Problem Set #3 Flashcards Preview

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Flashcards in Problem Set #3 Deck (12)
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1

Suppose the United States and Japan enter into a voluntary export agreement in which Japan imposes an export quota on its automakers. The largest share of the export quota's "revenue effect" would tend to be captured by:

Japanese automakers

2

Suppose the government grants a subsidy to its export firms that permits them to charge lower prices on goods sold abroad. The export revenue of these firms would rise if the foreign demand is:

Elastic in response to the price reduction

3

Because export subsidies tend to result in domestic exporters charging lower prices on their goods sold overseas, the home country's:

Terms of trade will worsen

4

Which trade restriction stipulates the percentage of a product's total value that must be produced domestically in order for that product to be sold domestically?

Local content requirement

5

Compared to an import quota, an equivalent tariff may provide a less certain amount of protection for home producers since

Foreign firms may absorb the tariff by offering exports at lower prices

6

Concerning the restrictive impact of an import quota, assume there occurs an increase in the domestic demand for the import product. As long as the quota falls short of what would be imported under free market conditions, the economy's adjustment to the increase in demand would take the form of:

An increase in the domestic price of the import good

7

A producer successfully practicing international dumping would charge:

A relatively higher price in the more inelastic market

8

Export subsidies levied by foreign governments on products in which the United States has a comparative disadvantage:

Lead to increases in U.S. consumer surplus

9

To maintain that South Koreans are dumping their VCRs in the United States is to maintain that:

Koreans are selling VCRs in the United States below their production cost

10

A removal of an import quota tends to result in

Lower import prices for domestic consumers

11

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

predatory dumping

12

A specification of a maximum amount of a foreign produced good that will be allowed to enter the country over a given time period is referred to as:

An import quota