Question 1

Quotas benefit consumers the most.

Accepted Answer

Quotas artificially limit the supply of goods, which can lead to higher prices for consumers as demand outstrips supply. Quotas also limit competition from foreign suppliers, which can result in reduced product variety and innovation. Overall, quotas tend to benefit domestic producers, while consumers may face higher costs or reduced choices.

Question 2

Tariffs are generally pro-producer and anti-consumer.

Accepted Answer

Tariffs are taxes imposed on imported goods which increase the price of those goods, making domestic products comparatively cheaper than imported products. This benefits domestic producers by reducing competition and increasing demand for their goods. However, it also makes foreign goods more expensive for consumers, resulting in higher prices and reduced choices for consumers. Therefore, tariffs are generally pro-producer and anti-consumer.

Question 3

Tariffs are the most complex instrument of trade policy.

Accepted Answer

Tariffs are generally considered one of the simpler instruments of trade policy, as they involve imposing taxes on imported goods, whereas other instruments like quotas, subsidies, and regulations can be more complex.

Question 4

A voluntary export restraint (VER)is a quota on trade imposed by the exporting country,typically at the request of the importing country's government.

Accepted Answer

A voluntary export restraint (VER) is a quota on trade that is voluntarily imposed by the exporting country, often at the request of the importing country's government.

Question 5

Under a tariff rate quota,a lower tariff rate is applied to imports within the quota than those over the quota.

Accepted Answer

This statement is true. Under a tariff rate quota scheme, a lower tariff rate is applied to imports within the quota limit than those above the quota limit. This is done to encourage imports to stay within the quota and to discourage imports that go beyond it, which can harm domestic industries.

Question 6

Dumping is variously defined as selling goods in a foreign market at below their costs of production,or as selling goods in a foreign market at below their "fair" market value.

Accepted Answer

Dumping is generally defined as selling goods in a foreign market at a price that is below their cost of production or below their fair market value.

Question 7

In most cases,tariffs are placed on imports to protect domestic producers from foreign competition by raising the price of imported goods.

Accepted Answer

Tariffs are typically imposed to make imported goods more expensive, making domestic goods more competitive in the market. This is often done to protect domestic industries from foreign competition.

Question 8

Tariffs are the oldest instrument of trade policy.

Accepted Answer

Tariffs have been implemented by countries for centuries and are the oldest form of trade policy.

Question 9

The main gains from subsidies accrue to importers,whose international competitiveness is increased as a result of these subsidies.

Accepted Answer

The answer of The main gains from subsidies accrue to...

Question 10

Administrative trade policies are bureaucratic rules that are designed to make it easy for imports to enter a country.

Accepted Answer

Administrative trade policies are actually bureaucratic rules and regulations designed to make it harder for imports to enter a country. Examples of administrative trade policies include customs procedures, technical standards, and licensing requirements.

Question 11

Antidumping policies are designed to punish the firms that engage in dumping industrial waste into the environment.

Accepted Answer

Antidumping policies are designed to punish firms that sell goods at unfairly low prices in other countries, not those that engage in environmental wrongdoing.

Question 12

In recent decades,a fall in subsidies,quotas,and voluntary export restraints has been accompanied by a rise in tariff barriers.

Accepted Answer

The statement is incorrect as there has been a decline in tariff barriers in recent years, rather than a rise. The trend has been towards free trade and reducing barriers to trade.

Question 13

Ad valorem tariffs are levied as a proportion of the value of the imported good.

Accepted Answer

Ad valorem tariffs are calculated as a percentage of the stated or assessed value of the good being imported. This means that the tariff rate is not fixed and can vary depending on changes in the value of the imported item.

Question 14

Export tariffs are far more common than import tariffs.

Accepted Answer

Import tariffs are actually more common than export tariffs. Import tariffs are used by countries to protect their domestic industries from foreign competition, while export tariffs are often used as a revenue or trade policy tool by the government. However, some countries may use export tariffs to protect their domestic industries or to limit the export of certain goods in order to conserve resources or prevent shortages at home.

Question 15

Specific tariffs are levied as a proportion of the value of the imported good.

Accepted Answer

Specific tariffs are levied as a fixed dollar amount for each unit of the imported good, while ad valorem tariffs are levied as a proportion of the value of the imported good.

Question 16

The Buy America Act specifies that government agencies must give preference to American products when putting contracts for equipment out for bid unless the foreign products have a significant advantage.

Accepted Answer

The Buy America Act does specify that government agencies must give preference to American products when putting contracts for equipment out for bid unless the foreign products have a significant advantage.

Question 17

Dumping is viewed as a method by which firms unload excess production in their domestic markets.

Accepted Answer

Dumping refers to the practice of selling goods in a foreign market at a price lower than their normal value, often below the cost of production, to gain market share or eliminate competition.

Question 18

Import tariffs increase the overall efficiency of the world economy.

Accepted Answer

Import tariffs result in higher prices for imported goods, which may increase production costs for local industries and lead to higher prices for consumers. Additionally, other countries may retaliate with their own tariffs, decreasing global trade and creating inefficiencies in the world economy.

Question 19

Subsidies are a trade policy instrument.

Accepted Answer

Subsidies are a trade policy instrument used by governments to support the domestic industry by providing financial assistance or tax benefits to export goods or services, making them more competitive in the global market.

Question 20

Both import quotas and VERs benefit domestic producers by limiting import competition.

Accepted Answer

Both import quotas and VERs (Voluntary Export Restraints) are trade barriers that limit the amount of imports coming into a country. By doing so, they reduce competition from foreign producers and benefit domestic producers.

Quiz 7: The Political Economy of International Trade