ECO 305 Week 3 Quiz

7/25/2019 ECO 305 Week 3 Quiz

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7/25/2019 ECO 305 Week 3 Quiz


5. Which !" the "!##!$in% $!u#d #ea&t #ike#y app#y t! the pr!duct #i"e

cyc#e the!ry)a. Ca#cu#at!r& and c!mputer&

b. C!a# and crude !i#c. !me m!(ie camera&d. O""ice machinery

6. C#a&&ica# trade the!ry empha&ized $hich !" the "!##!$in% a& anunder#yin% e'p#anati!n !" the ba&i& "!r trade)

a. r!ducti(itie& !" #ab!r input& b. *a&te& and pre"erence& am!n% nati!n&c. Chan%e& in techn!#!%ie& !(er timed. Quantitie& !" ec!n!mic re&!urce&

. C!ncernin% the in"#uence that tran&p!rtati!n c!&t& ha(e !n the #!cati!n!" indu&try $hich !" the "!##!$in% indu&trie& ha& %enera##y attempted t! #!cate

pr!ducti!n "aci#itie& c#!&e t! re&!urce &upp#ie&)a. ut!&

b. Stee#c. S!"t drink&d. 7a#uab#e e#ectr!nic& %!!d&

8. &&ume that C!untry in the ab&ence !" trade "ind& it&e#" re#ati(e#yabundant in #ab!r and re#ati(e#y &carce in #and. *he "act!r end!$ment the!ry rea&!n&

that $ith "ree trade the interna# di&tributi!n !" nati!na# inc!me in C!untry $i##chan%e in "a(!r !":a. +ab!r

b. +andc. 9!th #ab!r and #andd. either #ab!r n!r #and

;. When c!n&iderin% the e""ect& !" tran&p!rtati!n c!&t& the c!nc#u&i!n& !"

!ur trade m!de# mu&t be m!di"ied. *hi& i& becau&e tran&p!rtati!n c!&t& re&u#t in:a. +!$er trade (!#ume hi%her imp!rt price& &ma##er %ain& "r!m trade

7/25/2019 ECO 305 Week 3 Quiz


b. +!$er trade (!#ume #!$er imp!rt price& &ma##er %ain& "r!m tradec. i%her trade (!#ume hi%her imp!rt price& &ma##er %ain& "r!m traded. i%her trade (!#ume #!$er imp!rt price& %reater %ain& "r!m trade

10. ,!&t ec!n!mi&t& maintain that the ma<!r "act!r under#yin% $a%e&ta%nati!n in the =nited State& in the 1;;0& ha& been:a. >mp!rt c!mpetiti!n

b. *echn!#!%ica# chan%ec. ?i&in% rea# (a#ue !" the minimum $a%ed. >ncrea&in% uni!n member&hip

11. &&ume the c!&t !" tran&p!rtin% aut!& "r!m @apan t! Canada e'ceed&the pretrade price di""erence "!r aut!& bet$een @apan and Canada. *rade in aut!& i&:a. >mp!&&ib#e

b. !&&ib#ec. i%h#y pr!"itab#ed. ,!derate#y pr!"itab#e

1. E#i eck&cher and 9erti# Oh#in are a&&!ciated $ith the the!ry !"c!mparati(e ad(anta%e that &tre&&e& di""erence& in:a. >nc!me #e(e#& am!n% c!untrie&

b. *a&te& and pre"erence& am!n% c!untrie&c. ?e&!urce end!$ment& am!n% c!untrie&d. +ab!r pr!ducti(itie& am!n% c!untrie&

13. !n% A!n% i& re#ati(e#y abundant in #ab!r $hi#e Canada i& re#ati(e#yabundant in capita#. >n b!th c!untrie& the pr!ducti!n !" &hirt& i& re#ati(e#y m!re #ab!rinten&i(e than the pr!ducti!n !" c!mputer&. cc!rdin% t! the "act!r end!$mentthe!ry !n% A!n% $i## ha(e aBn:a. b&!#ute ad(anta%e in the pr!ducti!n !" &hirt& and c!mputer&

b. b&!#ute ad(anta%e in the pr!ducti!n !" c!mputer&c. C!mparati(e ad(anta%e in the pr!ducti!n !" &hirt&d. C!mparati(e ad(anta%e in the pr!ducti!n !" c!mputer&

7/25/2019 ECO 305 Week 3 Quiz


14. >" @apane&e $!rker& recei(e #!$er $a%e& in the pr!ducti!n !" aut!&than d! merican $!rker&:a. @apan $i## ha(e a c!mparati(e ad(anta%e in the pr!ducti!n !" aut!&

b. @apan $i## ha(e an ab&!#ute ad(anta%e in the pr!ducti!n !" aut!&c. r!ducti!n c!&t& $i## be #!$er in @apan than in the =.S.

d. r!ducti!n c!&t& c!u#d be #!$er in the =.S. i" merican #ab!r pr!ducti(ity i&hi%her than the @apane&e

15. Which trade the!ry &u%%e&t& that a ne$#y pr!duced %!!d !ncee'p!rted c!u#d u#timate#y end up bein% imp!rted a& the techn!#!%y i& tran&"erred t!#!$er- c!&t nati!n&)a. 2act!r end!$ment the!ry

b. r!duct #i"e cyc#e the!ry

c. O(er#appin% demand the!ryd. C!mparati(e ad(anta%e the!ry

16. "irm i& &aid t! en<!y ec!n!mie& !" &ca#e !(er the ran%e !" !utput "!r$hich the #!n%-run a(era%e c!&t i&:a. >ncrea&in%

b. C!n&tantc. ecrea&in%d. !ne !" the ab!(e

1. pr!duct $i## be internati!na##y traded a& #!n% a& the pretrade pricedi""erentia# bet$een the tradin% partner& i&:a. Dreater than the c!&t !" tran&p!rtin% it bet$een them

b. Eua# t! the c!&t !" tran&p!rtin% it bet$een themc. +e&& than the c!&t !" tran&p!rtin% it bet$een them

d. !ne !" the ab!(e

18. Which !" the "!##!$in% &u%%e&t& that by $idenin% the market& &izeinternati!na# trade can permit #!n%er pr!ducti!n run& "!r manu"acturer& $hich #ead&t! increa&in% e""iciency)a. Ec!n!mie& !" &ca#e

b. i&ec!n!mie& !" &ca#ec. C!mparati(e c!&t the!ry

d. b&!#ute c!&t the!ry

7/25/2019 ECO 305 Week 3 Quiz


1;. *he +e!ntie" parad!':a. Wa& app#ied t! the pr!duct #i"e cyc#e the!ry

b. Su%%e&ted that the =.S. e'p!rt& #ab!r-inten&i(e %!!d&c. 2!und that nati!na# inc!me di""erence& under#ie $!r#d trade pattern&d. >mp#ied that di&ec!n!mie& !" &ca#e !ccur at #!$ !utput #e(e#&

0. Which !" the "!##!$in% be&t app#ie& t! the the!ry !" !(er#appin%demand&)a. ,anu"actured %!!d&

b. Ser(ice&

c. rimary pr!duct&d. !ne !" the ab!(e

1. *he eck&cher-Oh#in the!ry e'p#ain& c!mparati(e ad(anta%e a& there&u#t !" di""erence& in c!untrie&:a. Ec!n!mie& !" #ar%e-&ca#e pr!ducti!n

b. ?e#ati(e abundance !" (ari!u& re&!urce&c. ?e#ati(e c!&t& !" #ab!r d. ?e&earch and de(e#!pment

. 9!ein% aircra"t c!mpany $a& ab#e t! c!(er it& pr!ducti!n c!&t& !" the"ir&t F<umb! <etF in the 1;0& becau&e 9!ein% c!u#d market it t! &e(era# "!rei%nair#ine& in additi!n t! d!me&tic air#ine&. *hi& i##u&trate&:a. !$ ec!n!mie& !" &ca#e make p!&&ib#e a #ar%er (ariety !" pr!duct& ininternati!na# trade

b. tran&"er !" $ea#th "r!m d!me&tic c!n&umer& t! d!me&tic pr!ducer& a& there&u#t !" tradec. !$ a natura# m!n!p!#y i& "!rced t! beha(e m!re c!mpetiti(e#y $ithinternati!na# traded. !$ a natura# m!n!p!#y i& "!rced t! beha(e #e&& c!mpetiti(e#y $ithinternati!na# trade

3. Which trade the!ry c!ntend& that a c!untry that initia##y de(e#!p& and

e'p!rt& a ne$ pr!duct may e(entua##y bec!me an imp!rter !" it and may n! #!n%ermanu"acture the pr!duct)

7/25/2019 ECO 305 Week 3 Quiz


a. *he!ry !" "act!r end!$ment& b. *he!ry !" !(er#appin% demand&c. Ec!n!mie& !" &ca#e the!ryd. r!duct #i"e cyc#e the!ry

4. *he the!ry !" !(er#appin% demand& predict& that trade in manu"actured%!!d& i& unimp!rtant "!r c!untrie& $ith (ery di""erent:a. *a&te& and pre"erence&

b. E'pectati!n& !" "uture intere&t rate #e(e#&c. er-capita inc!me #e(e#&d. +ab!r pr!ducti(itie&

5. *he trade m!de# !" the S$edi&h ec!n!mi&t& eck&cher and Oh#inmaintain& that:a. b&!#ute ad(anta%e determine& the di&tributi!n !" the %ain& "r!m trade

b. C!mparati(e ad(anta%e determine& the di&tributi!n !" the %ain& "r!m tradec. *he di(i&i!n !" #ab!r i& #imited by the &ize !" the $!r#d marketd. c!untry e'p!rt& %!!d& "!r $hich it& re&!urce end!$ment& are m!&t &uited

6. cc!rdin% t! the "act!r end!$ment m!de# c!untrie& hea(i#y end!$ed$ith #and $i##:a. e(!te e'ce&&i(e am!unt& !" re&!urce& t! a%ricu#tura# pr!ducti!n

b. e(!te in&u""icient am!unt& !" re&!urce& t! a%ricu#tura# pr!ducti!nc. E'p!rt pr!duct& that are #and-inten&i(ed. >mp!rt pr!duct& that are #and-inten&i(e

. 2!r the =nited State& empirica# &tudie& indicate that !(er the pa&t t$!decade& the c!&t !" internati!na# tran&p!rtati!n re#ati(e t! the (a#ue !" =.S. imp!rt&ha&:a. >ncrea&ed

b. ecrea&edc. !t chan%edd. !ne !" the ab!(e

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8. Sh!u#d internati!na# tran&p!rtati!n c!&t& decrea&e the e""ect !ninternati!na# trade $!u#d inc#ude:a. n increa&e in the (!#ume !" trade

b. &ma##er %ain "r!m tradec. dec#ine in the inc!me !" h!me pr!ducer&

d. decrea&e in the #e(e# !" &pecia#izati!n in pr!ducti!n.

;. *hat the di(i&i!n !" #ab!r i& #imited by the &ize !" the market be&tapp#ie& t! $hich e'p#anati!n !" trade)a. 2act!r end!$ment the!ry

b. r!duct #i"e cyc#e the!ryc. Ec!n!mie& !" &ca#e the!ryd. O(er#appin% demand the!ry

30. #ar%er (ariety !" pr!duct& re&u#t& "r!m internati!na# trade e&pecia##yi":a. >nternati!na# trade a""!rd& pr!ducer& m!n!p!#y p!$er

b. ati!na# %!(ernment& #e(y imp!rt tari""& and u!ta&c. r!ducin% %!!d& entai#& increa&in% c!&t&d. Ec!n!mie& !" &ca#e e'i&t "!r pr!ducer&

31. With ec!n!mie& !" &ca#e and decrea&in% unit c!&t& a c!untry ha& theincenti(e t!:a. Specia#ize c!mp#ete#y in the pr!duct !" it& c!mparati(e ad(anta%e

b. Specia#ize partia##y in the pr!duct !" it& c!mparati(e ad(anta%ec. Specia#ize c!mp#ete#y in the pr!duct !" it& c!mparati(e di&ad(anta%ed. Specia#ize partia##y in the pr!duct !" it& c!mparati(e di&ad(anta%e

3. r!p!nent& !" GGGG maintain that %!(ernment &h!u#d enact p!#icie&that enc!ura%e the de(e#!pment !" emer%in% F&unri&eF indu&trie&.a. r!duct #i"e cyc#e p!#icy

b. Static c!mparati(e ad(anta%e p!#icyc. >ntraindu&try trade p!#icyd. >ndu&tria# p!#icy

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33. +e%i&#ati!n reuirin% d!me&tic manu"acturer& t! in&ta## p!##uti!nabatement euipment tend& t! pr!m!te:a. i%her pr!ducti!n c!&t& and an increa&e in !utput

b. i%her pr!ducti!n c!&t& and a decrea&e in !utputc. +!$er pr!ducti!n c!&t& and an increa&e in !utput

d. +!$er pr!ducti!n c!&t& and a decrea&e in !utput

34. Strin%ent %!(ernmenta# re%u#ati!n& Be.%. air ua#ity &tandard&imp!&ed !n d!me&tic &tee# manu"acturer& tend t!:a. Enhance their c!mpetiti(ene&& in the internati!na# market

b. etract "r!m their c!mpetiti(ene&& in the internati!na# marketc. >ncrea&e the pr!"itabi#ity and pr!ducti(ity !" d!me&tic manu"acturer&d. ?educe the market &hare !" "!rei%n "irm& &e##in% &tee# in the d!me&tic market

35. m!n% the determinant& under#yin% a c!untry& internati!na#c!mpetiti(ene&& in bu&ine&& &er(ice& Be.%. c!n&tructi!n are:a. *he p!tentia# &ca#e ec!n!mie& a""!rded by a market& &ize

b. bundance !" euipment inc#udin% data pr!ce&&in% "aci#itie& and c!mputer&c. Ski##& and capabi#itie& !" emp#!yee& and their $a%e rate&d. ## !" the ab!(e

36. *he &imu#tane!u& imp!rt and e'p!rt !" c!mputer& by Dermany i& ane'amp#e !":a. >ntraindu&try trade

b. >nterindu&try tradec. er"ect c!mpetiti!nd. >mper"ect c!mpetiti!n

3. +inder& the!ry !" !(er#appin% demand pr!(ide& an e'p#anati!n !":a. r!duct #i"e cyc#e the!ry

b. 2act!r end!$ment m!de#c. Ec!n!mie& !" #ar%e-&ca#e pr!ducti!nd. >ntraindu&try trade

38. >ntraindu&try trade can be e'p#ained in part by:

7/25/2019 ECO 305 Week 3 Quiz


a. dam Smith& princip#e !" ab&!#ute ad(anta%e b. er"ect c!mpetiti!n in pr!duct market&c. i&ec!n!mie& !" #ar%e &ca#e pr!ducti!nd. *ran&p!rtati!n c!&t& bet$een and $ithin nati!n&

3;. *he +e!ntie" parad!' pr!(ided:a. Supp!rt "!r the princip#e !" ab&!#ute ad(anta%e

b. Supp!rt "!r the "act!r end!$ment m!de#c. E(idence a%ain&t the "act!r end!$ment m!de#d. E(idence a%ain&t the princip#e !" ab&!#ute ad(anta%e

40. Which trade the!ry &u%%e&t& that c!mparati(e ad(anta%e tend& t! &hi"t"r!m !ne nati!n t! an!ther a& a pr!duct mature&)a. >nterindu&try trade the!ry

b. >ntraindu&try trade the!ryc. r!duct #i"e cyc#e the!ryd. O(er#appin% demand the!ry

41. Which trade the!ry i& tantam!unt t! a &h!rt-run (er&i!n !" the "act!r price eua#izati!n the!ry)a. Speci"ic "act!r& the!ry

b. r!duct #i"e cyc#e the!ryc. Ec!n!mie& !" &ca#e the!ryd. O(er#appin% demand the!ry

4. cc!rdin% t! the &peci"ic "act!r& trade the!ry:a. O$ner& !" "act!r& &peci"ic t! e'p!rt indu&trie& &u""er "r!m trade $hi#e !$ner&!" "act!r& &peci"ic t! imp!rt-c!mpetin% indu&trie& %ain

b. O$ner& !" "act!r& &peci"ic t! e'p!rt indu&trie& %ain "r!m trade $hi#e !$ner&!" "act!r& &peci"ic t! imp!rt-c!mpetin% indu&trie& &u""er c. 9!th !$ner& !" "act!r& &peci"ic t! e'p!rt indu&trie& and !$ner& !" "act!r&&peci"ic t! imp!rt-c!mpetin% indu&trie& %ain "r!m traded. 9!th !$ner& !" "act!r& &peci"ic t! e'p!rt indu&trie& and !$ner& !" "act!r&&peci"ic t! imp!rt-c!mpetin% indu&trie& &u""er "r!m trade

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43. Which nati!n ha& &!metime& been characterized a& bein% a Fp!##uti!nha(enF due t! it& #enient en(ir!nmenta# &tandard& that enc!ura%e the pr!ducti!n !"

p!##uti!n-inten&i(e %!!d&)a. @apan

b. Canada

c. Dermanyd. ,e'ic!

