Chapter 34

A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as __________________.

A. a non-tariff barrier

Which of the following is not a short-run impact of imposing quotas on the American industries they seek to protect?

A. government tax revenues increase

An import quota or tariff on French wine that raises the prices for wine will probably:

A. hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.

Tariffs are taxes imposed on _________________.

A. imported products

The membership of the WTO includes about __________ nations.

B. 150

____________ means selling goods below their cost of production

B. Dumping

_____________ are numerical limitations on the quantity of products that can be imported.

B. Import quotas

__________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products.

B. Nontariff barriers

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

B. The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise

Why would foreign firms export a product at less than its cost of production—which presumably means making a loss?

B. This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic U.S. competition, they would then raise prices.

Which of the following is the best example of a quota?

B. a limit imposed on the number of men's suits that can be imported from a foreign country

After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will:

B. increase.

Raising an existing tariff on grapes from Argentina will:

C. increase American consumption of domestically produced grapes.

International trade is fundamentally a ________________________.

C. win-win situation

A tariff differs from a quota in that a tariff is:

D. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

"Tariffs and other trade restrictions increase the domestic scarcity of products in question. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement:

D. is essentially correct.

The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that:

B. domestic producers can attain the economies of scale to allow them to compete in world markets.

An import quota does which of the following?

B. increases the price of the domestic goods to consumers

Economists would say tariffs:

B. limit voluntary exchanges.

Low-wage U.S. workers suffer from protectionism in all the industries that they don't work in, because:

B. protectionism forces them to pay higher prices for basic necessities like clothing and food.