Question 1

Figure 5.5. Mexico's Television Market 
-Consider Figure 5.5.The Japanese export quota's revenue effect totals $1,200.

Accepted Answer

The answer of Figure 5.5. Mexico's Television Market 
-Consider Figure...

Question 2

Figure 5.5. Mexico's Television Market 
-Consider Figure 5.5.Compared to free trade, the Japanese export quota leads to an increase in Mexican producer surplus of $1,050.

Accepted Answer

An export quota restricts the quantity of goods that can be exported, which can lead to higher prices in the importing country. This can increase the producer surplus for domestic producers in the importing country, such as Mexico, as they can sell their goods at higher prices due to reduced competition from imports.

Question 3

In 2011 Whirlpool Inc.won an antidumping/subsidy case against clothes-washer imports from Samsung and LG.This resulted in antidumping/subsidy duties being imposed on imports of clothes washers from these foreign producers.

Accepted Answer

This information is not related to the figure shown, but it is a true statement regarding a previous case involving Whirlpool Inc. and clothes washer imports from Samsung and LG.

Question 4

Antidumping duties result in an increase in consumer surplus.

Accepted Answer

Antidumping duties result in a decrease in consumer surplus as they lead to higher prices for imported goods.

Question 5

Figure 5.5. Mexico's Television Market 
-Consider Figure 5.5.Assuming that the revenue effect of the export quota accrues to Japanese firms, the overall welfare loss to Mexico equals $2,100 as a result of the quota.

Accepted Answer

The statement assumes a specific scenario where a quota leads to a welfare loss for Mexico, which can be true if the quota reduces Mexico's export opportunities or increases costs, leading to a net welfare loss quantified as $2,100. This is a plausible outcome in economic models analyzing the impact of quotas on trade and welfare.

Question 6

A subsidy granted to import-competing producers is often preferred to an import tariff on the grounds that it results in a smaller deadweight welfare loss and allows consumption to remain unchanged.

Accepted Answer

A subsidy granted to import-competing producers can result in a smaller deadweight welfare loss compared to an import tariff because it supports domestic production, which may lead to lower prices and increased output. Import tariffs, on the other hand, can lead to higher prices for consumers and may not necessarily support domestic production. However, the impact on consumption may depend on the specifics of the subsidy or tariff policy.

Question 7

The result of antidumping duties is to impose a floor on foreign prices.

Accepted Answer

Antidumping duties are meant to prevent foreign companies from selling products at unfairly low prices that could harm domestic industries. By imposing duties, the government sets a minimum price that foreign firms must charge, in order to level the playing field with domestic producers. This effectively creates a floor on foreign prices.

Question 8

In 1933 the U.S.government enacted the Buy American Act, which requires federal agencies to purchase materials and products from American suppliers if their prices are NOT unreasonably higher than those of foreign competitors.

Accepted Answer

The statement accurately describes the Buy American Act as requiring federal agencies to purchase materials and products from American suppliers if their prices are not unreasonably higher than those of foreign competitors.

Question 9

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.

Accepted Answer

The figure does not mention anything about an export quota or tax revenue.

Question 10

Excessive sea transport and freight regulations are examples of nontariff trade barriers.

Accepted Answer

The statement is true. Excessive sea transport and freight regulations are examples of nontariff trade barriers that can impede trade between countries.

Question 11

Figure 5.5. Mexico's Television Market 
-Consider Figure 5.5.Compared to free trade, the Japanese export quota leads to an increase in Mexican consumer surplus of $3,150.

Accepted Answer

Figure 5.5 does not provide any information about the impact of a Japanese export quota on Mexican consumer surplus.

Question 12

A subsidy granted to an import-competing producer tends to be absorbed by producer surplus and higher-costs of production.

Accepted Answer

When a subsidy is granted to an import-competing producer, it allows them to lower their costs of production and increase their supply, which in turn increases producer surplus. However, because the subsidized producer is now able to offer their goods at a lower price, domestic producers who do not receive the subsidy may face higher costs of production as they struggle to compete. This can cause a shift in producer surplus from non-subsidized producers to the subsidized producer, as well as a decrease in consumer surplus due to higher prices for consumers.

Question 13

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

Accepted Answer

The definition of dumping is selling a product at a price that is less than its fair value.

Question 14

Describe some of the differences between tariffs and quotas?

Accepted Answer

The answer of Describe some of the differences between tariffs...

Question 15

Is a tariff-rate quota a two-tier tariff? Why?

Accepted Answer

The answer of Is a tariff-rate quota a two-tier tariff?...

Question 16

Figure 5.5. Mexico's Television Market 
-Consider Figure 5.5.The deadweight welfare loss to Mexico, as a result of the Japanese export quota, totals $1,200.

Accepted Answer

The given figure does not provide any information about a Japanese export quota for Mexico's television market, so it is not possible to calculate any deadweight welfare loss resulting from it.

Question 17

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

Accepted Answer

International dumping occurs when firms sell products in an international market at a price lower than what it sells for in their domestic market. The most likely reason for this is that firms are able to price discriminate in different markets based on the different demand conditions.

Question 18

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.

Accepted Answer

Corporate Average Fuel Economy (CAFÉ) standards set a maximum limit on the amount of fuel a vehicle can consume per mile driven, aiming to improve the average fuel economy of cars and light trucks sold in the United States.

Question 19

What is the price-based definition of dumping?

Accepted Answer

The answer of What is the price-based definition of dumping?...

Question 20

For a tariff-rate quota, the within-quota tariff rate is more than the over-quota tariff rate.

Accepted Answer

In a tariff-rate quota system, the within-quota tariff rate is lower than the over-quota tariff rate, making it cheaper to import goods within the quota limit.

Quiz 5: Nontariff Trade Barriers

Figure 5.5. Mexico's Television Market -Consider Figure 5.5.The Japanese export quota's revenue effect totals $1,200.

Figure 5.5. Mexico's Television Market -Consider Figure 5.5.Compared to free trade, the Japanese export quota leads to an increase in Mexican producer surplus of $1,050.