Question 1

Under U.S.law, a(n) ___________duty is levied when the U.S.Department of Commerce determines a class or kind of foreign merchandise is being sold at less than fair value (LTFV).

Accepted Answer

Antidumping duty is levied when the U.S. Department of Commerce determines that a class or kind of foreign merchandise is being sold at less than fair value (LTFV). Dumping refers to selling goods in the United States for less than their fair value, while below-cost sales refer to selling goods below their production cost. Margin of dumping denotes the amount by which the normal value of the product exceeds the export price. However, the correct answer to the question is antidumping.

Question 2

Which is NOT a material injury caused by LTFV?

Accepted Answer

General expenses are not a material injury caused by LTFV. Material injury refers to harm or damage that affects the economic position of the domestic industry, such as lost sales, lost profits, or unemployment. General expenses, on the other hand, are the usual expenses that a business incurs in its regular operations, regardless of whether there is LTFV or not.

Question 3

When voluntary export limits are imposed on the world's chief exporter

Accepted Answer

When voluntary export limits are imposed on a chief exporter, other countries may increase their exports to fill the gap, leading to a trade diversion effect.

Question 4

Figure 5.6 Domestice Supply and demand for Wine - U.S. 
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.What will happen to the price of a bottle of wine in the U.S.if a quota of 15 bottles of wine is imposed?

Accepted Answer

When a quota is imposed, the supply is restricted, leading to a shortage if demand exceeds the quota. This typically causes the price to increase above the equilibrium price, potentially reaching $15 if demand is strong enough.

Question 5

Figure 5.4. Venezuelan Calculator Market 
-Consider Figure 5.4.The increase in Venezuelan producer surplus under the production subsidy totals

Accepted Answer

Producer surplus increases by the area of the rectangle formed by the subsidy amount per unit (vertical distance between the supply curves before and after the subsidy) multiplied by the new quantity produced and sold.

Question 6

Assume that a U.S.importer imports furniture from China.If the Commerce Department makes a preliminary investigation and finds evidence of dumping, the U.S.importer must pay a special tariff equal to the

Accepted Answer

When the Commerce Department finds evidence of dumping, the U.S. importer must pay a special tariff equal to the estimated dumping margin on all imports of that product. This is because the purpose of the tariff is to offset the unfair advantage gained by the foreign company engaging in dumping, and the estimated dumping margin is the amount by which the foreign company has unfairly lowered their prices. Therefore, option A is the correct answer.

Question 7

Figure 5.6 Domestice Supply and demand for Wine - U.S. 
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.If the U.S.imposes a quota of 15 bottles of wine, how much wine will U.S.consumers demand, how much wine will U.S.producers produce and how much wine will be imported?

Accepted Answer

With a quota of 15 bottles, the domestic demand will be met by domestic producers first. At a price of $15 per bottle, producers are willing to supply 15 bottles. This leaves a shortage of 15 bottles which will be filled by imports from the EU at a price of $8 per bottle. Therefore, the U.S. consumers will demand 30 bottles in total (15 from domestic producers and 15 from imports), U.S. producers will produce 15 bottles, and 15 bottles will be imported. Choice D is the only option that matches these quantities.

Question 8

A home appliance manufacturer observes the following and determines that his competitors are pricing their imported goods below-cost sale.Which point would have helped him come to this conclusion?

Accepted Answer

The information that the cost of product in the U.S. is below that in the home market indicates that competitors may be pricing their imported goods below-cost sale, as they may be willing to absorb losses in order to gain market share. None of the other options provide information relevant to this conclusion.

Question 9

In recent years, the average antidumping duty imposed by the United States has been about

Accepted Answer

The answer of In recent years, the average antidumping duty...

Question 10

The margin of dumping is calculated as

Accepted Answer

The margin of dumping is the difference between the export price of a product and its normal value (usually the price charged in the domestic market of the exporting country) in the ordinary course of trade. Therefore, the best choice is B, which represents the difference between the foreign market value (i.e., the normal value) and the U.S. price (i.e., the export price).

Question 11

Assume that the Commerce Department makes a preliminary investigation on imports of furniture by a company and finds evidence of dumping and collects an estimated dumping margin on all imports of that product.On further investigation it is determined that dumping has NOT happened.Then, the special tariff collected is

Accepted Answer

Since it has been determined that dumping did not occur, the special tariff collected would be considered an overpayment by the importer and would need to be rebated to them.

Question 12

Figure 5.6 Domestice Supply and demand for Wine - U.S. 
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.If the U.S.imposes a quota of 15 bottles of wine what will happen to consumer surplus?

Accepted Answer

The answer of Figure 5.6 Domestice Supply and demand for...

Question 13

Why do you think Whirlpool had to file multiple lawsuits before it won import protection?

Accepted Answer

The article mentions that Samsung and LG were "country-hopping" to evade import tariffs, which implies that they were engaging in some sort of strategy to avoid import protections. This may have required multiple lawsuits before a resolution could be reached. The other options are not supported by the information provided in the article.

