Exam 7: Trade Policies for the Developing Nations

Developing countries include all of the following EXCEPT

A sweatshop includes all of the following EXCEPT

During the 1970s, the nations in the Organization of Petroleum Exporting Countries (OPEC) manifested their market power by utilizing

If the demand schedule for bauxite is relatively inelastic to price changes, an increase in the supply schedule of bauxite will cause a

If the supply schedule for tin is relatively inelastic to price changes, a decrease in the demand schedule for tin will cause a

Developing nations overwhelmingly acknowledge that they have benefited from international trade according to the principle of comparative advantage.

Many developing countries contend that they face worsening terms of trade because the prices they receive for exports have increased, while the prices they pay for imports have decreased.

A factor that discourages economic growth in developing countries is

The diagram below illustrates the international tin market. Assume that producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound. Figure 7.1. Defending the Target Price in Face of Changing Demand Conditions ? -Consider Figure 7.1.Suppose the demand for tin increases from D₀ to D₁.Under a buffer stock system, the buffer-stock manager could maintain the target price by

Economists note that instability of the prices of primary products (tin, coffee, copper) is mainly caused by

The success of buffer stocks is limited by the fact that stockpiles of a product may be exhausted after prolonged sales, while funds may be exhausted after prolonged purchases.

Concerning the hypothesis that the developing countries' terms of trade have been deteriorating, empirical studies provide

Import-substitution policies are supported by the fact that many developing countries have small domestic markets and thus their producers enjoy the benefits of diseconomies of small-scale production.

To be considered a good candidate for an export cartel, a commodity should

To promote stability in commodity markets, International Commodity Agreements have utilized production and export controls, buffer stocks, and multilateral contracts.

For developing countries, a key factor underlying the instability of primary-product prices and export receipts is the high price elasticity of demand for products such as tin and copper.

Developing countries that emphasize production in raw materials and agricultural goods may realize a long-run decline in their international terms of trade as the result of

Prolonged defense of a price ceiling tends to increase the supply of a commodity held by a buffer stock manager, thus putting downward pressure on price.

For most developing countries

Developing countries have often argued that their terms of trade have worsened because