44. 9!ein% >nc. ha& criticized *he irbu& C!mpany& c!mpetiti(ene&& !nthe %r!und& that irbu& bene"it& "r!m:a. >mp!rt tari""& pr!tectin% irbu& in the Eur!pean market

b. >mp!rt u!ta& pr!tectin% irbu& in the Eur!pean marketc. +enient en(ir!nmenta# &tandard& !" Eur!pean %!(ernment&

d. r!ducti!n &ub&idie& &upp#ied by Eur!pean %!(ernment&

45. *! <u&ti"y the &ub&idie& it ha& recei(ed "r!m Eur!pean %!(ernment&*he irbu& C!mpany ha& u&ed a## !" the "!##!$in% ar%ument& e'cept:a. >t& &ub&idie& ha(e pre(ented =.S. aircra"t "irm& "r!m h!#din% a $!r#d-$idem!n!p!#y

b. =.S. aircra"t "irm& ha(e bene"ited "r!m mi#itary-&p!n&!red pr!%ram& !" the=.S. %!(ernmentc. irbu& &ub&idie& $ere t!ta##y repaid a& the "irm rea#ized pr!"it& !n it& aircra"t&a#e&d. With!ut &ub&idie& t! irbu& Eur!pe $!u#d be dependent !n the =nited State&a& a &upp#ier !" aircra"t

46. E'pandin% trade !r techn!#!%ica# impr!(ement&a. >ncrea&e& the demand "!r &ki##ed $!rker& in the =.S.

b. ecrea&e& the demand "!r un&ki##ed $!rker& in the =.S.c. >ncrea&e& the demand "!r un&ki##ed $!rker& in the =.S.d. 9!th a and b.

4. Ec!n!mi&t& a%ree that $a%e& !" un&ki##ed $!rker& are bein% he#d d!$n bya. >nternati!na# trade

b. *echn!#!%y impr!(ement&

c. +ack !" educati!nd. c!mbinati!n !" a b and c

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48. *he "act!r end!$ment the!ry &tate& that c!mparati(e ad(anta%e i&

e'p#aineda. E'c#u&i(e#y by di""erence& in re#ati(e &upp#y c!nditi!n&

b. E'c#u&i(e#y by di""erence& in re#ati(e nati!na# demand c!nditi!n&c. 9!th &upp#y and demand c!nditi!n&d. !ne !" the ab!(e

4;. *he "act!r end!$ment the!ry a&&ume&a. Same ta&te& and pre"erence&

b. 2act!r input& !" uni"!rm ua#ityc. Same techn!#!%yd. ## !" the ab!(e

50. >n e'p#ainin% internati!na# trade the pr!duct #i"e cyc#e the!ry "!cu&e&!na. *a&te& and pre"erence&

b. *he r!#e !" techn!#!%ica# inn!(ati!nc. er-capita inc!me #e(e#& !" nati!n&d. 9!th b and c

()*E+ALSE

1. cc!rdin% t! ?icardian the!ry c!mparati(e ad(anta%e depend& !nre#ati(e di""erence& in #ab!r pr!ducti(ity.

. *he eck&cher-Oh#in the!ry a&&ert& that re#ati(e di""erence& in #ab!r pr!ducti(ity under#ie c!mparati(e ad(anta%e.

3. *he "act!r-end!$ment the!ry hi%h#i%ht& the re#ati(e abundance !" anati!n& re&!urce& a& the key "act!r under#yin% c!mparati(e ad(anta%e.

7/25/2019 ECO 305 Week 3 Quiz


4. cc!rdin% t! the "act!r-end!$ment the!ry a nati!n $i## e'p!rt that%!!d "!r $hich a #ar%e am!unt !" the re#ati(e#y &carce re&!urce i& u&ed.

5. cc!rdin% t! the "act!r-end!$ment the!ry a nati!n $i## imp!rt that%!!d "!r $hich a #ar%e am!unt !" the re#ati(e#y abundant re&!urce i& u&ed.

6. *he eck&cher-Oh#in the!ry &u%%e&t& that #and-abundant nati!n& $i##e'p!rt #and-inten&i(e %!!d& $hi#e #ab!r-abundant nati!n& $i## e'p!rt #ab!r-inten&i(e%!!d&.

. *he eck&cher-Oh#in the!ry c!ntend& that !(er a peri!d !" year& ac!untry that initia##y i& an e'p!rter !" a pr!duct $i## bec!me an imp!rter !" that

pr!duct.

8. *he eck&cher-Oh#in the!ry empha&ize& the r!#e that demand p#ay& inthe creati!n !" c!mparati(e ad(anta%e.

;. *he "act!r-end!$ment the!ry a&&ert& that $ith &pecia#izati!n and tradethere tend& t! !ccur an eua#izati!n in the re#ati(e re&!urce price& !" tradin% partner&.

10. cc!rdin% t! the "act!r-end!$ment the!ry internati!na# &pecia#izati!nand trade cau&e a nati!n& cheap re&!urce t! bec!me cheaper and a nati!n& e'pen&i(ere&!urce t! bec!me m!re e'pen&i(e.

11. 2ear& ab!ut the d!$n$ard pre&&ure that cheap "!rei%n $!rker& p#ace!n =.S. $a%e& ha(e #ed =.S. #ab!r uni!n& t! #!bby "!r imp!rt re&tricti!n& &uch a&tari""& and u!ta&.

1. cc!rdin% t! the "act!r-price-eua#izati!n the!ry internati!na# tradere&u#t& in the re#ati(e di""erence& in re&!urce price& bet$een nati!n& bein% e#iminated.

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13. Empirica# te&tin% by Wa&&i#y +e!ntie" %a(e &upp!rt t! the eck&cher-Oh#in the!ry !" trade.

14. *he +e!ntie" arad!' $a& the "ir&t ma<!r cha##en%e t! the pr!duct-#i"e-cyc#e the!ry !" trade.

15. *he +e!ntie" arad!' &u%%e&ted that in c!ntra&t t! the predicti!n& !"the "act!r-end!$ment the!ry =.S. e'p!rt& $ere #e&& capita#-inten&i(e than =.S.imp!rt-c!mpetin% %!!d&.

16. *he &peci"ic-"act!r& the!ry ana#yze& the inc!me di&tributi!n e""ect& !"trade in the &h!rt run $hen re&!urce& are imm!bi#e am!n% indu&trie&.

1. O$ner& !" re&!urce& &peci"ic t! e'p!rt indu&trie& tend t! #!&e "r!minternati!na# trade $hi#e !$ner& !" "act!r& &peci"ic t! imp!rt-c!mpetin% indu&trie&tend t! %ain.

18. *he "act!r-price-eua#izati!n the!ry i& a &h!rt-run (er&i!n !" the&peci"ic-"act!r& the!ry.

1;. With ec!n!mie& !" &ca#e &pecia#izati!n in a "e$ pr!duct& a##!$& amanu"acturer t! bene"it "r!m #!n%er pr!ducti!n run& $hich #ead t! decrea&in% a(era%ec!&t.

0. With decrea&in% c!&t& a c!untry ha& an incenti(e t! partia##y &pecia#izein the pr!duct !" it& c!mparati(e ad(anta%e.

1. 9y $idenin% the &ize !" the d!me&tic market internati!na# trade permit& c!mpanie& t! take ad(anta%e !" #!n%er pr!ducti!n run& and increa&in%e""iciencie& &uch a& ma&& pr!ducti!n.

7/25/2019 ECO 305 Week 3 Quiz


. *he the!ry !" !(er#appin% demand& app#ie& be&t t! trade inmanu"actured %!!d&.

3. ecrea&in% c!&t c!nditi!n& #ead t! c!mp#ete &pecia#izati!n in the pr!ducti!n !" the c!mm!dity !" c!mparati(e ad(anta%e.

4. cc!rdin% t! Sta""an +inder the "act!r end!$ment the!ry i& u&e"u# ine'p#ainin% trade pattern& in manu"actured %!!d& but n!t primary pr!duct&.

5. *he the!ry !" !(er#appin% demand& a&&ert& that trade in manu"actured

%!!d& i& &tr!n%er the #e&& &imi#ar the demand &tructure& !" t$! c!untrie&.

6. *he the!ry !" !(er#appin% demand& c!ntend& that internati!na# trade inmanu"actured pr!duct& i& &tr!n%e&t am!n% nati!n& $ith &imi#ar inc!me #e(e#&.

. cc!rdin% t! the the!ry !" !(er#appin% demand& trade inmanu"actured %!!d& $!u#d be %reater am!n% t$! $ea#thy c!untrie& than am!n% a$ea#thy c!untry and a p!!r c!untry.

8. ?ecent &tudie& !" =.S. re&!urce end!$ment& indicate that the =nitedState& i& m!&t abundant in un&ki##ed #ab!r "!##!$ed by &emi-&ki##ed #ab!r and &ki##ed#ab!r.

;. >ntraindu&try trade $!u#d !ccur i" c!mputer& manu"actured in the=nited State& by >9, are e'p!rted t! @apan $hi#e the =nited State& imp!rt&c!mputer& manu"actured by itachi !" @apan.

30. 9ecau&e &ea&!n& in the S!uthern emi&phere are !pp!&ite th!&e in the !rthern emi&phere !ne $!u#d e'pect intraindu&try trade t! !ccur in a%ricu#tura# pr!duct&.

7/25/2019 ECO 305 Week 3 Quiz


31. >ntraindu&try trade can be e'p#ained by pr!duct di""erentiati!nec!n!mie& !" &ca#e &ea&!n& !" the year and tran&p!rtati!n c!&t&.

3. cc!rdin% t! the the!ry !" intraindu&try trade many manu"actured%!!d& under%! a trade cyc#e in $hich the h!me c!untry initia##y i& an e'p!rter ande(entua##y bec!me& an imp!rter !" a pr!duct.

33. *he pr!duct-#i"e-cyc#e the!ry app#ie& be&t t! trade in primary pr!duct&in the &h!rt run.

34. cc!rdin% t! the pr!duct-#i"e-cyc#e the!ry the "ir&t &ta%e !" a pr!duct&trade cyc#e i& $hen it i& intr!duced t! the h!me market.

35. cc!rdin% t! the pr!duct #i"e cyc#e the!ry the #a&t &ta%e !" a pr!duct&trade cyc#e i& $hen it bec!me& an imp!rt-c!mpetin% %!!d.

36. ?icard!& the!ry !" c!mparati(e ad(anta%e i& a &tatic the!ry that d!e&n!t c!n&ider chan%e& in internati!na# c!mpetiti(ene&& !(er the #!n% run.

3. ynamic c!mparati(e ad(anta%e re"er& t! the creati!n !" c!mparati(ead(anta%e thr!u%h the m!bi#izati!n !" &ki##ed #ab!r techn!#!%y and capita#.

38. >ndu&tria# p!#icy &eek& t! direct re&!urce& t! dec#inin% indu&trie& in

$hich pr!ducti(ity i& #!$ #inka%e& t! the re&t !" the ec!n!my are $eak and "uturec!mpetiti(ene&& i& rem!te.

3;. Eur!pe& <umb!-<et manu"acturer irbu& ha& <u&ti"ied recei(in%%!(ernmenta# &ub&idie& !n the %r!und& that the &ub&idie& pre(ent the =nited State&"r!m bec!min% a m!n!p!#y in the <umb!-<et market.

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7/25/2019 ECO 305 Week 3 Quiz


4;. pr!duct $i## be traded !n#y i" the c!&t !" tran&p!rtin% it bet$eennati!n& i& #e&& than the pretrade di""erence bet$een their re#ati(e pr!duct price&.

50. Denera##y &peakin% tran&p!rtati!n c!&t& are m!re imp!rtant than pr!ducti!n c!&t& a& a &!urce !" c!mparati(e ad(anta%e.

51. *he pr!duct-#i"e-cyc#e m!de# c!ntend& that $hen a ne$ pr!duct i&intr!duced t! the h!me market it %enera##y reuire& #!$-&ki##ed #ab!r t! pr!duce it.

5. cc!rdin% t! the pr!duct #i"e cyc#e m!de# c!mparati(e ad(anta%e&hi"t& "r!m cheap-#ab!r c!untrie& t! hi%h-techn!#!%y c!untrie& a"ter a manu"actured%!!d bec!me& &tandardized.

S'O)( A/SWE)

1. !e& "act!r price eua#izati!n !ccur in the rea# $!r#d)

. What i& the "!cu& !" the pr!duct #i"e cyc#e the!ry and $here i& itapp#icab#e)

ESSA1

1. E'p#ain h!$ immi%rati!n and trade may $!r&en $a%e ineua#ity and

h!$ c!##e%e educati!n may miti%ate a%ain&t that.

. !$ d!e& Sta""an +inder e'p#ain $!r#d trade pattern&)

C'AP(E) &2(A),++S

#*L(,PLE C'O,CE

7/25/2019 ECO 305 Week 3 Quiz


1. *he imp!&iti!n !" tari""& !n imp!rt& re&u#t& in dead$ei%ht $e#"are#!&&e& "!r the h!me ec!n!my. *he&e #!&&e& c!n&i&t !" the:a. r!tecti(e e""ect p#u& c!n&umpti!n e""ect

b. ?edi&tributi!n e""ect p#u& re(enue e""ectc. ?e(enue e""ect p#u& pr!tecti(e e""ect

d. C!n&umpti!n e""ect p#u& redi&tributi!n e""ect

. Supp!&e that the =nited State& e#iminate& it& tari"" !n &tee# imp!rt& permittin% "!rei%n-pr!duced &tee# t! enter the =.S. market. Stee# price& t! =.S.c!n&umer& $!u#d be e'pected t!:a. >ncrea&e and the "!rei%n demand "!r =.S. e'p!rt& $!u#d increa&e

b. ecrea&e and the "!rei%n demand "!r =.S. e'p!rt& $!u#d increa&ec. >ncrea&e and the "!rei%n demand "!r =.S. e'p!rt& $!u#d decrea&e

d. ecrea&e and the "!rei%n demand "!r =.S. e'p!rt& $!u#d decrea&e

3. H100 &peci"ic tari"" pr!(ide& h!me pr!ducer& m!re pr!tecti!n "r!m"!rei%n c!mpetiti!n $hen:a. *he h!me market buy& cheaper pr!duct& rather than e'pen&i(e pr!duct&

b. >t i& app#ied t! a c!mm!dity $ith many %rade (ariati!n&c. *he h!me demand "!r a %!!d i& e#a&tic $ith re&pect t! price chan%e&d. >t i& #e(ied !n manu"actured %!!d& rather than primary pr!duct&

4. #!$er tari"" !n imp!rted a#uminum $!u#d m!&t #ike#y bene"it:a. 2!rei%n pr!ducer& at the e'pen&e !" d!me&tic c!n&umer&

b. !me&tic manu"acturer& !" a#uminumc. !me&tic c!n&umer& !" a#uminumd. W!rker& in the d!me&tic a#uminum indu&try

5. When a %!(ernment a##!$& ra$ materia#& and !ther intermediate pr!duct& t! enter a c!untry duty "ree it& tari"" p!#icy %enera##y re&u#t& in a:a. E""ecti(e tari"" rate #e&& than the n!mina# tari"" rate

b. !mina# tari"" rate #e&& than the e""ecti(e tari"" ratec. ?i&e in b!th n!mina# and e""ecti(e tari"" rate&d. 2a## in b!th n!mina# and e""ecti(e tari"" rate&

7/25/2019 ECO 305 Week 3 Quiz


6. O" the many ar%ument& in "a(!r !" tari""& the !ne that ha& en<!yed them!&t &i%ni"icant ec!n!mic <u&ti"icati!n ha& been the:a. >n"ant indu&try ar%ument

b. Cheap "!rei%n #ab!r ar%umentc. 9a#ance !" payment& ar%ument

d. !me&tic #i(in% &tandard ar%ument

. *he redi&tributi!n e""ect !" an imp!rt tari"" i& the tran&"er !" inc!me"r!m the d!me&tic:a. r!ducer& t! d!me&tic buyer& !" the %!!d

b. 9uyer& t! d!me&tic pr!ducer& !" the %!!dc. 9uyer& t! the d!me&tic %!(ernmentd. D!(ernment t! the d!me&tic buyer&

8. Which !" the "!##!$in% i& true c!ncernin% a &peci"ic tari"")a. >t i& e'c#u&i(e#y u&ed by the =.S. in it& tari"" &chedu#e&.

b. >t re"er& t! a "#at percenta%e duty app#ied t! a %!!d& market (a#ue.c. >t i& p#a%ued by pr!b#em& a&&!ciated $ith a&&e&&in% imp!rt pr!duct (a#ue&.d. >t a""!rd& #e&& pr!tecti!n t! h!me pr!ducer& durin% era& !" ri&in% price&.

