QUESTION 1 Which of the following is NOT true of nontariff barriers to imports? •Some nontariff barriers create uncertainty about the conditions under which imports will be permitted. •Unlike...

QUESTION 1

Which of the following is NOT true of nontariff barriers to

imports?

•Some

nontariff barriers create uncertainty about the conditions under which imports

will be permitted.

•Unlike

tariffs, the nontariff barriers do not increase the price of the imported goods

in the domestic markets.

•Nontariff

barriers can limit imports with greater certainty than tariffs.

•Like

tariffs, nontariff barriers also result in a net welfare loss in a small

country.

1 points

QUESTION 2

Refer to Figure 9.2 in the PDF below. After the quota is

imposed by the government, the domestic producers gain $_______ million. (Denote negative answers with a

“-“).

Figure 9.2.pdf

1 points

QUESTION 3

Refer to Figure 9.2. If the government auctions the quota

licenses, it will collect $________ million in revenue. (Denote negative answers with a

“-“).

1 points

QUESTION 4

Refer to Figure 9.2. If the government auctions the quota

licenses, the net change in welfare (change in total surplus) for the importing

country will be $_______ million. (Denote negative answers with a

“-“).

1 points

QUESTION 5

Refer to Figure 9.2. Suppose that instead of an import

quota, this country successfully convinced the exporting country to impose a

voluntary export restraint of the same magnitude as the quota (0.9 million

mopeds). In this case, the net change in welfare for the importing country will

be $_______ million. (Denote negative answers with a “-“).

1 points

QUESTION 6

Governments choose to use voluntary export restraints rather

than tariffs because:

•the

increase in the price of the imported good in the domestic market is much lower

in case of VERs than tariffs.

•voluntary

export restraints do not generate any welfare loss in the importing country.

¶voluntary

export restraints have the potential to generate higher revenue.

•tariffs

more obviously violate the international rules of the WTO.

1 points

QUESTION 7

Which of the following statements reflects a situation in

which there are external benefits?

•John’s

decision to get vaccinated for smallpox reduces the chances that his neighbor

Pete will get smallpox.

•John

paints his house and cleans his paintbrushes in the stream.

•John

pays 5 percent of his income as taxes.

•John

sells his car to his neighbor Pete at half the first-hand price.

1 points

QUESTION 8

The French highly value domestic production of traditional

French cheese made by high-cost, traditional production methods. According to

the specificity rule, the most efficient policy tool to protect this

traditional industry would be:

•to

eliminate all barriers on cheese imports since no protectionist policy would be

efficient.

•to

impose an import tariff on cheeses produced in other countries.

•to

impose an import ban on cheeses produced in other countries.

•to

provide a production subsidy to the domestic firms.

1 points

QUESTION 9

Refer to Figure 10.1 in the PDF below. The overall impact of

the tariff would be $_______ million.

(Denote negative answers with a “-“).

Figure 10.1.pdf

1 points

QUESTION 10

Refer to Figure 10.1. If there is initially free trade, and

then a $50 per unit subsidy is given to the domestic producers of mopeds,

domestic production will increase by ________ million. (Denote negative answers

with a “-“).

1 points

QUESTION 11

If there is initially free trade, and then a $50 per unit

subsidy is given to the domestic producers of mopeds, the change in domestic

consumption of mopeds would be ________ million. (Denote negative answers with

a “-“).

1 points

QUESTION 12

The impact on the national well-being if, instead of

imposing a tariff of $50 per unit, the government provides a subsidy of $50 per

unit to the domestic manufacturers of mopeds would be $______ million. (Denote

negative answers with a “-“).

1 points

QUESTION 13

A small country imports T-shirts. With free trade at a world

price of $10, domestic production is 10 million T-shirts and domestic

consumption is 42 million T-shirts. The country’s government now decides to

impose a quota to limit T-shirt imports to 20 million per year. With the import

quota in place, the domestic price rises to $12 per T-shirt and domestic

production rises to 15 million T-shirts per year. The change in consumer

surplus due to the quota on T-shirts is $_______ million. (Denote negative answers

with a “-“).

1 points

QUESTION 14

A small country imports T-shirts. With free trade at a world

price of $10, domestic production is 10 million T-shirts and domestic

consumption is 42 million T-shirts. The country’s government now decides to

impose a quota to limit T-shirt imports to 20 million per year. With the import

quota in place, the domestic price rises to $12 per T-shirt and domestic

production rises to 15 million T-shirts per year. The consumption effect due to

the quota on T-shirts is $_______million. (Ignore negative sign).

1 points

QUESTION 15

A small country imports T-shirts. With free trade at a world

price of $10, domestic production is 10 million T-shirts and domestic

consumption is 42 million T-shirts. The country’s government now decides to

impose a quota to limit T-shirt imports to 20 million per year. With the import

quota in place, the domestic price rises to $12 per T-shirt and domestic

production rises to 15 million T-shirts per year. If the government auctions

the import licenses, the national well-being due to the quota on T-shirts will

be $______ million. (Denote negative answers with a “-“).