Exam 7: Trade Policies for the Developing Nations

The replacement of imports of one nation with imports of another nation is known as "import substitution."

A cartel tends to be most successful in maximizing the profits of its members when there are a large number of producers in the cartel and these producers' cost and demand conditions greatly differ from each other.

Figure 7.5 Global Market for Tin -Figure 7.5 represents the global market for tin. The initial equilibrium price and quantity is at point A. As a result of an International Tin Agreement a price range of $3.27 - $4.02 is set. As the supply of tin increases from S₀ to S₁, the buffer-stock manager will need to

Import substitution policies make use of:

The characteristics that have underlaid the economic success of the "high-performing Asian Economies" have included all of the following except:

The developing nations are most of those in Africa, Asia, North America, and Western Europe.

Empirical research indicates that the demand and supply schedules for most primary products are relatively inelastic to changes in price.

During periods of weak demand, the Organization of Petroleum Countries has implemented production (export) quotas to ensure that excess oil supplies be kept off the market.

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.

Which industrialization policy used by developing countries places emphasis on the comparative advantage principle as a guide to resource allocation?

For the oil-importing countries, the increases in oil prices in 1973-1974 and 1979-1980 resulted in all of the following $\underline { \text { except: } }$

In 1999 the United States revoked the normal-trade-relations (most-favored-nation) status it provided China in retaliation for China's suppression of human rights.

To prevent the market price of tin from falling below the target price, the manager of a buffer stock would purchase any excess supply of tin that exists at the target price.

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.

Export-led growth tends to:

The diagram below illustrates the international tin market. Assume that the producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound. Figure 7.2. Defending the Target Price in Face of Changing Supply Conditions -Consider Figure 7.2. Assume there exists a cartel of several producers that is maximizing total profit. If one producer cheats on the cartel agreement by decreasing its price and increasing its output, rational action of the other producers is to:

Which terms-of-trade concept emphasizes a nation's capacity to import?

What are some major trade problems faced by developing nations?

In its transition toward capitalism, by the 1990s China permitted free enterprise as well as democracy for its people.

Concerning the price elasticities of supply and demand for commodities, empirical estimates suggest that most commodities have: