ECON HW TEST 2

Suppose a manufacturer of software develops a new computer program that sells for $50. The $50 cost includes $0.25 for the CD it is stored on, $5 for the labor of the company software programmers, and $1.75 for packaging materials and transportation costs. Value added by the software company is

$48

Compared with free​ trade, large countries may increase national welfare when they place a tariff on imports. What unique aspect of large​ countries, explains this​ conclusion? Large countries A. reduce the world price of the import when they levy a tariff. Your answer is correct. B. have large numbers of domestic producers who can expand substantially when they are protected by tariffs. C. are less likely to face tariff retaliation by trade partners. D. All of the above

D. All of the above

As a retaliatory measure against other​ nations, tariffs are A. never justified because they make the retaliating nation less efficient. B. warranted if they have the result of forcing nations with tariffs to drop them. C. justified if they prevent firms in nations with tariffs from achieving an unfair​ advantage, particularly in industries with significant scale economies. D. all of the above have been advanced regarding the usefulness of retaliatory tariffs. Your answer is correct. E. B and C only.

D. all of the above

which of the following does not help reduce the frequency of child labor A​. a country's movement away from manufacturing and towards more agricultural production. B. Increased schooling opportunities. C. Increases in a​ country's GDP. D. None of the above. Each of the previous factors is generally associated with a decrease in child labor.

a. a countrys movement away from manufacturing and towards more agricultural production

If a firm's output doubles when all inputs are doubled, production is said to occur under conditions of constant returns to scale increasing returns to scale. imperfect competition. intra-industry equilibrium. decreasing returns to scale.

a. constant returns to scale

If a small country were to levy a tariff on its imports then this would decrease the country's economic welfare. increase the country's economic welfare. raise prices on its exports in other countries. change the terms of trade. have no effect on that country's economic welfare.

a. decrease the country's economic welfare

most of the worlds population and a majority of countries are.. A. either​ low-income or​ middle-income. B. ​low-income. C. there is no majority. The​ world's population and countries are evenly distributed across income groups. D. ​high-income.

a. either low income or middle income

External economies of scale arise when the cost per unit falls as the industry grows larger and rises as the average firm grows larger. rises as the industry and the average firm grows larger. remains constant over a broad range of output. falls as the industry and the average firm grows larger. rises as the industry grows larger and falls as the average firm grows larger.

a. falls as the industry grows larger and rises as the average firm grows larger

WTO allows subsidies of "precompetitive" activities such as research. when there are external economies. when there are internal economies. when there are positive externalities in production.

a. of "precompettive activities such as research

Which of the following is NOT one of the three ways for countries to handle different standards abroad? optimization of standards mutual recognition of standards separate standards harmonization of standards

a. optimization of standards

If some industries exhibit internal increasing returns to scale in each country, we should not expect to see perfect competition in these industries. intra-industry trade between countries. high levels of specialization in both countries. inter-industry trade between countries. increased productivity in both countries.

a. perfect competition in these industries

harmonization of standards implies that countries decide to...

adopt a common set of standards in an area of concern, such as product safety or labor

intra-industry trade is most common in the trade patterns of ....

advanced industrial nations

Tariffs are highest internationally in which​ sector?

agriculture

The two industries most commonly receiving protection​ are:

agriculture and clothing

protectionism tends to be concentrated in which two sectors?

agriculture and clothing

High-income industrial nations such as the United States and Japan tend to have their highest tariffs in

agriculture, clothing, and textiles

Regarding the arguments that have been advanced for the use of trade barriers as an enforcement​ measure, the claim that​ "pollution havens" are fostered is ____________ by empirical​ evidence; the claim that countries with low standards achieve an unfair advantage is ___________ and the claim that a​ "race to the​ bottom" occurs is _______________ by the evidence.

all are NOT SUPPORTED

The efficiency case made for free trade is that as trade distortions such as tariffs are dismantled and removed deadweight losses for producers and consumers will decrease, hence decreasing national economic welfare. deadweight losses for producers and consumers will decrease, hence increasing national economic welfare. government tariff revenue will decrease, and therefore national economic welfare will decrease. government tariff revenue will decrease, and therefore national economic welfare will increase. government tariff revenue will increase, hence increasing national economic welfare.

b. the deadweight losses for producers and consumers will decrease, hence increasing national economic welfare

one of the potential ethical problems arising from trading with low-income nations that make lower-priced goods is that taxes or tariffs may be too high. the manufacturing process could exploit children. the firms producing the goods might violate international labor laws. the good could be of lower quality.

b. the manufacturing process could exploit children

Labeling that states a product was produced under environmentally sustainable conditions may not be an effective way to reduce pollution if... a. producers do not apply labels b. consumers do not believe the information on the label c. labeling increasing costs d. governments require labels

b. consumers do not believe the information on the label

following the completion of the Uruguay round in 1993 A. agricultural subsidies were banned in all cases. B. direct agricultural subsidies were​ curtailed, but indirect payments to support farmer income were allowed. C. countries were encouraged to replace tariffs on agricultural goods with agricultural quotas. D. indirect payments to support farmer income were banned.

b. direct agricultural subsidies were curtailed, but indirect payments to support farmer income were allowed

Race to the bottom refers to which of the following? Countries have an incentive to raise the standards of the lowest income country. Firms have an incentive to relocate to countries with lower standards. Countries will compete with each other to offer incentives to firms. Firms will overpay workers in low income countries.

b. firms have an incentive to relocate to countries with lower standards

In an industry where transportation costs are high and there are limited scale economies, ANSWER firms will locate close to their input sources. firms will locate close to the market. firms might locate in either area. firms will locate where policy makers decide.

b. firms will locate close to the market

Since the end of WWII... a. agricultural subsidies have been significantly reduced. b. tariffs around the world have fallen substantially. c. tariffs have increased in low-income countries and fallen by a small percentage in high-income countries. d. most nations have begun to apply tariffs uniformly across all industries.

b. tariffs around the world have fallen substantially

International negotiations are especially appropriate when environmental problems are Part 2 A. ​non-transboundary in nature. B. transboundary in nature. C. neither transboundary nor​ non-transboundary. It is always best for individual nations to design their own solutions to pollution problems. D. either transboundary or​ non-transboundary. The best solution for all pollution problems is international negotiation.

b. transboundary in nature

Which of the following is an example escape clause relief? A tariff is granted to an industry because another nation persistently uses unfair trade practices. A tariff is granted to an industry because foreign firms are subsidized by their governments. A temporary tariff is granted to allow for adjustment of the domestic industry. A tariff is granted because foreign firms are selling below cost.

c. a temporary tariff is granted to allow for adjustment of the domestic industry

Which of the following is a true statement about obstacles to increased economic integration? Countries generally agree about appropriate environmental standards. Production changes due to trade redistribute income fairly. Adopting common standards gives an advantage to firms that already meet those standards. Domestic policies do not affect international trade.

c. adopting common standards gives an advantage to firms that already meet those standards

The agreement signed after the Uruguay Round of the General Agreement on Tariffs and Trade included coverage in several new areas of trade and investment. Which of the following is not one of those new​ areas? A. Trade in services B. Intellectual property rights C. Agriculture and agriculture support policies D. Treatment of foreign investment

c. agriculture and agriculture support policies

The labor argument for​ tariffs, argues that it is unfair for a country to face imports from countries that have lower wages. The​ problem(s) with this argument The labor argument for​ tariffs, argues that it is unfair for a country to face imports from countries that have lower wages. The​ problem(s) with this argument Part 2 A. is that it ignores the fact that cross country wage differences reflect productivity differences. B. it ignores the fact that tariffs or quotas are an expensive method of saving jobs. C. Both A and B.

c. both A and B

The existence of INTERNAL economies of scale maybe associated with a perfectly competitive industry. is associated only with sophisticated products such as aircraft. cannot be associated with a perfectly competitive industry. cannot form the basis for international trade. focuses more on the industry than individual firms.

c. cannot be associated with a perfectly competitive industry

Which of the following is NOT an expected benefit of reducing nontariff barriers to trade? Lower prices for many goods Improved overall economic welfare Fewer firms to compete with Increase in the volume of exports and imports

c. fewer firms to compete with

labor standards in trade agreements tend to... a. force minimum wages b. revert to the lower nations standards c. follow ILO conventions d. ignore child labor

c. follow ILO conventions

What is meant by the statement, "diminishing returns to trade negotiations imply that the remaining gains from trade due to further tariff reductions are also relatively small in terms of world gross domestic product?" Now that significant reductions have been achieved, the number of countries participating in negotiations has diminished, leading to less growth of world GDP. Countries have become less willing to lower remaining tariffs and completely remove trade barriers because they will have nothing left to bargain with. Now that significant reductions have been achieved with substantial benefits, the benefits of further reductions is modest and does not yield as much growth. Now that significant reductions have been achieved, countries do not want to spend as much time in trade negotiations.

c. now that significant reductions have been achieved with substantial benefits, the benefits of further reductions is modest and does not yield as much growth

a "race to the bottom refers to a situation where countries try to compete against eachother for investment by A. increasing their standards on​ labor, environmental, or other policy issues. B. implementing new product standards that discriminate against imports. C. reducing their standards on​ labor, environmental, or other policy issues. D. harmonizing their​ labor, environmental, and other policy standards.

c. reducing their standards on labor, environmental, or other policy issues

Which of the following is NOT a true statement? Economists generally favor further reductions in trade barriers. There have been significant reductions in trade barriers over the last 60 years. Trade barriers are usually a good way of protecting jobs. There are diminishing returns to trade negotiations.

c. trade barriers are usually a good way of protecting jobs

in order for countries to be integrated, standards can differ, even persistently can differ, only temporarily must be exactly the same

can differ, even persistently

what tends to happen when countries try to ban child labor

child labor often moves to the informal economy

Harmonization of standards refers to

common product safety, environment, labor, and fair competition standards agreed upon by trading partners

Under the Sullivan Principles, a multinational producing in different countries should...

comply with the same environmental standards that exist in the home country

Which of the following is NOT an issue in the reduction of trade protection in agriculture? consumption subsidies. tariffs and quotas. export subsidies. production subsidies.

consumption subsidies

Some proponents of trade sanctions argue for changes in policy because they fear low standards will be used to capture markets and foreign investment. While theoretically possible, there is little or no support for the view that countries use low labor standards this way, because

countries with low labor standards generally have trouble attracting foreign investment

If a firm's output less than doubles when all inputs are doubled, production is said to occur under conditions of increasing returns to scale. imperfect competition. intra-industry equilibrium. decreasing returns to scale. constant returns to scale

d. decreasing returns to scale

which of the following is NOT an expected benefit of reducing nontariff barriers to trade? Increase in the volume of exports and imports Improved overall economic welfare Lower prices for many goods Fewer firms to compete with

d. fewer firms to compete with

What is the main problem with imposing labor standards to prevent child labor and poor working conditions in the exporting sector of a​ less-developed country? A. It is too inexpensive to justify monitoring. B. Countries cannot settle on a particular standard. C. Consumers in developed countries are not willing to pay more for goods produced in better conditions. D. ​Less-developed countries are resistant to them.

d. less-developed countries are resistant to them

labor standards are A. made up of a core set of​ work-related rights that everyone views as universal human rights. B. narrowly defined to include only minimum wages. C. ​indefinable, given the diversity in the world. D. ​multifaceted, covering both basic rights​ (freedom form forced​ labor) as well as civic rights​ (union representation).

d. multifaced

The U.S. sugar quota A) generates government revenue. B) results in net welfare benefits to the U.S. economy. C) results in benefits to sugar producers that exceed the cost to consumers. D) results in costs to consumers that exceed the benefits to sugar producers. E) does not result in an efficiency loss.

d. results in costs to consumers that exceed the benefits to sugar producers

High tariffs on intermediate inputs _______ the effective rate of production on final goods

decrease the effective rate of protection on final goods

the infant industry argument is that

developing countries have a potential comparative advantage in manufacturing.

