Deck 7: Nontariff Barriers and Arguments for Protection

Question 1

Tariffs can be used to redistribute income from

A) abundant factors to scarce factors.
B) consumers to domestic producers.
C) from one country to another.
D) All of the above.

Answer 1

D

Question 2

Quotas are government imposed limits on the of goods traded between countries.

A) prices
B) quantity
C) value
D) Either B or C

Answer 2

D

Question 3

Which of the following are used as nontariff barriers?

A) health and safety standards
B) government procurement policies
C) domestic content laws
D) All of the above

Answer 3

D

Question 4

Which of the following is a valid argument for protection?

A) national defense
B) fair trade
C) creation of employment
D) All of the above

Question 5

In the case of national defense protection, is a better policy than protection.

A) a production subsidy combined with free trade
B) an income tax
C) direct government provision of infrastructure
D) None of the above is better

Question 6

A production subsidy combined with free trade

A) has the same deadweight costs as a tariff.
B) has only consumption deadweight costs.
C) has only production deadweight costs.
D) None of the above.

Question 7

The welfare effects of a quota depend, to considerable extent, upon

A) who has the quota license.
B) the size of the quota.
C) elasticities of domestic demand and supply.
D) all of the above.

Question 8

are profits that accrue to whomever has the right to import the quota restricted good.

A) Quota licenses
B) Quota rents
C) Quota prices
D) None of the above.

Question 9

Which of the following is false?

A) Tariffs and quotas are identical in their effects, if the protected industry is a monopoly.
B) Quotas tend to breed graft.
C) Welfare effects of quotas depend, in part, on who gets the quota rents.
D) Quotas tend to be administrated in an arbitrary fashion.

Question 10

Countries like the United States use to offset foreign export subsidies.

A) quotas
B) the escape clause
C) countervailing duties
D) government procurement

Question 11

Which of the following is true (assume the small country case)?

A) With a quota, an increase in demand leads to a higher price and more imports.
B) With a tariff, an increase in demand leads to a higher price and more imports.
C) With either a tariff or a quota, an increase in demand leads to a higher price and more imports.
D) None of the above are true.

Question 12

The United States bans most imports from all of the following countries except

A) China.
B) Cuba.
C) North Korea.
D) Iran.

Question 13

Export subsidies lead to

A) greater production of exportables and higher internal prices for these goods.
B) greater production of exportables and lower internal prices for these goods.
C) greater production of importables and higher internal prices for these goods.
D) None of the above.

Question 14

countries tend to depend on tariffs for a relatively large part of their government revenue.

A) Developed
B) Developing
C) All

Question 15

Like tariffs, quotas tend to lead to

A) higher prices and reduced imports.
B) increased government revenue.
C) increased consumer surplus.
D) All of the above.

Question 16

are quotas that lead to a complete elimination of trade.

A) Embargoes
B) Voluntary export restraints
C) Nontariff barriers
D) Orderly marketing agreements

Question 17

Which of the following is an invalid argument for protection?

A) redistribution of income
B) infant industry protection
C) preservation of the home market
D) All of the above

Question 18

A(n) is an example of a quota where foreigners hold quota licenses.

A) voluntary export restraint
B) embargo
C) auction quota
D) All of the above

Question 19

Tariffs and quotas tend to be similar in their domestic welfare effects

A) if quota licenses are given to foreigners.
B) if quota license are auctioned.
C) if quota licenses are given to domestic firms.
D) Both B and C.

Question 20

Governments around the world tend to auction quota licenses

A) never.
B) seldom.
C) often.
D) always.

Question 21

Higher protection raises the overall level of employment.

Question 22

A less costly alternative to protection of national defense industries would be a production subsidy.

Question 23

Why do countries impose protection even if it lowers economic welfare? Explain fully.

Question 24

Are tariffs and quotas equivalent in their economic effects? Demonstrate.

Question 25

The welfare effects of quotas depend, to some extent, on who has the right to import the quota restricted goods.

Question 26

While tariff levels have been falling over the past several decades, nontariff barriers have been used increasingly.

Question 27

If the pollution havens hypothesis is true, we should expect world pollution to decline as a result of international trade and globalization.

Question 28

Tariffs and quotas are essentially identical in their effects.

Question 29

Voluntary export restraints and quotas are essentially identical in their welfare effects.

Question 30

Quotas that entirely eliminate trade in a certain product or a number of products are known as

A) export tariffs.
B) deadweight.
C) ultimate tariffs.
D) embargoes.

Question 31

The argument that developing countries with lax environmental standards will attract foreign manufacturers who want to escape stricter standards in their own countries is known as the pollution havens hypothesis.

Question 32

Export subsidies lead to lower prices of exportables for both domestic residents and foreigners.

Question 33

The argument that developing countries with lax environmental standards will attract foreign manufacturers who want to escape stricter standards in their own countries is known as

A) the pollution havens hypothesis.
B) the escape clause hypothesis.
C) the earth destruction hypothesis.
D) the environmentally destructive hypothesis.

Question 34

Quotas redistribute income from consumers to domestic producers.

Question 35

The most commonly expressed arguments for protection tend to be largely invalid.

Question 36

Strategic trade policy considerations imply that free trade policies should never be pursued.

Question 37

Most tariffs around the world are collected on an ad valorem basis.