Question 14

Figure 5.6 Domestice Supply and demand for Wine - U.S. 
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.If the U.S.imposes a quota of 15 bottles of wine, how much revenue will the U.S.government collect?

Accepted Answer

Quotas limit the quantity of goods that can be imported but do not directly generate revenue for the government. Tariffs, not quotas, are what generate revenue through taxes on imported goods.

Question 15

Figure 5.6 Domestice Supply and demand for Wine - U.S. 
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.How much will the U.S.produce and import in these circumstances?

Accepted Answer

At the price of $8 per bottle, the U.S. domestic supply curve intersects with the demand curve at a quantity of 5 bottles. This means that the U.S. will produce 5 bottles domestically. However, at the same price, the EU is willing to supply an additional 35 bottles, which means that the U.S. will import 35 bottles from the EU. Therefore, the total quantity of wine that the U.S. will produce and import is 5 bottles domestically and 35 bottles from the EU, for a total of 40 bottles.

Question 16

A voluntary export agreement

Accepted Answer

Voluntary export agreements are not necessarily limited to the world's most important exporting nations. They can be negotiated between any countries, depending on their trade relationships and strategic interests. These agreements are not inherently more restrictive than tariffs or quotas; their impact depends on the specific terms agreed upon. They also do not specifically allow only producers with superior products to participate in markets; rather, they are broader agreements that can affect a range of products and industries.

Question 17

Concerning international dumping, many economists argue that "fair value" should be based on

Accepted Answer

Average variable cost is often used as a benchmark for determining "fair value" in the context of international dumping, as it reflects the direct costs associated with producing an additional unit of a good.

Question 18

Figure 5.4. Venezuelan Calculator Market 
-Consider Figure 5.4.The production subsidy results in an overall welfare loss for Venezuela totaling

Accepted Answer

The answer of Figure 5.4. Venezuelan Calculator Market 
-Consider Figure...

Question 19

Assume that the manufacturing cost of a company is $50,0000 and the general expenses is $50,000.Then, the amount of profit must be equal to at least _____ for the cost-based definition criterion of foreign market value to be met.

Accepted Answer

The cost-based definition criterion of foreign market value is met when the profit is at least 8% of the sum of manufacturing cost and general expenses. Here, the total cost is $50,000 (manufacturing) + $50,000 (general expenses) = $100,000. 8% of $100,000 is $8,000. Therefore, the profit must be at least $8,000 to meet the criterion. However, none of the given options exactly match this calculation, suggesting a possible typo in the question or options. Among the provided options, $44,000 (A) is the only one that exceeds the minimum required profit of $8,000, indicating a misunderstanding in the question's formulation or a typographical error in the manufacturing cost (possibly meant to be $500,000, which would change the calculation).

Question 20

Subsidies to domestic firms may lead to

Accepted Answer

Subsidies to domestic firms can lower their production costs, making their goods cheaper on the international market. This can lead to a higher volume of exports as their products become more competitive abroad.

Quiz 5: Nontariff Trade Barriers

Under U.S.law, a(n) ___________duty is levied when the U.S.Department of Commerce determines a class or kind of foreign merchandise is being sold at less than fair value (LTFV) .

Which is NOT a material injury caused by LTFV?

When voluntary export limits are imposed on the world's chief exporter

Figure 5.6 Domestice Supply and demand for Wine - U.S. -Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.What will happen to the price of a bottle of wine in the U.S.if a quota of 15 bottles of wine is imposed?

Figure 5.4. Venezuelan Calculator Market -Consider Figure 5.4.The increase in Venezuelan producer surplus under the production subsidy totals

Assume that a U.S.importer imports furniture from China.If the Commerce Department makes a preliminary investigation and finds evidence of dumping, the U.S.importer must pay a special tariff equal to the

A home appliance manufacturer observes the following and determines that his competitors are pricing their imported goods below-cost sale.Which point would have helped him come to this conclusion?

In recent years, the average antidumping duty imposed by the United States has been about

The margin of dumping is calculated as

Figure 5.6 Domestice Supply and demand for Wine - U.S. -Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.If the U.S.imposes a quota of 15 bottles of wine what will happen to consumer surplus?

Why do you think Whirlpool had to file multiple lawsuits before it won import protection?

Figure 5.6 Domestice Supply and demand for Wine - U.S. -Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.If the U.S.imposes a quota of 15 bottles of wine, how much revenue will the U.S.government collect?

Figure 5.6 Domestice Supply and demand for Wine - U.S. -Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.How much will the U.S.produce and import in these circumstances?

A voluntary export agreement

Concerning international dumping, many economists argue that "fair value" should be based on

Figure 5.4. Venezuelan Calculator Market -Consider Figure 5.4.The production subsidy results in an overall welfare loss for Venezuela totaling

Assume that the manufacturing cost of a company is $50,0000 and the general expenses is $50,000.Then, the amount of profit must be equal to at least _____ for the cost-based definition criterion of foreign market value to be met.

Subsidies to domestic firms may lead to