;. *he principa# bene"it !" tari"" pr!tecti!n %!e& t!:a. !me&tic c!n&umer& !" the %!!d pr!duced

b. !me&tic pr!ducer& !" the %!!d pr!ducedc. 2!rei%n pr!ducer& !" the %!!d pr!ducedd. 2!rei%n c!n&umer& !" the %!!d pr!duced

10. Which !" the "!##!$in% p!#icie& permit& a &peci"ied uantity !" %!!d&t! be imp!rted at !ne tari"" rate and app#ie& a hi%her tari"" rate t! imp!rt& ab!(e thi&uantity)a. *ari"" u!ta

b. >mp!rt tari"" c. Speci"ic tari"" d. d (a#!rem tari""

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11. &&ume the =nited State& ad!pt& a tari"" u!ta !n &tee# in $hich theu!ta i& &et at mi##i!n t!n& the $ithin-u!ta tari"" rate eua#& 5 percent and the!(er-u!ta tari"" rate eua#& 10 percent. Supp!&e the =.S. imp!rt& 1 mi##i!n t!n& !"&tee#. *he re&u#tin% re(enue e""ect !" the tari"" u!ta $!u#d accrue t!:a. *he =.S. %!(ernment !n#y

b. =.S. imp!rtin% c!mpanie& !n#yc. 2!rei%n e'p!rtin% c!mpanie& !n#yd. *he =.S. %!(ernment and either =.S. imp!rter& !r "!rei%n e'p!rter&

1. When the pr!ducti!n !" a c!mm!dity d!e& n!t uti#ize imp!rted input&the e""ecti(e tari"" rate !n the c!mm!dity:a. E'ceed& the n!mina# tari"" rate !n the c!mm!dity

b. Eua#& the n!mina# tari"" rate !n the c!mm!dity

c. >& #e&& than the n!mina# tari"" rate !n the c!mm!dityd. !ne !" the ab!(e

13. e(e#!pin% nati!n& !"ten maintain that indu&tria# c!untrie& permit ra$materia#& t! be imp!rted at (ery #!$ tari"" rate& $hi#e maintainin% hi%h tari"" rate& !nmanu"actured imp!rt&. Which !" the "!##!$in% re"er& t! the ab!(e &tatement)a. *ari""-u!ta e""ect

b. !mina# tari"" e""ectc. *ari"" e&ca#ati!n e""ectd. r!tecti(e tari"" e""ect

14. Sh!u#d the h!me c!untry be F#ar%eF re#ati(e t! the $!r#d it&imp!&iti!n !" a tari"" !n imp!rt& $!u#d #ead t! an increa&e in d!me&tic $e#"are i" theterm&-!"-trade e""ect e'ceed& the &um !" the:a. ?e(enue e""ect p#u& redi&tributi!n e""ect

b. r!tecti(e e""ect p#u& re(enue e""ectc. C!n&umpti!n e""ect p#u& redi&tributi!n e""ectd. r!tecti(e e""ect p#u& c!n&umpti!n e""ect

15. Sh!u#d Canada imp!&e a tari"" !n imp!rt& !ne $!u#d e'pect Canada&:a. *erm& !" trade t! impr!(e and (!#ume !" trade t! decrea&e

b. *erm& !" trade t! $!r&en and (!#ume !" trade t! decrea&ec. *erm& !" trade t! impr!(e and (!#ume !" trade t! increa&e

d. *erm& !" trade t! $!r&en and (!#ume !" trade t! increa&e

7/25/2019 ECO 305 Week 3 Quiz


16. be%%ar-thy-nei%hb!r p!#icy i& the imp!&iti!n !":a. 2ree trade t! increa&e d!me&tic pr!ducti(ity

b. *rade barrier& t! increa&e d!me&tic demand and emp#!ymentc. >mp!rt tari""& t! curb d!me&tic in"#ati!nd. ?e(enue tari""& t! make pr!duct& cheaper "!r d!me&tic c!n&umer&

1. pr!b#em enc!untered $hen imp#ementin% an Fin"ant indu&tryF tari""i& that:a. !me&tic c!n&umer& $i## purcha&e the "!rei%n %!!d re%ard#e&& !" the tari""

b. !#itica# pre&&ure may pre(ent the tari""& rem!(a# $hen the indu&try mature&

c. ,!&t indu&trie& reuire tari"" pr!tecti!n $hen they are matured. +ab!r uni!n& $i## capture the pr!tecti(e e""ect in hi%her $a%e&

18. *ari""& are n!t de"ended !n the %r!und that they:a. >mpr!(e the term& !" trade !" "!rei%n nati!n&

b. r!tect <!b& and reduce unemp#!ymentc. r!m!te %r!$th and de(e#!pment !" y!un% indu&trie&d. re(ent !(erdependence !" a c!untry !n !n#y a "e$ indu&trie&

1;. *he dead$ei%ht #!&& !" a tari"":a. >& a &!cia# #!&& &ince it pr!m!te& ine""icient pr!ducti!n

b. >& a &!cia# #!&& &ince it reduce& the re(enue "!r the %!(ernmentc. >& n!t a &!cia# #!&& becau&e &!ciety a& a $h!#e d!e&nt pay "!r the #!&&d. >& n!t a &!cia# #!&& &ince !n#y bu&ine&& "irm& &u""er re(enue #!&&e&

0. Which !" the "!##!$in% i& a "i'ed percenta%e !" the (a#ue !" animp!rted pr!duct a& it enter& the c!untry)a. Speci"ic tari""

b. d (a#!rem tari"" c. !mina# tari"" d. E""ecti(e tari""

7/25/2019 ECO 305 Week 3 Quiz


1. ta' !" 0 cent& per unit !" imp!rted chee&e $!u#d be an e'amp#e !":a. C!mp!und tari""

b. E""ecti(e tari"" c. d (a#!rem tari"" d. Speci"ic tari""

. ta' !" 15 percent per imp!rted item $!u#d be an e'amp#e !":a. d (a#!rem tari""

b. Speci"ic tari"" c. E""ecti(e tari"" d. C!mp!und tari""

3. Which type !" tari"" i& n!t u&ed by the merican %!(ernment)a. >mp!rt tari""

b. E'p!rt tari"" c. Speci"ic tari"" d. d (a#!rem tari""

4. Which trade p!#icy re&u#t& in the %!(ernment #e(yin% a Ft$!-tierF tari"" !n imp!rted %!!d&)a. *ari"" u!ta

b. !mina# tari"" c. E""ecti(e tari"" d. ?e(enue tari""

5. >" $e c!n&ider the impact !n b!th c!n&umer& and pr!ducer& then pr!tecti!n !" the &tee# indu&try i&:a. >n the intere&t !" the =nited State& a& a $h!#e but n!t in the intere&t !" the&tate !" enn&y#(ania

b. >n the intere&t !" the =nited State& a& a $h!#e and in the intere&t !" the &tate !"enn&y#(aniac. !t in the intere&t !" the =nited State& a& a $h!#e but it mi%ht be in theintere&t !" the &tate !" enn&y#(aniad. !t in the intere&t !" the =nited State& a& a $h!#e n!r in the intere&t !" the&tate !" enn&y#(ania

7/25/2019 ECO 305 Week 3 Quiz


6. >" > purcha&e a &tere! "r!m S!uth A!rea > !btain the &tere! and S!uthA!rea !btain& the d!##ar&. 9ut i" > purcha&e a &tere! pr!duced in the =nited State& >!btain the &tere! and the d!##ar& remain in merica. *hi& #ine !" rea&!nin% i&:a. 7a#id "!r &tere!& but n!t "!r m!&t pr!duct& imp!rted by the =nited State&

b. 7a#id "!r m!&t pr!duct& imp!rted by the =nited State& but n!t "!r &tere!&c. ecepti(e &ince A!rean& e(entua##y &pend the d!##ar& !n =.S. %!!d&d. ecepti(e &ince the d!##ar& &pent !n a &tere! bui#t in the =nited State&e(entua##y $ind up !(er&ea&

. *he m!&t (!ca# p!#itica# pre&&ure "!r tari""& i& %enera##y made by:a. C!n&umer& #!bbyin% "!r e'p!rt tari""&

b. C!n&umer& #!bbyin% "!r imp!rt tari""&

c. r!ducer& #!bbyin% "!r e'p!rt tari""&d. r!ducer& #!bbyin% "!r imp!rt tari""&

8. >" $e c!n&ider the intere&t& !" b!th c!n&umer& and pr!ducer& then a p!#icy !" tari"" reducti!n in the =.S. aut! indu&try i&:a. >n the intere&t !" the =nited State& a& a $h!#e but n!t in the intere&t !" aut!-

pr!ducin% &tate& b. >n the intere&t !" the =nited State& a& a $h!#e and in the intere&t !" aut!- pr!ducin% &tate&c. !t in the intere&t !" the =nited State& a& a $h!#e n!r in the intere&t !" aut!-

pr!ducin% &tate&d. !t in the intere&t !" the =nited State& a& a $h!#e but i& in the intere&t !" aut!-

pr!ducin% &tate&

;. 2ree trader& p!int !ut that:

a. *here i& u&ua##y an e""iciency %ain "r!m ha(in% tari""& b. *here i& u&ua##y an e""iciency #!&& "r!m ha(in% tari""&c. r!ducer& #!&e "r!m tari""& at the e'pen&e !" c!n&umer&d. r!ducer& #!&e "r!m tari""& at the e'pen&e !" the %!(ernment

