Exam 6: Trade Regulations and Industrial Policies

Assume Boeing Inc. (of the United States) and Airbus Industries (of Europe) rival for monopoly profits in the Canadian aircraft market. Suppose the two firms face identical cost and demand conditions, as seen in Figure 6.1. Figure 6.1. Strategic Trade Policy: Boeing versus Airbus -Referring to Figure 6.1, the total cost of the Airbus subsidy to the European taxpayer equals

Proponents of the Smoot-Hawley Act of 1930 viewed it as a means of combating domestic unemployment.

Adjustment assistance is sometimes used to assist

As a way of helping U.S.business firms trade in the world market on more equal terms with their organized foreign competitors, the U.S.government permits them to form export trade associations and export trading companies.

Successful international economic sanctions imposed against a target country are likely to be more successful when there is a small number of countries imposing the sanctions.

As viewed by the World Trade Organization, ______________ constitutes unfair competition.

Figure 6.3 represents the Iraqi computer market. Assume Iraq purchases all of its computers from the United States. Figure 6.3 Iraqi Computer Market and Economic Sanctions -Consider Figure 6.3.In response to Iraq's armed invasion of neighboring countries, suppose the United States imposes a partial embargo that limits exports to Iraq to 10 computers.The export quota leads to a(n) ______________ in the price of computers equal to $______________ and a(n) ______________ in consumer surplus equal to $______________.

Who is most likely to support the mission of the World Trade Organization? extreme environmentalists

According to the Reciprocal Trade Agreements Act of 1934, the president could lower tariffs by up to 50 percent of the existing level without congressional approval.

During the past four decades

Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable to influence the South Korean (world) price. Assume the South Korean price to be $60 per calculator. Figure 6.2. Effects of an Export Subsidy -Consider Figure 6.2.With free trade, Mexican consumers purchase ______________ calculators, Mexican firms produce ______________ calculators, and ______________ calculators are imported.

Figure 6.5 Japanese Market for Jetliners -Consider the Japanese market for jetliners as depicted in Figure 6.5.Suppose the lone producer of jetliners in the world is Boeing, which faces a constant marginal cost of $20 million per jetliner, but now a European manufacturer, Airbus, begins production.Airbus faces the same marginal cost as Boeing, but the European government provides Airbus with a subsidy of $8 million per jetliner produced.As a result of the competition, Boeing leaves the Japanese market, leaving Airbus as a monopoly.How many jetliners will Airbus produce and what price will they sell them for?

Under the World Trade Organization, the most recent round of multilateral trade negotiations was the

The United States has often regarded China as a major violator of intellectual property laws.

The fast-track provision of U.S.trade law has the effect of speeding up the timetable during which the president negotiates trade agreements with foreign governments.

The U.S.trade-remedy laws attempt to redress hardships for U.S.firms resulting from actions and policies of foreign firms and governments.

According to U.S.trade law, trade restrictions can be imposed against both unfairly and fairly traded foreign goods.

Explain how advocates of strategic trade policy differ from the classical free traders in their treatment of externalities?

Figure 6.3 represents the Iraqi computer market. Assume Iraq purchases all of its computers from the United States. Figure 6.3 Iraqi Computer Market and Economic Sanctions -Consider Figure 6.3.Of the quota-induced change in Iraqi consumer surplus, $______________ is NOT transferred to other sectors of Iraq's economy and represents deadweight loss.

Industrial policies