Question 1

For a tariff-rate quota

Accepted Answer

In a tariff-rate quota, the within-quota tariff rate is set lower than the over-quota tariff rate to encourage imports up to a certain limit, after which higher tariffs are applied to additional imports.

Question 2

Suppose that Airbus sells jetliners in the United States at prices below fair value,to drive Boeing out of business and then become a monopoly.This conduct is known as

Accepted Answer

Predatory dumping refers to selling products at below fair market value with the intention of driving competitors out of business and then establishing a monopoly. In this scenario, Airbus is selling jetliners in the United States at prices below fair value to drive Boeing out of business and then become the only supplier in the market, which falls under the definition of predatory dumping. Persistent dumping refers to the continuous sale of products at below fair value, sporadic dumping refers to occasional instances of selling products at below cost, and subsidization dumping involves selling products at below cost with the help of subsidies from the government.

Question 3

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.

Question 4

According to U.S.trade law,which of the following is/are illegal in American markets?

Accepted Answer

Both dumping (selling goods in a foreign market at a lower price than in the domestic market) and export subsidies (financial assistance given by governments to domestic producers to help them sell goods overseas at a lower price) are considered unfair trade practices and are illegal under U.S. trade law.

Question 5

Which government agency/agencies make investigations in order to resolve dumping cases?

Accepted Answer

Dumping cases fall under the jurisdiction of the International Trade Commission and the Commerce Department, which investigate and determine whether the practice is occurring and whether it is harmful to domestic producers. The Antitrust Division of the Justice Department and the Federal Trade Commission may be involved in investigating anticompetitive behavior but not specifically dumping cases. The Consumer Product Safety Commission is a separate agency that deals with product safety issues, not international trade.

Question 6

Import quotas will increase the price consumers pay for imported goods and

Accepted Answer

Import quotas limit the amount of goods that can be imported, leading to a decrease in the volume of imports. This often leads to an increase in the price consumers pay for imported goods due to the reduced supply. It does not necessarily impact the volume of exports as it is a policy that only affects imports.

Question 7

A removal of an import quota tends to result in

Accepted Answer

When an import quota is removed, there is an increase in the quantity of imported goods. This creates more competition in the domestic market, which tends to lead to lower import prices for domestic consumers.

Question 8

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 lowers their costs of production, which increases their producer surplus. However, this increased surplus is likely to be offset by the effects of higher production costs. This is because the subsidy encourages the producer to expand output, which leads to higher demand for inputs such as labor and raw materials. This increased demand drives up the prices of these inputs, which raises the producer's costs of production. As a result, the overall effect of the subsidy on the producer is likely to be minimal, or possibly negative.

Question 9

In the early 1980s,the Japanese government limited shipments of Japanese automobiles to the United States.This limitation was known as

Accepted Answer

A limit on the number of automobiles being shipped from Japan to the United States is known as an export quota. An export tariff refers to a tax on exports, while domestic and foreign content requirements refer to regulations on the proportion of domestic or foreign components that can be used in the production of a certain product.

Question 10

A tariff-rate quota tends to result in

Accepted Answer

Tariff-rate quotas have multiple effects:
- Revenue effect: the tariff collected on imports within the quota generates revenue for the government.
- Protective effect: the quota restricts the amount of imports outside the quota, protecting domestic producers from foreign competition.
- Consumption effect: the quota may reduce the availability of imported goods outside the quota, leading to higher prices and reduced consumption.

Question 11

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 12

For the United States,antidumping laws tend to result in

Accepted Answer

Antidumping laws typically result in higher prices for imported goods, which reduces competition and leads to a decrease in the quantity demanded. This results in a decrease in consumer surplus. At the same time, because domestic industries are protected from foreign competition, domestic producers can charge higher prices, resulting in an increase in producer surplus. However, this benefit may be offset by higher costs of production due to limited access to cheaper imported inputs. Overall, both consumer and producer surplus are likely to decrease as a result of antidumping laws.

Question 13

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 Buy American Act was indeed enacted by the U.S. government in 1933, and it requires federal agencies to give preference to American-made products and materials, provided that the cost difference is not unreasonable.

Question 14

In the long run,increased import quotas by Mexico's government would tend to

Accepted Answer

The answer of In the long run,increased import quotas by...

Question 15

If Canada was to levy a quota on chocolate imported from Denmark

Accepted Answer

Levying a quota on chocolate imported from Denmark would result in a decrease in the supply of chocolate in Canada, and therefore, an increase in its price. This would lead to a decrease in consumer surplus in Canada, as consumers would have to pay more for the same amount of chocolate. The other options are not directly related to the imposition of a quota on Danish chocolate imports.

Question 16

An example of a nontariff trade barrier would be

Accepted Answer

The answer of An example of a nontariff trade barrier...

Question 17

A domestic content requirement placed on automobiles would tend to result in

Accepted Answer

A domestic content requirement would require a higher percentage of domestically produced parts in automobiles. This would increase the production costs for automakers, which would likely be passed on to consumers in the form of higher prices for autos.

Question 18

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

Accepted Answer

Nontariff trade barriers refer to any restrictions, other than tariffs, that can make trade difficult. Excessive sea transport and freight regulations are examples of such barriers.

Question 19

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

Whirlpool did win an antidumping/subsidy case against Samsung and LG for clothes-washer imports in 2011, and as a result, antidumping/subsidy duties were imposed on such imports from these foreign producers.

Question 20

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.

Quiz 5: Nontariff Trade Barriers