30. decrea&e in the imp!rt tari"" $i## re&u#t in:a. n increa&e in imp!rt& but a decrea&e in d!me&tic pr!ducti!n

b. decrea&e in imp!rt& but an increa&e in d!me&tic pr!ducti!n

c. n increa&e in price but a decrea&e in uantity purcha&edd. decrea&e in price and a decrea&e in uantity purcha&ed

7/25/2019 ECO 305 Week 3 Quiz


2i%ure 4.1 i##u&trate& the demand and &upp#y &chedu#e& "!r p!cket ca#cu#at!r& in

,e'ic! a F&ma##F nati!n that i& unab#e t! a""ect the $!r#d price.

2i%ure 4.1. >mp!rt *ari"" +e(ied by a FSma##F C!untry

31. C!n&ider 2i%ure 4.1. >n the ab&ence !" trade ,e'ic! pr!duce& andc!n&ume&:a. 10 ca#cu#at!r&

b. 40 ca#cu#at!r&c. 60 ca#cu#at!r&

d. 80 ca#cu#at!r&

3. C!n&ider 2i%ure 4.1. >n the ab&ence !" trade ,e'ic!& pr!ducer &urp#u&and c!n&umer &urp#u& re&pecti(e#y eua#:a. H10 H40

b. H180 H180c. H180 H30d. H40 H40

33. C!n&ider 2i%ure 4.1. With "ree trade ,e'ic! imp!rt&:a. 40 ca#cu#at!r&

b. 60 ca#cu#at!r&c. 80 ca#cu#at!r&d. 100 ca#cu#at!r&

34. C!n&ider 2i%ure 4.1. With "ree trade the t!ta# (a#ue !" ,e'ic!&imp!rt& eua#:a. H0

b. H60c. H;0d. H300

7/25/2019 ECO 305 Week 3 Quiz


35. C!n&ider 2i%ure 4.1. With "ree trade ,e'ic!& pr!ducer &urp#u& andc!n&umer &urp#u& re&pecti(e#y eua#:a. H5 H605

b. H5 H380c. H45 H50

d. H85 H1;5

36. C!n&ider 2i%ure 4.1. With a per-unit tari"" !" H3 the uantity !"imp!rt& decrea&e& t!:a. 0 ca#cu#at!r&

b. 40 ca#cu#at!r&c. 50 ca#cu#at!r&d. 0 ca#cu#at!r&

3. cc!rdin% t! 2i%ure 4.1 the #!&& in ,e'ican c!n&umer &urp#u& due t!the tari"" eua#&:a. H5

b. H65c. H85d. H35

38. cc!rdin% t! 2i%ure 4.1 the tari"" re&u#t& in the ,e'ican %!(ernmentc!##ectin%:a. H100

b. H10c. H140d. H160

3;. cc!rdin% t! 2i%ure 4.1 ,e'ican manu"acturer& %ain GGGG becau&e !"the tari"".a. H5

b. H85c. H;5d. H105

7/25/2019 ECO 305 Week 3 Quiz


40. cc!rdin% t! 2i%ure 4.1 the dead$ei%ht c!&t !" the tari"" t!ta#&:a. H60

b. H0c. H80d. H;0

41. C!n&ider 2i%ure 4.1. *he tari"" $!u#d be pr!hibiti(e Bi.e. e#iminateimp!rt& i" it eua#ed:a. H

b. H3c. H4d. H5

&&ume the =nited State& i& a #ar%e c!n&umer !" &tee# that i& ab#e t! in"#uence the$!r#d price. >t& demand and &upp#y &chedu#e& are re&pecti(e#y den!ted by =.S. andS=.S. in 2i%ure 4.. *he !(era## B=nited State& p#u& $!r#d &upp#y &chedu#e !" &tee# i&den!ted by S=.S.IW.

2i%ure 4.. >mp!rt *ari"" +e(ied by a F+ar%eF C!untry

4. C!n&ider 2i%ure 4.. With "ree trade the =nited State& achie(e& marketeui#ibrium at a price !" HGGGG. t thi& price GGGG t!n& !" &tee# are pr!duced by =.S."irm& GGGG t!n& are b!u%ht by =.S. buyer& and GGGG t!n& are imp!rted.a. H450 5 t!n& 60 t!n& 55 t!n&

b. H45 10 t!n& 50 t!n& 40 t!n&c. H55 5 t!n& 60 t!n& 55 t!n&d. H630 30 t!n& 30 t!n& 0 t!n&

43. C!n&ider 2i%ure 4.. Supp!&e the =nited State& imp!&e& a tari"" !"H100 !n each t!n !" &tee# imp!rted. With the tari"" the price !" &tee# ri&e& t! HGGGGand imp!rt& "a## t! GGGG t!n&.a. H550 0 t!n&

b. H550 30 t!n&c. H55 0 t!n&d. H55 30 t!n&

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44. C!n&ider 2i%ure 4.. O" the H100 tari"" HGGGG i& pa&&ed !n t! the =.S.c!n&umer (ia a hi%her price $hi#e HGGGG i& b!rne by the "!rei%n e'p!rterJ the =.S.term& !" trade:a. H5 H5 impr!(e

b. H5 H5 $!r&en

c. H5 H5 impr!(ed. H5 H5 $!r&en

45. ?e"errin% t! 2i%ure 4. the tari""& dead$ei%ht $e#"are #!&& t! the=nited State& t!ta#&:a. H450

b. H550c. H650

d. H50

46. cc!rdin% t! 2i%ure 4. the tari""& term&-!"-trade e""ect eua#&:a. H300

b. H400c. H500d. H600

4. cc!rdin% t! 2i%ure 4. the tari"" #ead& t! the !(era## $e#"are !" the=nited State&:a. ?i&in% by H50

b. ?i&in% by H500c. 2a##in% by H50d. 2a##in% by H500

48. Supp!&e that the pr!ducti!n !" H500000 $!rth !" &tee# in the =nitedState& reuire& H100000 $!rth !" ir!n !re. *he =.S. n!mina# tari"" rate& "!r imp!rtin%the&e %!!d& are 15 percent "!r &tee# and 5 percent "!r ir!n !re. Di(en thi& in"!rmati!nthe e""ecti(e rate !" pr!tecti!n "!r the =.S. &tee# indu&try i& appr!'imate#y:a. 6 percent

b. 1 percentc. 18 percentd. 4 percent

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4;. Supp!&e that the pr!ducti!n !" a H30000 aut!m!bi#e in Canadareuire& H10000 $!rth !" &tee#. *he Canadian n!mina# tari"" rate& "!r imp!rtin% the&e%!!d& are 5 percent "!r aut!m!bi#e& and 10 percent "!r &tee#. Di(en thi& in"!rmati!n

the e""ecti(e rate !" pr!tecti!n "!r the Canadian aut!m!bi#e indu&try i& appr!'imate#y:a. 15 percent


E'hibit 4.1

&&ume that the =nited State& imp!rt& aut!m!bi#e& "r!m S!uth A!rea at a price !"H0000 per (ehic#e and that the&e (ehic#e& are &ub<ect t! an imp!rt tari"" !" 0

percent. #&! a&&ume that =.S. c!mp!nent& are u&ed in the (ehic#e& a&&emb#ed byS!uth A!rea and that the&e c!mp!nent& ha(e a (a#ue !" H10000.