Arguments about labor standards are confined primarily to arguments between​ high-income countries on the one​ hand, and​ low- and​ middle-income countries on the other because these countries have underlying conditions that are very....

dissimiliar

The imposition of tariffs on imports results in deadweight (triangle) losses. These are ...

distortion of incentives

the principal benefit of tariff protection goes to ...

domestic producers of the good produced

The International Labor Organization​ (ILO) proposes that five labor standards are basic rights. These include Part 2 A. prohibition of forced labor. B. the payment of living wages. C. the right to organize and bargain collectively. D. All of the above. E. A and C only.

e. A and C only

The existence of EXTERNAL economies of scale tends to result in large profits for each firm. cannot be associated with a perfectly competitive industry. tends to result in one huge monopoly. focuses more on individual firms than the industry as a whole. may be associated with a perfectly competitive industry.

e. may be associated with a perfectly competitive industry

A tariff will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

increase, decrease, increase, have an ambiguous effect on

If a firm's output more than doubles when all inputs are doubled, production is said to occur under conditions of ________ returns to scale.

increasing

harmful carbon emissions are increasingly produced by __________ countries

industrializing countries such as China and India

When a country both exports and imports a type of commodity, the country is engaged in (what type of trade)

intra industry trade

Trade measures are usually not the best way of addressing problems such as pollution and child labor because...

it is more efficient to address these problems at the production and consumtion level

Today U.S. protectionism is concentrated in

labor-intensive industries

developed countries have lost comparative advantage in _______ industries

labor-intensive industries

If a firm increases its output in the ________ run and unit costs ________, then the firm is experiencing ________ of scale.

long run, decrease, economies

If a good is imported into (large) country H from country F, then the imposition of a tariff in country H (in terms of prices)

raises the price of the good in H and lowers it in F

internal economies of scale will _______ average cost when output is ________ by ________

reduce, increased, a firm

Greater specialization within a country creates _____ and ______

winners and losers AND raises issues about fairness

If there are a large number of firms in a monopolistically competitive industry long-run profit will be equal to ______

zero

U.S. imports of sugar are limited by an import quota that, according to one study, imposed a cost on American consumers of between $_____and $ _______for every individual living in the US.

5 and 10

The average agricultural tariff in the U.S. is about

5 percent

Which of the following is not a tariff pattern of the major world​ traders? A. tariffs are higher to economically hostile countries B. commonality in the sectors they protect most C. tariffs are higher in agriculture than in other industrial sectors D. overall tariff rates are relatively low

A. tariffs are higher to economically hostile countries

Free market economies underproduce goods with positive externalities because the additional social benefits are not taken into account by the marketplace. the additional social benefits cannot be measured. the additional social benefits are too small to matter. there are no benefits to the production of these goods.

A. the additional social benefits are not taken into account by the market place

Standards vary across countries because

A. national laws and regulations are usually initially adopted for strictly domestic​ reasons, and these reasons obviously differ from country to country. B. economic conditions and living standards vary dramatically across​ countries, and standards undoubtedly reflect these underlying conditions. C. many standards reflect history and​ culture, and these clearly vary widely across countries

Unlike the eight previous rounds of world trade negotiations since the creation of GATT in​ 1948, the Doha round appears to be the first to have A. broken down with no agreement. B. forced the rich nations to compensate the poor nations. C. pitted the U.S. against its traditional allies. D. received unanimous approval.

