Deck 7: Nontariff Barriers and Arguments for Protection

Question 1

Governments around the world tend to auction quota licenses

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

Answer 1

B

Question 2

Refer to the figure above.The quota shown in the diagram equals

A)200 units.
B)500 units.
C)1000 units.
D)1200 units.

Answer 2

A

Question 3

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.

Answer 3

C

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.

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

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

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

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 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

Question 10

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.

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.

Question 12

Refer to the figure above.Quota rents equal

A)$2000.
B)$5000.
C)$6000.
D)$10000.

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.

Question 14

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.

Question 15

Refer to the figure above.The quota generates deadweight costs of

A)$10,000.
B)$12,000.
C)$30,000.
D)$50,000.

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.

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

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.

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

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

Question 21

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

Question 22

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 23

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 24

Tariffs and quotas are essentially identical in their effects.

Question 25

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

Question 26

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

Question 27

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

A)Developed
B)Developing
C)All

Question 28

Higher protection raises the overall level of employment.

Question 29

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

Question 30

Quotas redistribute income from consumers to domestic producers.

Question 31

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 32

The argument that developing countries should nurture their domestic industries by protecting them from foreign competition is known as

A)preservation of the home market.
B)the escape clause hypothesis.
C)the earth destruction hypothesis.
D)institutional fair trade policy.

Question 33

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

Question 34

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 35

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

Question 36

The argument that developing countries should nurture their infant domestic industries by protecting them from foreign competition is known as

A)the infant industry argument.
B)the escape clause hypothesis.
C)preservation of the home market.
D)institutional fair trade policy.

Question 37

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

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

Question 38

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 39

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

Question 40

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.

Question 41

Write an essay on the national defense argument for tariffs.Include in your discussion points in favor of this idea as well as problems with its implementation.Is protection the best policy to achieve the stated ends? Explain.

Question 42

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

Question 43

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

Question 44

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

Question 45

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

Question 46

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 47

Explain why each of the following is not a valid argument for protection.
(a) patriotism
(b) fair play (e.g.level international playing fields)
(c) preservation of jobs

Question 48

Describe aspects of customs valuation practices that are controversial in the world of international trade,such as how countries establish import tariffs.Also,how does the WTO protect against potentially abusive practices when determining appropriate tariffs.