50. ?e"er t! E'hibit 4.1. >n the ab&ence !" the O""&h!re &&emb#yr!(i&i!n !" =.S. tari"" p!#icy the price !" an imp!rted (ehic#e t! the =.S. c!n&umera"ter the tari"" ha& been #e(ied i&:a. H000

b. H3000c. H4000d. H5000

51. ?e"er t! E'hibit 4.1. =nder the O""&h!re &&emb#y r!(i&i!n !" =.S.tari"" p!#icy the price !" an imp!rted (ehic#e t! the =.S. c!n&umer a"ter the tari"" ha&

been #e(ied i&:a. H000

b. H3000

c. H4000d. H5000

5. Supp!&e an imp!rter !" &tee# i& reuired t! pay a tari"" !" H0 per t!n p#u& 5 percent !" the (a#ue !" &tee#. *hi& i& an e'amp#e !" a Ban:a. Speci"ic tari""

b. d (a#!rem tari"" c. C!mp!und tari""

d. *ari"" u!ta

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53. c!mp!und tari"" i& a c!mbinati!n !" a Ban:a. *ari"" u!ta and a t$!-tier tari""

b. ?e(enue tari"" and a pr!tecti(e tari"" c. >mp!rt tari"" and an e'p!rt tari"" d. Speci"ic tari"" and an ad (a#!rem tari""

*ab#e 4.1. r!ducti!n C!&t& and rice& !" >mp!rted and !me&tic 7C?&

>mp!rted 7C?& !me&tic 7C?&C!mp!nent part& H150 >mp!rted c!mp!nent part& H150

&&emb#y c!&t/pr!"it 50 &&emb#y c!&t 50 !mina# tari"" 5 r!"it 5

GGGG GGGG >mp!rt price !me&tic pricea"ter tari"" 5 a"ter tari"" 5

54. C!n&ider *ab#e 4.1. ri!r t! the tari"" the t!ta# price !" d!me&tica##y- pr!duced 7C?& i&:a. H150

b. H00c. H5d. H50

55. C!n&ider *ab#e 4.1. ri!r t! the tari"" the t!ta# price !" imp!rted 7C?&i&:a. H150

b. H00

c. H5d. H35

56. C!n&ider *ab#e 4.1. *he n!mina# tari"" rate !n imp!rted 7C?& eua#&:a. 11.1 percent

b. 1.5 percentc. 16. percentd. 50.0 percent

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5. C!n&ider *ab#e 4.1. ri!r t! the tari"" d!me&tic (a#ue added eua#&:a. H5

b. H50

c. H5d. H100

58. C!n&ider *ab#e 4.1. "ter the tari"" d!me&tic (a#ue added eua#&:a. H5

b. H50c. H5d. H100

5;. C!n&ider *ab#e 4.1. *he e""ecti(e tari"" rate eua#&:a. 11.1 percent

b. 16. percentc. 50.0 percentd. 100.0 percent

60. >" the d!me&tic (a#ue added be"!re an imp!rt tari"" "!r a pr!duct i&H500 and the d!me&tic (a#ue added a"ter the tari"" i& H550 the e""ecti(e rate !"

pr!tecti!n i&:a. 5 percent


61. When a tari"" !n imp!rted input& e'ceed& that !n the "ini&hed %!!da. *he n!mina# tari"" rate !n the "ini&hed pr!duct $!u#d tend t! !(er&tate it&

pr!tecti(e e""ect b. *he n!mina# tari"" rate $!u#d tend t! under&tate it& pr!tecti(e e""ectc. >t i& imp!&&ib#e t! determine the pr!tecti(e e""ect !" a tari"" d. *ari"" e&ca#ati!n !ccur&

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6. *he !""&h!re a&&emb#y pr!(i&i!n in the =.S.a. r!(ide& "a(!rab#e treatment t! =.S. tradin% partner&

b. i&criminate& a%ain&t primary pr!duct imp!rter&c. r!(ide& "a(!rab#e treatment t! pr!duct& a&&emb#ed abr!ad "r!m =.S.manu"actured c!mp!nent&

d. urt& the =.S. c!n&umer

63. r%ument& "!r =.S. trade re&tricti!n& inc#ude a## !" the "!##!$in%e'cepta. @!b pr!tecti!n

b. >n"ant indu&try &upp!rtc. ,aintenance !" d!me&tic #i(in% &tandardd. >mpr!(in% inc!me& "!r de(e#!pin% c!untrie&

64. 2!r the =nited State& a "!rei%n trade z!ne B2*K i&a. &ite $ithin the =nited State&

b. &ite !ut&ide the =nited State&c. #$ay& #!cated in p!!rer de(e#!pin% c!untrie&d. >& u&ed t! di&c!ura%e trade

()*E+ALSE

1. *! pr!tect d!me&tic pr!ducer& "r!m "!rei%n c!mpetiti!n the =.S.%!(ernment #e(ie& b!th imp!rt tari""& and e'p!rt tari""&.

. With a c!mp!und tari"" a d!me&tic imp!rter !" an aut!m!bi#e mi%ht

be reuired t! pay a duty !" H00 p#u& 4 percent !" the (a#ue !" the aut!m!bi#e.

3. With a &peci"ic tari"" the de%ree !" pr!tecti!n a""!rded d!me&tic pr!ducer& (arie& direct#y $ith chan%e& in imp!rt price&.

4. urin% a bu&ine&& rece&&i!n $hen cheaper pr!duct& are purcha&ed a&peci"ic tari"" pr!(ide& d!me&tic pr!ducer& a %reater am!unt !" pr!tecti!n a%ain&t

imp!rt-c!mpetin% %!!d&.

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5. ad (a#!rem tari"" pr!(ide& d!me&tic pr!ducer& a dec#inin% de%ree !" pr!tecti!n a%ain&t imp!rt-c!mpetin% %!!d& durin% peri!d& !" chan%in% price&.

6. With a c!mp!und duty it& F&peci"icF p!rti!n neutra#ize& the c!&tdi&ad(anta%e !" d!me&tic manu"acturer& that re&u#t& "r!m tari"" pr!tecti!n %ranted t!d!me&tic &upp#ier& !" ra$ materia#& and the Fad (a#!remF p!rti!n !" the duty %rant&

pr!tecti!n t! the "ini&hed-%!!d& indu&try.

. *he n!mina# tari"" rate &i%ni"ie& the t!ta# increa&e in d!me&tic pr!ducti(e acti(itie& c!mpared t! $hat $!u#d !ccur under "ree-trade c!nditi!n&.

8. When materia# input& enter a c!untry at a (ery #!$ duty $hi#e the "ina#imp!rted pr!duct i& pr!tected by a hi%h duty the re&u#t tend& t! be a hi%h rate !"

pr!tecti!n "!r d!me&tic pr!ducer& !" the "ina# pr!duct.

;. cc!rdin% t! the tari"" e&ca#ati!n e""ect indu&tria# c!untrie& app#y #!$tari""& t! imp!rt& !" "ini&hed %!!d& and hi%h tari""& t! imp!rt& !" ra$ materia#&.

10. =nder the O""&h!re &&emb#y r!(i&i!n !" =.S. tari"" p!#icy =.S.imp!rt dutie& app#y !n#y t! the (a#ue added in the "!rei%n a&&emb#y pr!ce&& pr!(idedthat =.S.-made c!mp!nent& are u&ed by !(er&ea& c!mpanie& in their a&&emb#y!perati!n&.

11. 9!nded $areh!u&e& and "!rei%n trade z!ne& ha(e the e""ect !" a##!$in%d!me&tic imp!rter& t! p!&tp!ne and pr!rate !(er time their imp!rt duty !b#i%ati!n&.

1. nati!n $h!&e imp!rt& c!n&titute a (ery &ma## p!rti!n !" the $!r#dmarket &upp#y i& a price taker "acin% a c!n&tant $!r#d price "!r it& imp!rt c!mm!dity.

13. Draphica##y c!n&umer &urp#u& i& repre&ented by the area ab!(e the

demand cur(e and be#!$ the pr!duct& market price.

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14. r!ducer &urp#u& i& the re(enue pr!ducer& recei(e !(er and ab!(e theminimum nece&&ary "!r pr!ducti!n.

15. 2!r a F&ma##F c!untry a tari"" rai&e& the d!me&tic price !" an imp!rted pr!duct by the "u## am!unt !" the duty.

16. #th!u%h an imp!rt tari"" pr!(ide& the d!me&tic %!(ernment additi!na#ta' re(enue it bene"it& d!me&tic c!n&umer& at the e'pen&e !" d!me&tic pr!ducer&.

1. n imp!rt tari"" reduce& the $e#"are !" a F&ma##F c!untry by an am!unteua# t! the redi&tributi!n e""ect p#u& the re(enue e""ect.

18. *he dead$ei%ht #!&&e& !" an imp!rt tari"" c!n&i&t !" the pr!tecti!ne""ect p#u& the c!n&umpti!n e""ect.

1;. *he redi&tributi!n e""ect i& the tran&"er !" pr!ducer &urp#u& t! d!me&ticc!n&umer& !" the imp!rt-c!mpetin% pr!duct.

0. & #!n% a& it i& a&&umed that a nati!n acc!unt& "!r a ne%#i%ib#e p!rti!n!" internati!na# trade it& #e(yin% an imp!rt tari"" nece&&ari#y increa&e& it& !(era##$e#"are.

1. Chan%e& in a F#ar%eF c!untry& ec!n!mic c!nditi!n& !r trade p!#icie&can a""ect the term& at $hich it trade& $ith !ther c!untrie&.

. F#ar%eF c!untry that #e(ie& a tari"" !n imp!rt& cann!t impr!(e theterm& at $hich it trade& $ith !ther c!untrie&.

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3. 2!r a F#ar%eF c!untry a tari"" !n an imp!rted pr!duct may be partia##yab&!rbed by the d!me&tic c!n&umer (ia a hi%her purcha&e price and partia##y ab&!rbed

by the "!rei%n pr!ducer (ia a #!$er e'p!rt price.

4. >" a F#ar%eF c!untry #e(ie& a tari"" !n an imp!rted %!!d it& !(era##$e#"are increa&e& i" the m!netary (a#ue !" the tari""& c!n&umpti!n e""ect p#u&

pr!tecti(e e""ect e'ceed& the m!netary (a#ue !" the term&-!"-trade e""ect.

5. >" a F&ma##F c!untry #e(ie& a tari"" !n an imp!rted %!!d it& !(era##$e#"are increa&e& i" the m!netary (a#ue !" the tari""& c!n&umpti!n e""ect p#u&

pr!tecti(e e""ect i& #e&& than the m!netary (a#ue !" the term&-!"-trade e""ect.

6. tari"" !n &tee# imp!rt& tend& t! impr!(e the c!mpetiti(ene&& !"d!me&tic aut!m!bi#e c!mpanie&.

. >" a tari"" reduce& the uantity !" @apane&e aut!& imp!rted by the=nited State& !(er time it reduce& the abi#ity !" @apan t! imp!rt %!!d& "r!m the=nited State&.

8. c!mp!und tari"" permit& a &peci"ied am!unt !" %!!d& t! be imp!rtedat !ne tari"" rate $hi#e any imp!rt& ab!(e thi& am!unt are &ub<ected t! a hi%her tari""rate.

;. tari"" can be th!u%ht !" a& a ta' !n imp!rted %!!d&.

30. #th!u%h tari""& !n imp!rted &tee# may #ead t! <!b %ain& "!r d!me&tic&tee# $!rker& they can #ead t! <!b #!&&e& "!r d!me&tic aut! $!rker&.

31. ?e#ati(e#y #!$ $a%e& in ,e'ic! make it imp!&&ib#e "!r =.S.manu"acturer& !" #ab!r-inten&i(e %!!d& t! c!mpete a%ain&t ,e'ican manu"acturer&.

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3. cc!rdin% t! the in"ant-indu&try ar%ument temp!rary tari"" pr!tecti!n%ranted t! an in"ant indu&try $i## he#p it bec!me c!mpetiti(e in the $!r#d marketJ$hen internati!na# c!mpetiti(ene&& i& achie(ed the tari"" &h!u#d be rem!(ed.

E'hibit 4.

>n the ab&ence !" internati!na# trade a&&ume that the eui#ibrium price and uantity !" m!t!rcyc#e& in Canada i& H14000 and 10 unit& re&pecti(e#y. &&umin% that Canada i&a &ma## c!untry that i& unab#e t! a""ect the $!r#d price !" m!t!rcyc#e& &upp!&e it&market i& !pened t! internati!na# trade. & a re&u#t the price !" m!t!rcyc#e& "a##& t!H1000 and the t!ta# uantity demanded ri&e& t! 14 unit&J !ut !" thi& t!ta# 6 unit& are

pr!duced in Canada $hi#e 8 unit& are imp!rted. !$ a&&ume that the Canadian%!(ernment #e(ie& an imp!rt tari"" !" H1000 !n m!t!rcyc#e&.

33. ?e"er t! E'hibit 4.. & a re&u#t !" the tari"" the price !" imp!rtedm!t!rcyc#e& eua#& H13000 and imp!rt& t!ta# 4 cyc#e&.

34. ?e"er t! E'hibit 4.. *he tari"" #ead& t! an increa&e in Canadianc!n&umer &urp#u& t!ta#in% H11000.

35. ?e"er t! E'hibit 4.. *he tari""& redi&tributi!n e""ect eua#& H000.

36. ?e"er t! E'hibit 4.. *he tari""& re(enue e""ect eua#& H6000.

3. ?e"er t! E'hibit 4.. ## !" the imp!rt tari"" i& &hi"ted t! the Canadianc!n&umer (ia a hi%her price !" m!t!rcyc#e&.

38. ?e"er t! E'hibit 4.. *he tari"" #ead& t! a dead$ei%ht $e#"are #!&& "!rCanada t!ta#in% H1000.

3;. =n#ike a &peci"ic tari"" an ad (a#!rem tari"" di""erentiate& bet$eenc!mm!ditie& $ith di""erent (a#ue&.

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40. #imitati!n !" a &peci"ic tari"" i& that it pr!(ide& a c!n&tant #e(e# !" pr!tecti!n "!r d!me&tic c!mm!ditie& re%ard#e&& !" "#uctuati!n& in their price& !(ertime.

41. tari"" u!ta i& a c!mbinati!n !" a &peci"ic tari"" and an ad (a#!remtari"".

4. &peci"ic tari"" i& e'pre&&ed a& a "i'ed percenta%e !" the t!ta# (a#ue !"an imp!rted pr!duct.

43. *he pr!tecti(e e""ect !" a tari"" !ccur& t! the e'tent that #e&& e""icientd!me&tic pr!ducti!n i& &ub&tituted "!r m!re e""icient "!rei%n pr!ducti!n.

44. tari"" can increa&e the $e#"are !" a F#ar%eF #e(yin% c!untry i" the"a(!rab#e term&-!"-trade e""ect m!re than !""&et& the un"a(!rab#e pr!tecti(e e""ect andc!n&umpti!n e""ect.

45. >" the $!r#d price !" &tee# i& H600 per t!n a &peci"ic tari"" !" H10 pert!n i& eui(a#ent t! an ad (a#!rem tari"" !" 5 percent.

46. n imp!rt tari"" $i## $!r&en the term& !" trade "!r a F&ma##F c!untry but impr!(e the term& !" trade "!r a F#ar%eF c!untry.

4. Supp!&e that the tari"" !n imp!rted &tee# i& 40 percent the tari"" !nimp!rted ir!n !re i& 0 percent and 30 percent !" the c!&t !" pr!ducin% a t!n !" &tee#c!n&i&t& !" the ir!n !re it c!ntain&. *he e""ecti(e rate !" pr!tecti!n !" &tee# i&appr!'imate#y 4; percent.

48. *here i& $ide&pread a%reement am!n% ec!n!mi&t& that imp!rt tari""&increa&e !(era## emp#!yment in the #e(yin% c!untry.

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4;. &&ume that the =nited State& imp!rt& 7C?& "r!m S!uth A!rea at a price !" H00 per unit and that the&e 7C?& are &ub<ect t! an imp!rt tari"" !" 0 percent. #&! a&&ume that =.S. c!mp!nent& are u&ed in the 7C?& a&&emb#ed by S!uthA!rea and that the&e c!mp!nent& ha(e a (a#ue !" H100. =nder the O""&h!re &&emb#yr!(i&i!n !" =.S. tari"" p!#icy the price !" an imp!rted 7C? t! the =.S. c!n&umer

a"ter the tari"" ha& been #e(ied i& H0.

50. &&ume that the =nited State& imp!rt& te#e(i&i!n& "r!m *ai$an at a price !" H300 per unit and that the&e te#e(i&i!n& are &ub<ect t! an imp!rt tari"" !" 5 percent. #&! a&&ume that =.S. c!mp!nent& are u&ed in the te#e(i&i!n& a&&emb#ed by*ai$an and that the&e c!mp!nent& ha(e a (a#ue !" H100. =nder the O""&h!re&&emb#y r!(i&i!n !" =.S. tari"" p!#icy the price !" an imp!rted te#e(i&i!n t! the=.S. c!n&umer a"ter the tari"" ha& been #e(ied i& H35

S'O)( A/SWE)

1. Can imp!rt dutie& ha(e unintended &ide e""ect&)

. What happen& t! e""ecti(e pr!tecti!n $hen the (a#ue added by thed!me&tic pr!ducer dec#ine&)

ESSA1

1. >& it p!&&ib#e "!r a #!$ n!mina# tari"" rate t! under&tate the e""ecti(erate !" pr!tecti!n) What i& tari"" e&ca#ati!n)

. !$ can tari""& be <u&ti"ied)

ECO 305 Week 3 Quiz

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