Exam 5: Nontariff Trade Barriers

With a quota placed on imported sugar, increased domestic demand leads to increased sugar imports but NOT to higher sugar prices.

Empirical studies show that because voluntary export quotas are typically administered by exporting countries, foreign exporters tend to

To maintain that South Koreans are dumping their VCRs in the United States is to maintain that

A subsidy granted to an import-competing producer tends to be absorbed by producer surplus and higher-costs of production.

During the 1980s, the U.S.government imposed sugar import quotas in an attempt to reduce its costs of maintaining price supports for U.S.sugar growers.

The California Transit Authority implemented the Buy American policy when rebuilding portions of the earthquake-damaged San Francisco-Oakland Bay Bridge.The learning from the project was that the policy

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.

Figure 5.5. Mexico's Television Market -Consider Figure 5.5.Compared to free trade, the Japanese export quota leads to an increase in Mexican producer surplus of $1,050.

During periods of growing demand, a tariff more effectively restricts the volume of imports than an equivalent import quota.

The purpose of international dumping is to decrease a firm's costs and increase its profits, compared to what would be realized in the absence of dumping.

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

For the United States, antidumping laws tend to result in

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

For a tariff-rate quota there is a limitation on

Figure 5.6 Domestice Supply and demand for Wine - U.S. -Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.What will happen to the price of a bottle of wine in the U.S.if a quota of 15 bottles of wine is imposed?

Suppose that Airbus sells jetliners in the United States at prices below fair value, to drive Boeing out of business and then become a monopoly.This conduct is known as

A voluntary export agreement

The margin of dumping is calculated as

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 total cost of the subsidy to the Mexican government equals

What is the price-based definition of dumping?