1. A payment to a firm for every unit exported is called: A) an export tariff. B
ID: 1100337 • Letter: 1
Question
1. A payment to a firm for every unit exported is called: A) an export tariff. B) an export stipend.
C) an export restriction D) an export subsidy.
2. In general, an export subsidy:
A) discourages foreign sales exporters in favor of domestic sales. B) encourages firms to export rather than sell domestically.
C) penalizes producers that export.
D) justifies government involvement in helping firms export.
3. Why is food aid to poor nations seen to be an indirect subsidy by the WTO?
A) It always has to be brokered by a third party.
B) The poor nations have to pay for it in other ways.
C) It enables firms to increase exports, partially paid for by the government. D) It only works with small farmers rather than large agribusiness.
Use the following to answer questions 4-8:
SCENARIO: DEMAND AND SUPPLY FOR IRON ORE
The table supplied represents a demand and supply schedule for a small-country producer of
iron ore. It sells output in its home market and on the world market at the world price of $70 per ton.
Table: Demand and Supply for Iron Ore
4. (Scenario: Demand and Supply for Iron Ore) At the world price of $70, how many units will be sold domestically?
A) 80 tons B) 70 tons C) 40 tons D) 30 tons
5. (Scenario: Demand and Supply for Iron Ore) At the world price of $70, how many units will it export?
A) 80 tons B) 70 tons C) 40 tons D) 30 tons
6. (Scenario: Demand and Supply for Iron Ore) Suppose that the country's government offers its iron ore producers an export subsidy of $10 per ton. How many tons will the country now export?
A) 80 tons B) 70 tons C) 60 tons D) 50 tons
7. (Scenario: Demand and Supply for Iron Ore) How many tons will be sold domestically when exporters receive a $10-per-ton export subsidy?
A) 10 tons B) 20 tons C) 30 tons D) 40 tons
8. (Scenario: Demand and Supply for Iron Ore) What price will domestic iron ore consumers pay for their iron ore purchases when there is a $10-per-ton export subsidy? A) $10 per ton B) $60 per ton C) $70 per ton D) $80 per ton
Use the following to answer questions 9-13:
Figure: Home's Exporting Industry I
The supplied graph shows information about a home exporter.
9. (Figure: Home's Exporting Industry I) According to the figure, if the world price of the product is $125, then the domestic demand is:
A) 120. B) 100 C) 20 D) 40
10. (Figure: Home's Exporting Industry I) According to the figure, at the world price there is a of in the home market, which is .
A) surplus; 60; imported B) shortage; 60; imported
C) surplus; 60; exported D) shortage; 100; exported
11. (Figure: Home's Exporting Industry I) According to the figure, the home country provides a subsidy of , which results in an increase in exports of . A) $50; 40 B) $175; 120 C) $125; 100 D) $175; 100
12. (Figure: Home's Exporting Industry I) According to the figure, the subsidy results in a(n) of government revenue by the amount of .
A) increase; $5,000 B) increase; $2,500 C)decrease; $5,000 D)decrease; $21,000
13. (Figure: Home's Exporting Industry I) According to the figure, the subsidy results in
in producer surplus by the amount of . A) a reduction; $6,500 B) a reduction; $5,000
C) an increase; $5,500 D) an increase; $4,000
14. If a large nation imposes a production subsidy:
A) the production subsidy has more impact on world prices than an export subsidy. B) the production subsidy increases exports by more than the export subsidy.
C) the production subsidy has no measurable effect on prices or exports for a large country.
D) the production subsidy changes world prices by less and increases exports by less than an export subsidy.
15. In the United States, which of the following is a subsidy provided for Boeing?
A) free utility to the production facility
B) tax breaks for Boeing
C) loans to Boeing customers through the Export-Import Bank
D) loans to Boeing for production assistance
16. In 2002 the United States relied upon the GATT's to impose tariffs on imported steel.
A) escape clause
B) antidumping clause
C) countervailing duty clause
D) most favored nation clause
17. U.S. consumers were hurt by the 2002 steel tariff; U.S. producers who use steel were also hurt, but the biggest outcry came from:
A) exporters of steel to the United StatesEurope, Japan, and South Korea. B) the United Nations.
C) the big labor unions.
D) Ralph Nader, who is very opposed to restrictions on free trade.
18. Quota rents are:
A) the difference between the domestic price and world price following imposition of a quota.
B) the extra return to land that occurs following imposition of a quota.
C) the difference between imports with no quota and imports with the quota. D) the extra payment to labor that occurs following imposition of a quota.
19. Who collects quota rents when the government auctions quota licenses?
A) domestic consumers B) foreign suppliers
C) domestic producers D) the government
20. If a quota license is awarded to a domestic firm without an auction, it may generate bribes or lobbying spending to earn this revenue. Economists call this a(n) activity. A) Efficient B) unnecessary C) wasteful rent-seeking D) profit-maximizing
21. Most favored nation status refers to:
A) tariff concessions negotiated in the context of regional trading organizations such as NAFTA.
B) an arrangement whereby a country unilaterally grants tariff concessions to all countries.
C) an arrangement whereby a nation unilaterally applies lower tariff rates on imports from countries that it favors and higher tariff rates on countries that it does not favor.
D) an arrangement that requires a WTO member nation granting a tariff reduction to another WTO member nation to extend that tariff reduction to all WTO members.
22. The safeguard provision or escape clause allows a country to: A) import products below cost from foreign countries.
B) export products by selling below cost to foreign countrie. C) avoid tariffs in foreign countries temporarily.
D) temporarily increase tariffs on certain imported goods
23. WTO is the acronym (or abbreviation) for: A) the World Traffic Organization.
B) the World Trade Organization. C) the World Tariff Organization. D) the World Tax Organization.
24. Import tariffs are imports.
A) subsidies; taxes B) limits; subsidies C) taxes; limits
D) limits; taxes
on imports, and import quotas are on
25. What is the most recent set of negotiations underway called?
A) the Doha round
B) the Kyoto round
C) the Geneva accord
D) the Paris negotiation
Explanation / Answer
Q1 is answered below.
1.
A payment to a firm for every unit exported is called: (D) an export subsidy
It is the payment given to firms, as a means of export promoting activity or incentive.
2.
In general, an export subsidy: (B) Encourages firms to export rather than sell domestically.
It is the payment given to firms, as a means of export promoting activity or incentive.
3.
Why is food aid to poor nations seen to be an indirect subsidy by the WTO? (A) It always has to be brokered by a third party.
Although the aid is intended to be paid to poorer countries, they are paid out through brokers, and are thus received indirectly.
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