A. broken down with no agreement

What is the main problem with imposing environmental​ standards? Part 2 A. Country differences in income and preferences complicates the definition of appropriate standards. B. Consumers in developed countries are not willing to pay more for​ "clean" goods. C. Their monitoring costs are too high. D. They can cause potential export industries to shut down in poor countries.

A. country difference in income and preferences complicated the definition of appropriate standards

Which of these statements is FALSE? Developing countries usually advocate strongly for the protection of intellectual property rights. Pharmaceuticals, computer hardware, telecommunications equipment, and other high technology products are valuable because of the innovation and research they incorporate. At the end of the twentieth century, more and more traded goods and services incorporated specialized knowledge and unique ideas. The protection given to creators and innovators varied greatly internationally until standardization began with the signing of the TRIPS agreement.

A. developing countries usually advocate strongly for the protection of intellectual property rights.

Most foreign investment today is directed towards high-income countries because markets are larger, so transportation costs are minimized by producing near the market. there are tax breaks and subsidies available. high-income countries are politically stable. there are no economies of scale in low-income countries.

A. markets are larger, so transporation costs are minimized by producing near the market

market failures are less likely to occur whenever new firms can easily attract start-up capital. private returns are greater than social returns. social returns are greater than private returns. the free market produces less than what is socially optimal

A. new firms can easily attract start-up capital

Suppose the U.S. decided to use a quota to limit cell phone imports. Assume the U.S. is a small country. If the U.S. used an auction to allocate quota rights Part 2 A. the auction could generate revenue that was roughly equal to the revenue generated by a tariff which limited imports to the level allowed under the quota. B. the U.S. welfare would be lower than it would be if the exporting countries used voluntary export restraints instead. C. the auction would generate much more revenue than would be generated by a tariff which limited imports to the level allowed under the quota. D. the U.S. welfare would be higher than it would be if U.S. continued to have a free trade policy.

A. the auction could generate revenue that was roughly equal to the revenue generated by a tariff which limited imports to the level allowed under the quota

A country, such as the US, is allowed to use anti-dumping duties if the price a foreign exporter... A. charges for the products it sells in the U.S. is more than the price charged in the exporters market. B. charges for the products it sells in the U.S. is less than the price charged in the exporters​ market, and U.S. firms are harmed by import of the product. C. falls over​ time, and U.S. firms are harmed by import of the product. D. charges for the products it sells in the U.S. is less than the price charged in the​ exporter's market.

B. charges for the product it sells in the U.S. is less than the price charged in the exporters market, and U.S. firms are harmed by import of the product

An import quota: A. Is always more costly to a country than an import tariff. B. Generates rents that might go to foreigners. C. Has the same effects on welfare as an import tariff. D. Is always less costly to a country than an import tariff.

B. generates rent that might go to foreigners

One common critique of the WTO is that it overturns national environmental protections and forces countries to lower their standards. For​ example, when the United States tried to protect endangered sea​ turtles, the WTO prevented it. This action illustrates that Part 2 A. the United States is a​ "paper tiger" on the international stage. B. individual countries can raise their​ standards, but must do so in accordance with WTO rules. C. the WTO does in fact force lower standards upon​ well-intentioned countries. D. the WTO maintains a bias against rich nations seeking to advance world standards.

B. individual countries can raise their standards, but must do so in accordance with WTO rules

Export labels provide an alternative to the use of trade barriers to promote environmental standards in partner trading​ countries, since Part 2 A. they are only granted when all transboundary pollution ends. B. labels might allow customers to determine whether products were produced in an environmentally sustainable fashion. C. the WTO has created a register which overseas export labels. D. they are only granted when all transboundary and​ non-transboundary pollution ends.

B. labels might allow customers to determine whether products were produced in an environmentally sustainable fashion

Empirical studies have found that countries with low labor standards generally attract less foreign investment due to Part 2 A. countries with low labor standards are often high cost​ locations, since these countries often have poor infrastructure in terms of​ roads, communications, power supply and schools. B. low labor standards are highly correlated with labor forces that are unskilled and illiterate. C. low labor standards are usually implemented by​ capital-abundant countries. D. A and B only.

D. A and B only

When​ high-definition television​ (HDTV) was first considered a possibility in the United​ States, the U.S. government held a competition to select the technical standards that would be used nationwide. Why would the government see an advantage to setting one​ standard? With a newly introduced product​ (such as​ HDTV) where the​ "best standards" are​ unknown, it may be wise to hold a competition to prevent locking into or adopting inferior standards. B. Shared standards permit manufacturers to capture economies of scale. C. The adoption of common standards allows states to work together and expand their commercial ties. D. All of the above.

D. all of the above

A pollution haven is said to exist when Part 2 A. a country fails to prosecute violators of its environmental regulations. B. a poorer region or country agrees to store pollutants in exchange for aid. C. the industrial countries choose an​ area, usually in the less developed​ world, to dispose of industrial wastes. D. an economic activity becomes concentrated in countries or regions having less strict environmental controls than elsewhere.

D. an economic activity becomes concentrated in countries or region having less strict environmental controls than elsewhere

What obstacles to increased international economic integration begin to appear after trade barriers are removed? A. Each country may set up different​ standards, generating conflicts over enforcement and application. B. A​ country's domestic regulations may unintentionally limit international commerce for that country. C. Increased comparative advantage will cause competing countries to reinstate trade barriers. D. Both A and B. E. All of the above are obstacles.

D. both A and B

In addition to the production and consumption side of deadweight​ losses, a variety of other potential costs of tariffs have been identified. Which of the following is not one of those​ costs? A. The encouragement of rent-seeking. B. The threat of retaliation and the potential loss of export markets. C. The stifling of the incentive to innovate. D. The likelihood of excessive growth in the protected industry.

D. the likelihood of excessive growth in the protected industry

transoundary environmental impacts can take place when one country's pollution spills over into a second country in all of the following situation EXCEPT A. when heavy traffic between two or more countries creates semi-global warming. B. when industrial production in one country creates acid rain in another country. C. when an upstream user pollutes a shared watershed. D. the production of exported products degrades the local environment.

D. the production of exported products degrades the local environment

Given that tariffs and quotas cost consumers and that they are a grossly inefficient means for creating or preserving​ jobs, citizens nevertheless allow these policies to exist because A. incentives to organize around the issue of trade policy are asymmetric. B. they know that petitioning the government to do the right thing is futile. C. the costs of tariffs and quotas are diffused throughout an entire​ nation, while the benefits are concentrated. D. all of the above. E. A and C only.

E. A and C only

A country may actually make itself better off by levying a tariff if A. no rent-seeking behavior occurs. B. it is large enough to affect the world price when it imposes a tariff. C. other nations do not retaliate. D. there are no harmful effects on innovation. E. all of the above.

E. all of the above

International trade economists are divided on whether labor and environmental standards should be included in trade agreements. Which of the following is a reason why the use of trade barriers to enforce labor or environmental standards may be less efficient than other​ measures? Part 2 A. The imposition of trade barriers may make conditions worse rather than​ better, since some producers may move their facilities into the informal sector of the economy. B. The trade barriers may come to be exploited by special interest groups for ulterior motives. C. Trade barriers are very​ costly, creating deadweight losses in consumption and production at home. D. Without a coalition of​ countries, which are difficult to​ assemble, the trade barriers may be ineffectual. E. All of the above are reasons why trade barriers tend to be weak enforcement mechanisms. F. ​A, B, and C only.

E. all of the above

What externalities may arise in a low-income country after trade barriers are​ removed? A. More incentives exist to exploit differences in environmental regulations to gain a cost advantage. B. More incentives exist to exploit certain​ low-wage sectors of the​ population, such as​ children, to gain a cost advantage. C. More incentives to increase specialization to exploit comparative​ advantage, leading to bigger losses to less productive sectors of the economy. D. Both A and B. E. All of the above are externalities.

E. all of the above externalities

in which way are tariffs different from quotas?

Tariffs raise government revenue.

A voluntary export restraint will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

increase, decrease, have no effect on, decrease

Complaints are often made to the International Trade Commission concerning foreign "dumping" practices. These complaints typically claim that

U.S. firms are harmed by the unfair pricing of foreign exporters

Harmonization of standards a. is not possible for countries of different income levels b. can make it less costly for exporting firms to produce c. is required under WTO rules d. is easy to agree on

b. can make it less costly for exporting firms to produce

Is the claim that environmental standards reduce industrial competitiveness​ valid? Why or why not?

Yes, because environmental standards raise costs to businesses

Most regional trade and WTO agreements practice a combination of ...

a combination of​ harmonization, mutual​ recognition, and separate standards.

an export subsidy is

a payment to a firm or individual that ships a good abroad

dumping occurs when

an exporter sells a product in a foreign market below its domestic cost.

Because of its politically sensitive​ nature, the last economic sector to be liberalized via multilateral trade negotiations has been A. energy. B. agriculture. C. transportation. D. financial services. E. manufacturing.

b. agriculture

For most developing countries A) productivity is high among domestic workers. B) population growth and illiteracy rates are low. C) saving and investment levels are high. D) agricultural goods and raw materials constitute a high proportion of domestic output. E) pollution emissions are relatively low.

d. agricultural goods and raw materials constitute a high proportion of domestic output

Of the following criticisms leveled against​ trade, which are shared by labor and environmental​ interests? Part 2 A. Countries with high standards must either lower their standards or incur business losses. B. Lower standards create a​ "race to the​ bottom" in standards. C. Differing standards result in a lack of​ fairness, giving those with lower standards an advantage. D. All of the​ above; labor and environmental tend to agree on these points. E. A and B only.

d. all of the above

The "Uruguay Round" of trade talks resulted in the formation of the WTO measures regulating the treatment of intellectual property new measures for trade dispute settlements all of the above

d. all of the above

Why do critics of trade want to use trade barriers to enforce environmental​ regulations? Part 2 A. Polluting industries in countries with standards relocate to countries with lower standards. B. Environmental standards reduce competitiveness. C. Tariffs and quotas have been shown to reduce world pollution. D. Both A and B. E. All of the above are reasons.

d. both A and B

Labor and environmental activists have advanced a number of arguments in favor of using trade barriers to enforce labor and environmental standards. Which of the following is not one of these​ arguments? Part 2 A. Differences in standards are an unfair competitive advantage for the​ low-standard countries. B. Trade and foreign investment cause a race to the bottom in standards. C. Low environmental standards make some countries​ "pollution havens." D. Countries will only improve standards if coerced through the imposition of trade barriers.

d. countries will only imrpove standards if coerced through the imposition of trade barriers

An export subsidy will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

increase, decrease, decrease, decrease

The opportunity to exploit economies of scale is one of the gains to be derived by removing tariffs and other trade distortions. These gains will be the result of a decrease in

excessive entry and inefficient business practices

An export subsidy will cause the relative demand for ________ to ________ and the relative supply for ________ to ________.

exports, decrease, exports, increase

Working conditions for clothing workers in Bangladesh are very poor. If countries refuse to buy clothing from Bangladesh in order to encourage change, the effect is likely to be that firms will _______ and workers will be ________ off

firms will try to comply and workers will be worse off

in economic terms, tariffs are preferred to quotas because

given the way quotas are usually administered, tariffs cause a smaller net national welfare loss.

The claim that lower environmental standards in foreign countries reduce industrial competitiveness for high-standard countries is on firm theoretical ground because

higher environmental standards requirements raise the cost of production to a firm or industry abiding by the rules

if an industry has technological externalities, an infant industry policy is justified when?

if the protection offered is temporary AND if the industry experiences falling costs

what is not considered a nontariff barrier?

import tax

specific tariffs are...

import taxes calculated as a fixed charge for each unit of imported goods.

the infant industry argument was an important theoretical basis for

import-substituting industrialization

An import tariff will cause the relative demand for ________ to ________ and the relative supply for ________ to ________.

imports, decrease, imports, increase

When there are external economies of scale, an increase in the size of the market will _________ the number of firms and ________ the price per unit

increase the number of firms and lower the price per unit

When a private market fails to deliver an optimal quantity of goods and services it is called

market failure

a negative effective rate of protection implies that domestic producers are...

more exposed to foreign competition than if there were no tariffs

Discriminatory trade practices are allowed among sister WTO member countries, especially when it comes to

national security and special benefits given to other members of a free trade area.

nominal rates of protection cannot be ________

negative

Which of the following is NOT a characteristic of nontariff measures

nontariff measures are relatively rare and do not have a significant impact on world trade volume

If social returns to the production of a good are less than private returns, then we can conclude that relative tothe social optimum, the good will be _______ produced and ________ priced

over produced and under priced

Countries that compete by offering foreign firms a reduced set of environmental compliance requirements known as....

pollution havens

the most vocal political pressure for tariffs is generally made by

producers lobbying for import tariffs

monopolistic competition is often associated with

product differentiation

one advantage of specialization that results from international trade is that countries can take advantage of ....

scale economies

Geographical concentration is self-reinforcing. costly to a region. easily planned. costly to a region.

self-reinforcing

Dumping occurs when a firm

sells in a foreign country at prices that are below fair value.

The infant industry argument calls for active government involvement ONLY IF

some market failure can be identified

Separate standards refers to

standards held by different trading partners which other partners refuse to recognize.

Sixty years after the signing of GATT and following eight completed round of trade negotiations trade barriers have been ....

successfully` reduced

Why are negative effective rates of protection common?

tariff policy has occurred with little cohesive planning and has resulted in conflicting and contradictory tariffs

why are negative effective rates of protection common?

tariff policy has occurred with little cohesive planning and has resulted in conflicting and contradictory tariffs

The logic of collective action explains the persistence of tariffs and quotas as an outcome that is driven by the asymmetry between

the benefits concentrated in the hands of the few firms, versus the costs distributed across many consumers

one reason why consumers are unlikely to be too upset about tariffs is because...

the costs are so spread out that no one pays a big share of the total

Domestic firms operating abroad may find it economically beneficial to adopt environment-friendly standards because

the least-cost strategy usually involves the adoption of one set of environment-friendly technology rather than multiple standards

according to the textbook, the fact that trade policy often imposes harm on large numbers of people, and benefits only a few may be explained by

the problem of collective action

All of the following are responsible for the removal of the formal trade barriers EXCEPT the World Bank and the IMF. the General Agreement on Tariffs and Trade (GATT). the World Trade Organization (WTO). regional trade agreements such as NAFTA.

the world bank and the IMF

For the private businesses that were interested in producing for the U.S.​ market, a​ "pro" was the chance to have

their product adopted as the standard

When a country must resort to tariffs for​ protection, the result is considered a​ "second best"​ solution, which means the tariff is not the most efficient action. This result occurs because

there are always deadweight losses to market interventions

Most developing countries oppose including labor standards in trade agreements because...

they believe this would limit their ability to export to rich markets

One factor that may help explain why some countries benefit more from geographical concentration is that...

they had a head start over other nations

If social returns to the production of a good are greater than private returns, then we can conclude that relativeto the social optimum, the good will be ________ produced and ______ priced

underproduced and overpriced