1) Which of the following statements describes the historical trend in subsidies implemented by the EU Common Agricultural Policy?
a) Export subsidies resulted in a underproduction and were slowly replaced with export subsidies to boost output
b) Export subsidies resulted in a overproduction and were slowly replaced with subsidies that “decoupled” subsidy payments from production
c) Production subsidies resulted in low prices and were slowly replaced with export subsidies to improve the EU terms of trade
d) Production subsidies were insufficient measures for increased agricultural production and were supplemented by export subsidies
2) Suppose that the US International Trade Commission determines that the US furniture industry has been injured by subsidies that Thailand provides to firms that export furniture from Thailand to the United States Which type of tariff will be applied to US imports of furniture from Thailand?
a) export tariff
b) antidumping duty
c) countervailing duty
d) safeguard duty
3) During the 1980s, Brazil used trade policy to protect its computer industry as an infant industry Brazil’s efforts were largely viewed as
a) a failure
b) a partial success in which Brazilian computer technology improved but prices were high
c) a partial success in which Brazilian computer technology declined but prices were low
d) a complete success
4) The Trump Administration has announced its intention to impose a 25% tariff on steel and a 10% tariff on aluminum after an investigation by the Department of Commerce determined that steel and aluminum were critical industries for national defense Which of the following statements best characterizes the position of the Department of Defense on the upcoming tariffs?
a) The Department of Defense welcomes the imposition of the tariffs because they are concerned that the size of the domestic steel and aluminum industries are too small to meet their procurement needs
b) The Department of Defense welcomes the imposition of the tariffs because most of our steel and aluminum imports come from countries with which we have contentious relationships and are thus not a reliable supply source in the event of war
c) The Department of Defense welcomes the imposition of the tariffs because they are concerned that the imported price of steel and aluminum is too high and a tariff will help to control defense-related spending
d) The Department of Defense advises against implementing the tariffs because domestic supply is more than adequate to meet their needs and a tariff might anger close allies, who provide most of the steel and aluminum imports
5) Baggins Rings is a monopolist producer of gold rings in its home country of The Shire, where it charges $500 for a ring The market for rings in Rivendell is more competitive, includes a more elastic demand curve, and has a lower price for rings As a price discriminating monopolist,
a) Baggins Rings will be likely to price rings at less than $500 in Rivendell
b) Baggins Rings will be likely to price rings at more than $500 in Rivendell
c) Baggins Rings will be unlikely to sell rings in Rivendell because it will not be able to make a profit in a competitive market
d) Baggins Rings will shutdown