auctions import licenses to the highest bidder in a competitive market,it could realize revenues of up to:

Accepted Answer

A)  $3.20 
B)  $4.00 
C)  $4.80 
D)  $5.60

Question 11

According to the U.S.Buy American Act,federal government agencies cannot purchase materials and products from U.S.suppliers if their prices are higher than those of foreign competitors.

Accepted Answer

A) True 
 B)False

Question 12

If the U.S.demand for Korean steel is price elastic,an export subsidy granted to Korean steel firms will increase Korea's export revenue.

Accepted Answer

A) True 
 B)False

Question 13

An elimination of nontariff barriers on apples tends to increase apple imports,reduce profits of import-competing apple producers,and generate job losses for domestic apple workers.

Accepted Answer

A) True 
 B)False

Question 14

The imposition of a tariff on imported steel for the home country results in:

Accepted Answer

A)  Improving terms of trade and rising volume of trade 
B)  Higher steel prices and falling steel consumption 
C)  Lower profits for domestic steel companies 
D)  Higher unemployment for domestic steel workers

Question 15

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.With free trade,Mexican producer surplus equals $2450 and Mexican consumer surplus equals $200.

Accepted Answer

A) True 
 B)False

Question 16

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.Suppose the rest of the world can supply apples to Sweden at a price of $0.60 per pound.With free trade,Sweden produces ____ pounds of apples and imports ____ pounds of apples.

Accepted Answer

A)  10, 8 
B)  10, 18 
C)  6, 22 
D)  6, 16

Question 17

A specification of a maximum amount of a foreign produced good that will be allowed to enter the country over a given time period is referred to as:

Accepted Answer

A)  A domestic subsidy 
B)  An export subsidy 
C)  An import quota 
D)  An export quota

Question 18

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.Assume that Swedish import companies behave as competitive buyers while foreign export companies behave as a monopoly seller.Compared to free trade,Sweden's import quota results in domestic welfare:

Accepted Answer

A)  Gains totaling $3.20 
B)  Gains totaling $4.80 
C)  Losses totaling $3.20 
D)  Losses totaling $4.80

Question 19

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.Suppose the rest of the world supplies calculators to Venezuela at a price of $4 each.With free trade,Venezuelan imports total:

Accepted Answer

A)  8 calculators 
B)  16 calculators 
C)  20 calculators 
D)  24 calculators

Question 20

An orderly marketing agreement is a market-sharing pact negotiated by trading nations,and its effect is to moderate the intensity of international competition.

Accepted Answer

A) True 
 B)False

Exam 5: Nontariff Trade Barriers

The practice of Canadian firms dumping their products in Sweden poses a problem for economic policymakers since dumping tends to:

By limiting the amount of foreign sourcing,local content laws are viewed as a means of jobs preservation for domestic workers.

-Consider Figure 5.1.With free trade,the quantity of steel imported by Mexico equals:

For years the U.S.government levied quotas on inexpensive oil imported from the Middle East.The quotas led to cost increases for U.S.consumers totaling $3 billion for oil products.An apparent justification for this policy was that:

A firm suffering idle plant capacity would minimize losses by selling its product abroad at a lower price than at home,provided that the foreign price more than covers average variable cost.

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.

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

Describe some of the differences between tariffs and quotas?

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

According to the U.S.Buy American Act,federal government agencies cannot purchase materials and products from U.S.suppliers if their prices are higher than those of foreign competitors.

If the U.S.demand for Korean steel is price elastic,an export subsidy granted to Korean steel firms will increase Korea's export revenue.

An elimination of nontariff barriers on apples tends to increase apple imports,reduce profits of import-competing apple producers,and generate job losses for domestic apple workers.

The imposition of a tariff on imported steel for the home country results in:

A specification of a maximum amount of a foreign produced good that will be allowed to enter the country over a given time period is referred to as:

An orderly marketing agreement is a market-sharing pact negotiated by trading nations,and its effect is to moderate the intensity of international competition.