Econ Chapter 8/9

Which of the following is true of a voluntary export restraint (VER)?

A VER usually requires that the foreign exporting firms act like a cartel, restricting sales and raising prices.

If Japan and Australia enter into a voluntary export restraint (VER) agreement and Australia agrees to limit its exports to Japan, then we would expect that the VER's import price markup effect would accrue to:

Australian producers

Which of the following is defined as the percentage by which the entire set of a nation's trade barriers raises an industry's value added per unit of output?

Effective rate of protection

Which of the following is a means of allocating import licenses by assigning the licenses without competition, applications, or negotiation?

Fixed favoritism

A(n) _____________ is a limit on the total quantity of imports allowed into a country each year.

Import quota

A nontariff barrier is any policy that?

Is used to limit imports other than a simple tariff___

Country A is a large country that imports good-quality processed chicken from country B. Suddenly, country A's government decides to impose a tariff on this import. Who among the following will be adversely affected by this policy?

Producers of chicken in country B

Which of the following refers to the extra cost of shifting to more expensive home production following the imposition of a tariff?

Production effect

One of the reasons that protectionists and government officials may favor using a quota instead of a tariff is:

Quotas ensure that the quantities of imports are strictly limited

Which of the following is the least efficient method of allocating import licenses by the government?

Resource-using application procedures

Which of the following is the basis for the consumption effect of a tariff imposed on imported automobiles

The decline in the purchase of the product due to the increase in its price

Which of the following is an impact of tariffs on the country imposing them?

The domestic consumers pay a higher price for the imported products.

When a large country imposes an import quota:

The product's world price falls

Which of the following correctly identifies the impact of tariffs on the producers of import-competing products in the imposing country?

They can expand their production and sales.

A tariff that has the effect of limiting imports into a small country results in

a net loss to the importing country and the world.

An arrangement by which the government of an importing country compels foreign governments to limit the number of exports to the importing country is:

a voluntary export restraint.

If a tariff is not so high as to prohibit the importation of the product subject to the tariff, the government imposing the tariff benefits:

by collecting revenue.

The lifting of a voluntary export restraint (VER) by the foreign exporting country would benefit:

consumers in the importing country

The _______________ of a tariff shows the loss to consumers of an importable product because of the reduction in total consumption of the product subject to the tariff.

consumption effect

When a tariff is imposed on an imported product, the ___________________ represents those consumers who would have bought the product had the price of the product not increased as a result of the imposition of the tariff.

consumption effect

The percentage by which the entire set of a nation's trade barriers raises the affected industry's value added per unit of output is identified as the industry's _______________.

effective rate of protection.

Suppose country A collectively enjoys monopsony power in good X. If country A imposes a tariff on the imports of good X, the world price of good X will:

fall

If a government allocates import licenses for free to firms or individuals without competition, application, or negotiation, the licenses are allocated on the basis of:

fixed favoritism.

When a country imposes high import barriers to protect domestic industries from competition from imports, the protected industries:

gain higher income, but the overall costs of the import barriers are usually also high.

When a government's purchasing procedures are biased in favor of domestic products and against foreign products, the nontariff barrier being employed is a(n):

government procurement practice.

In the context of international trade, a small country is one that:

is a price-taker in the sense that the price it must pay for imported goods is not affected by the amount of the goods that it imports.

Tariffs make imports ________________ in domestic markets and domestic products ________________ in domestic markets.

less competitive; more competitive

A nonfinancial cost of nontariff barriers that is often overlooked is the:

loss of incentive to innovate by firms that are protected by the nontariff barrier.

A tariff rate that creates the largest net gain for the country imposing the tariff is called the:

nationally optimal tariff.

If a country mandates that imports meet certain requirements that necessitate unnecessarily expensive modifications be made to the imports, the country is employing:

product standards as an NTB.

If a small country imposes a tariff on imported motorcycles, the world price of motorcycles will _____ and the domestic price of motorcycles will _____

remain constant; rise

When a country awards import licenses on a first-come, first-served basis or on a negotiated basis, taking into consideration a demonstrated need or worthiness, the country has a:

resource-using procedure.

The assumption that any feasible change in demand for an import in a country is so small that it has almost no effect on the world market for that product is called the:

small country assumption.

A(n) _____ is a tax on imports that is stipulated as a money amount per unit

specific tariff

Governments choose to use voluntary export restraints rather than tariffs because:

tariffs more obviously violate the international rules of the WTO

If the imposition of a tariff on a commodity alters the relative prices of the imposing country's exports to its imports, it is referred to as the:

terms-of-trade effect of the tariff

The nationally optimal tariff is the tariff for which:

the difference between the part of the tariff paid by the exporters and the welfare loss associated with the consumption and production effects is the highest.

With a voluntary export restraint (VER), the economic rent created for the quantitatively limited trade is collected by

the exporting firms in the foreign countries.

When an import quota is imposed and import licenses are auctioned off, the import price markup effect of the quota goes primarily to:

the government.

A large country can gain from imposing a tariff on the import of a good if:

the part of the tariff paid by the foreign exporters is greater than the losses arising from the production and consumption effects of the tariff in the domestic market

The general formula used for calculating the net national loss from a trade barrier as a percentage of GDP may fail to account for:

the rent-seeking costs of the local firms

If a small country imposes a tariff on imported motorcycles:

the surplus of the domestic producers of motorcycles will increase, but the surplus of the domestic consumers will decline

In economic terms, free trade is preferred because:

there are usually net gains from free trade for nations and the world.

Section 301 of the Trade Act of 1974 allows the U.S. president to:

unilaterally use threats of retaliation to open foreign markets for U.S. trade.