Exam 5: Nontariff Trade Barriers

A firm granting lifetime employment to its workers has the incentive to engage in international dumping during periods of business recession and excess production capacity.

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.How much will the U.S.produce and import in these circumstances?

Figure 5.4. Venezuelan Calculator Market -Consider Figure 5.4.Assume the Venezuelan government grants its manufacturers a production subsidy of $4 per calculator.After the subsidy is granted, Venezuelan imports total

An import quota is a physical restriction on the quantity of goods that may be imported during a specified time period.

Government imposed limits on the quantities of goods traded between nations are called

Government subsidies may take the form of all of these EXCEPT

For the United States, corporate average fuel economy standards (CAFÉ) provide a minimum limit on the number of gallons of gas that an automobile can consume per mile driven.

Suppose the government grants a subsidy to its export firms that permits them to charge lower prices on goods sold abroad.The export revenue of these firms would rise if the foreign demand is

Figure 5.5. Mexico's Television Market -Consider Figure 5.5.The government of Mexico collects 50 percent of the export quota's revenue effect, or $600, in the form of tax revenue.

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.If the U.S.imposes a quota of 15 bottles of wine, how much revenue will the U.S.government collect?

Import tariffs and import quotas yield identical protection effects, consumption effects, redistribution effects, and revenue effects.

International dumping occurs when foreign buyers are charged higher prices than domestic buyers for an identical product, after allowing for transportation costs and tariff duties.

According to U.S.trade law, dumping is defined as selling a product at a price that is greater than fair value.

The most likely/common reason for international dumping is that firms are international price discriminators, responding to different demand conditions in different markets.

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.

The margin of dumping equals the amount by which the foreign price is greater than the domestic price, or the amount by which the foreign price exceeds the cost of production.

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

Export subsidies levied by foreign governments on products in which the United States has a comparative disadvantage

Assume the U.S.has a competitive advantage in producing calculators, while the rest of the world has a competitive advantage in steel.Suppose the U.S.and the rest of the world enter into an agreement to lower import quotas below existing levels on calculators and steel.Which of the following would least likely occur for the U.S.? Rising levels of

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