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- 15. While import tariffs and import quotas can both be used to protect domestic producers, the import quota is the more effective policy when the policy goal is O a. To raise government revenue O b. To protect producers from declines in domestic demand O. To minimize the inefficiency of the trade barrier O d. To protect domestic producers from declines in the world priceAn export subsidy always makes a country worse off on net. O True O FalseThe policies are other than tariffs which restrict the volume of international trade Such policies areknown as non-tariff barriers to trade and include such practices as import quotas, orderly marketingagreements, domestic content requirements, subsidies, antidumping regulations, discriminatorygovernment procurement practices, social regulations, and sea transport and freight restrictions. It isnoted that quotas and tariffs have many of the same economic effects; however, quotas tend to bemore restrictive. Special attention is given to the revenue effect of an import quota, which may becaptured by domestic importers, foreign exporters, or the domestic government. Differentiatebetween an import subsidy and an export subsidy
- Figure: World Imports Domeste dend The imposition of a $20 tariff would generate a valur of lost gains from trade of O S45. O S0. O S70 091S OConsider a small country that exports steel. Supposethat a “pro-trade” government decides to subsidizethe export of steel by paying a certain amount foreach ton sold abroad. How does this export subsidyaffect the domestic price of steel, the quantity ofsteel produced, the quantity of steel consumed, andthe quantity of steel exported? How does it affectconsumer surplus, producer surplus, governmentrevenue, and total surplus? Is it a good policy fromthe standpoint of economic efficiency? (Hint: Theanalysis of an export subsidy is similar to the analysisof a tariff.)Cooperton and Denalla each produce two products; pots and pens. The table shows the productlon possibilitles for each country. Cooperton Denalia Pots Pens Pots Pens 6,000 4,500 100 4,000 50 3,000 200 2,000 100 1,500 300 200 Which of the following terms of trade would be beneficlal for both countries? O 1 pot trades for 25 pens O 1 pen trades for 1/18 of a pot 1 pot trades for 15 pens O 1 pen trades for 1/22 of a pot
- Assuming there is no foreign trade in the economy, the economy is in equilibrium when Select one: O O O a. I + G= S + T. b. G +T=S+I. c. S+ T = C + I. d. IT = S + G.Assume the United States is a large consumer of steel, able to influence the world price. Its demand and supply schedules are respectively denoted by Dus and Sus in Figure 42. The overall (United States plus world) supply schedule of steel is denoted by Sus.. Figure 4.2. Import Tariff Levied by a Large Country 8 550 475 450 325 0 5 10 O $450, 5 tons, 60 tons, 55 tons O $475, 10 tons, 50 tons, 40 tons O $525, 5 tons, 60 tons, 55 tons 20 O $630, 30 tons, 30 tons, 0 tons 30 40 Consider Figure 4.2. With free trade, the United States achieves market equilibrium at a price of Sus 50 55 Sus W.1 Sus+ w Dus Tons of Steel At this price, of steel are produced by U.S. firms, are bought by U.S. buyers, and are imported.Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles, O Vietnam has a comparative advantage over other countries and Vietnam will export textiles. O other countries have a comparative advantage over Vietnam and Vietnam will export textiles. O other countries have a comparative advantage over Vietnam and Vietnam will import textiles. O Vietnam has a comparative advantage over other countries and Vietnam will import textiles. MacBook A esc D00 FA F1 F2 F3 FS % 4 Q W E R T tab I A S D F G s lock
- Figure 1 shows a country's domestic supply and demand curves for a good, as well as the world price, Pw, for the good that it faces, as a small country, on the world market if it opens up to free trade. Initially, the country did not engage in any trade with the rest of the world, but it now starts to engage in free trade. Use this diagram to answer questions 13-15. Figure 1 Price Supply Po a 9. Pw + x d f g ih Pw Demand Q1 Q2 Q3 Q4 Q5 Quantity According to Figure 1, what is the Quantity imported with free trade? Q5- Q1 Q5- Q2 Q5 Q4- Q2 EWhen countries specialize in the production of goods they have the comparative advantage in, both and will increase O prices, the trade deficit O production, consumption price level, unemployment consumption, unemploymentThe figure shows the domestic supply and demand of a product in the United States. Suppose the world price of this product is $14. After the United States engages in free trade in this product, O A. the consumers will lose, the producers will win, but the overall economy will be worse off O B. the consumers will lose, the producers will win, but the overall economy will be better off O C. the consumers will win, the producers will win, and the overall economy will be better off O D. the consumers will win, the producers will lose, but the overall economy will be better off Price 21- 20 19 18 17 16 15 14 13 12 11- 10- 9. 8 7 6 5 4 3 2 0 10 20 Supply Demand 30 40 50 60 70 80 90 100 110 120 130 Quantity (millions)