Exam 5: Nontariff Trade Barriers

Why do you think Whirlpool had to file multiple lawsuits before it won import protection?

Assume that a truck manufacturer has light trucks with the following fuel economy.Which would NOT meet the CAFÉ standard?

Which of the following refers to a market-sharing pact negotiated by trading partners to moderate the intensity of international competition?

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

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

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

For an export quota applied to manufactured goods, foreign exporters tend to capture only a negligible share of the quota's revenue effect.

To the extent that subsidies granted to exporting firms reduce the foreign price of their goods, the subsidizing country's terms of trade worsen.

What are the intent and impact of domestic content requirements?

For most nations, the ratio of imports to total purchases in the public sector is much higher than in the private sector.

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

Import quotas tend to lead to all of the following EXCEPT

A subsidy granted to an import-competing producer imposes a deadweight loss on the domestic economy equal to the redistribution effect plus consumption effect.

Assume that the U.S.government is working on a large-sized infrastructure project and approaches China, Canada, and France for various products it needs.Then, it would have to take an exception from adhering to the ________ policy.

Figure 5.1 illustrates the steel market for Mexico, assumed to be a "small" country that is unable to affect the world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican steel industry is able to obtain trade protection. Figure 5.1. Alternative Nontariff Trade Barriers Levied by a "Small" Country -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 S_{M (with subsidy)}.The overall deadweight welfare loss to Mexico equals

Describe some of the differences between tariffs and quotas?

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 $2,100 as a result of the quota.

A subsidy granted to import-competing producer reduces overall domestic welfare by the same amount as would a tariff or quota that restricts imports by the same amount.

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.

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