Exam 7: Trade Policies for the Developing Nations

The "newly industrializing countries" of East Asia have emphasized the implementation of import-substitution policies to insulate their industries from international competition.

The purpose of a cartel is to support prices higher than would occur under more competitive conditions,thus increasing the profits of cartel members.

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

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:

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

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?

Under the Generalized System of Preferences program,the industrialized countries agree to maintain lower tariffs on imports of natural resources and higher tariffs on imports of manufactured goods.

Which trade strategy have developing countries used to restrict imports of manufactured goods so that the domestic market is preserved for home producers,who thus can take over markets already established in the country?

Stabilizing commodity prices around long-term trends tends to benefit exporters at the expense of importers in markets characterized by:

Figure 7.3.World Oil Market -Consider Figure 7.3.Under a profit-maximizing cartel,the price of a barrel of oil equals:

All of the following nations except ____ have recently utilized export-led (outward oriented)growth policies.

Once a cartel establishes its profit-maximizing price:

It is widely agreed that import-substitution policies have been a main contributor to above-average growth rates in developing countries.

East Asian economies started enacting export-push strategies

Which of the following could partially explain why the terms of trade of developing countries might deteriorate over time?

In recent decades,the East Asian "newly industrializing countries" have pursued export-led growth (outward orientation)as an industrialization strategy.

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

Which trade strategy have developing countries used to replace commodity exports with exports such as processed primary products,semi-manufacturers,and manufacturers?

What are some major trade problems faced by developing nations?

A widely used indicator to differentiate developed countries from developing countries is: