Question 1

Governments around the world tend to auction quota licenses
A)never.
B)seldom.
C)often.
D)always.

Accepted Answer

B

Question 2

Answer the question(s)below based on the following diagram.
 
-Refer to the figure above.The quota shown in the diagram equals
A)200 units.
B)500 units.
C)1000 units.
D)1200 units.

Accepted Answer

The quota is the amount of a good that can be imported or exported without paying a tariff. In this case, the quota is 200 units.

Question 3

Answer the question(s)below based on the following diagram.
 
-Refer to the figure above.If the government was to auction quota licenses competitively,it could earn up to
A)$2000.
B)$5000.
C)$6000.
D)$10000.

Accepted Answer

The government could earn up to the total value of the quota, which is the area of the rectangle formed by the quota limit. This area is calculated by multiplying the quota limit (200 units) by the price difference created by the quota ($30 - $0 = $30). Therefore, 200 units * $30/unit = $6000.

Question 4

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.

Accepted Answer

Export subsidies increase the production of goods destined for export by making it more profitable for producers, and they also tend to increase the internal market price of these goods by reducing their domestic supply.

Question 5

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

Accepted Answer

All of the above- health and safety standards, government procurement policies, and domestic content laws- can be used as nontariff barriers to restrict foreign competition in trade. Nontariff barriers are measures other than tariffs (import taxes) that countries use to restrict imports and protect their domestic industries. These measures can include quotas, subsidies, technical barriers to trade (such as health and safety standards), and policies that favor domestically produced goods (such as domestic content laws).

Question 6

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

Accepted Answer

The answer of Which of the following is a valid...

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.

Accepted Answer

All of the above factors - who has the quota license, the size of the quota, and elasticities of domestic demand and supply - have an impact on the welfare effects of a quota. The entity that holds the quota license determines which domestic producers benefit from the quota, and this can impact consumer surplus. The size of the quota affects how much of the imported good is allowed in and how much domestic producers can produce, which can impact both consumer and producer surplus. Elasticities of demand and supply determine how responsive consumers and producers are to price changes, and this can impact the overall welfare effects of the quota.

Question 8

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.

Accepted Answer

Tariffs and quotas have different effects even if the protected industry is a monopoly. Tariffs result in higher domestic prices but allow for increased imports under certain conditions, while quotas limit the amount of imports allowed and can result in shortages and higher prices.

Question 9

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

Accepted Answer

The answer of A(n)________ is an example of a quota...

Question 10

Answer the question(s)below based on the following diagram.
 
-Refer to the figure above.The quota restricts trade by the same amount as a tariff of
A)$20.
B)$30.
C)$50.
D)Cannot answer without more information.

Accepted Answer

The answer of Answer the question(s)below based on the following...

Question 11

Tariffs and quotas tend to be similar in their domestic welfare effects
A)if quota licenses are given to foreigners.
B)if quota licenses are auctioned.
C)if quota licenses are given to domestic firms.
D)Both B and C.

Accepted Answer

Tariffs and quotas are similar in their domestic welfare effects if quota licenses are auctioned or given to domestic firms. In both cases, the domestic producers receive the benefit of reduced competition and higher prices. When quota licenses are auctioned, the government earns revenue, which can be used for public goods and services, but when they are given to domestic firms, the benefits flow only to a particular group of producers, and there is no revenue for the government. Therefore, both B and C are the best choices.

Question 12

Answer the question(s)below based on the following diagram.
 
-Refer to the figure above.Quota rents equal
A)$2000.
B)$5000.
C)$6000.
D)$10000.

Accepted Answer

The quota rents equal $6000 based on the diagram above.

Question 13

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.

Accepted Answer

Quotas limit the amount of imports, which can lead to higher prices due to reduced competition. This can also lead to reduced imports, as the limit on the amount of goods that can be imported is reached. It does not necessarily lead to increased government revenue or increased consumer surplus.

Question 14

Answer the question(s)below based on the following diagram.
 
-Refer to the figure above.If this were a voluntary restraint agreement,the welfare costs to the importing country would be
A)$14,000.
B)$18,000.
C)$38,000.
D)$60,000.

Accepted Answer

A voluntary restraint agreement typically leads to higher prices and reduced consumer surplus, resulting in welfare costs. The correct welfare cost in this scenario is $18,000.

Question 15

Answer the question(s)below based on the following diagram.
 
-Refer to the figure above.The quota generates deadweight costs of
A)$10,000.
B)$12,000.
C)$30,000.
D)$50,000.

Accepted Answer

The answer of Answer the question(s)below based on the following...

Question 16

________ 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.

Accepted Answer

Quota rents refer to the profits that accrue to whomever has the right to import the quota-restricted good. These rents are often obtained through the sale or lease of quota licenses by the government to domestic importers or foreign producers, which can then be used to import the restricted good. Therefore, choice B is the correct answer.

Question 17

________ are quotas that lead to a complete elimination of trade.
A)Embargoes
B)Voluntary export restraints
C)Nontariff barriers
D)Orderly marketing agreements

Accepted Answer

Embargoes are government orders that restrict commerce or exchange with a specified country or the exchange of specific goods. They are often used as a political tool and can lead to a complete elimination of trade between countries for the specified goods or with the specified country.

Question 18

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.

Accepted Answer

The answer of Which of the following is true (assume...

Question 19

Quotas are government imposed limits on the ________ of goods traded between countries.
A)prices
B)quantity
C)value
D)Either B or C

Accepted Answer

Quotas are government-imposed limits that can restrict both the quantity of goods traded between countries and the total value of those goods. This means quotas can limit either the physical number of items (quantity) or the overall value of these items (value), depending on how the quota is structured.

Question 20

Countries like the United States use ________ to offset foreign export subsidies.
A)quotas
B)the escape clause
C)countervailing duties
D)government procurement

Accepted Answer

Countervailing duties are taxes imposed on imports to offset subsidies provided to foreign producers, such as export subsidies. This is done to ensure fair competition in the domestic market and prevent foreign exports from flooding the market and harming domestic producers. Quotas refer to a limit on the quantity of a certain product that can be imported, while the escape clause allows temporary protection from imports in cases of unforeseen surges in imports that cause harm to domestic industries. Government procurement refers to the government's purchasing of goods and services.

Quiz 7: Nontariff Barriers and Arguments for Protection

Governments around the world tend to auction quota licenses

Answer the question(s) below based on the following diagram. -Refer to the figure above.The quota shown in the diagram equals

Answer the question(s) below based on the following diagram. -Refer to the figure above.If the government was to auction quota licenses competitively,it could earn up to

Export subsidies lead to

Which of the following are used as nontariff barriers?

Which of the following is a valid argument for protection?

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

Which of the following is false?

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

Answer the question(s) below based on the following diagram. -Refer to the figure above.The quota restricts trade by the same amount as a tariff of

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

Answer the question(s) below based on the following diagram. -Refer to the figure above.Quota rents equal

Like tariffs,quotas tend to lead to

Answer the question(s) below based on the following diagram. -Refer to the figure above.If this were a voluntary restraint agreement,the welfare costs to the importing country would be

Answer the question(s) below based on the following diagram. -Refer to the figure above.The quota generates deadweight costs of

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

________ are quotas that lead to a complete elimination of trade.

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

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

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