Exam 7: Trade Policies for the Developing Nations

The United Nation Conference on Trade and Development in 1964 was successful in convincing developing countries to switch from export-led industrialization to import-substitution industrialization.

Which country is not a member of the European Union?

Hong Kong and South Korea are examples of developing nations that have recently pursued industrialization policies.

The gains from having an optimum currency include

Are economic downturns helpful to cartels?

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

A static welfare effect resulting from the formation of the European Union would be:

Figure 8.1 depicts the supply and demand schedules of calculators for Greece,a "small" country that is unable to affect the world price.Greece's supply and demand schedules of calculators are respectively depicted by SG and DG.Assume that Greece imports calculators from either Germany or France.Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $20 per unit,while France can supply calculators at $30 per unit. Figure 8.1.Effects of a Customs Union -Referring to Figure 8.1,suppose Greece forms a customs union with France.Greece will import:

One factor that has prevented the formation of cartels for producers of commodities is that:

Once a cartel establishes its profit-maximizing price:

Figure 7.3.World Oil Market -Consider Figure 7.3.Under competitive conditions,producer profits total:

Which method has not generally been used by the international commodity agreements to stabilize commodity prices?

According to the theory of optimum currency areas,a currency area has the least chance for success when:

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.

When a group of countries establish a free-trade area,they achieve the highest stage of economic integration.

Import substitution is an example of

Figure 7.4 Global Market for Tin -Consider the global market for tin represented by figure 7.4.Initially equilibrium is at point A with a market price of $3.50 per pound and 50,000 pounds.In ordr to keep tin price relatively stable an International Tin Agreement has set a price floor of $3.27 and a ceiling of $4.02.As the demand for tin increases to D1 how will the buffer-stock manager need to respond?

The implementation of a common market involves all of the following except:

To prevent the market price of tin from rising above the target price,the manager of a buffer stock will purchase excess supplies of tin from the market.

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.