Do not need to explain, just pick the correct answer 1- COMMODITIES | Fri Oct 7,

Question

Do not need to explain, just pick the correct answer

1- COMMODITIES | Fri Oct 7, 2016 | 3:21pm EDT

EU sets import duties on cheap Chinese steel

By Philip Blenkinsop | BRUSSELS

The European Union has set provisional import duties on two types of steel coming into the bloc from China to counter what it says are unfairly low prices, in a move likely to anger Beijing. The duties are the latest in a line of trade defenses set up against Chinese steel imports over the past two years to counter what EU steel producers say is a flood of steel sold at a loss.

Some 5,000 jobs have been axed in the British steel industry in the last year, as it struggles to compete with cheap Chinese imports and high energy costs. G20 governments recognized last month that steel overcapacity was a serious problem. China, the source of 50 percent of the world's steel and the largest steel consumer, has said the problem is a global one.

The duties, which will take effect on Saturday, are provisional, meaning they are in place for up to six months until the European Commission completes its investigation. If upheld, they would typically be set for five years. No one was available for comment at a series of steelmakers in China, which was celebrating a week-long national holiday. The duties are set at between 13.2 and 22.6 percent for hot-rolled flat iron and steel products and at between 65.1 and 73.7 percent for heavy-plate steel, according to a filing in the European Union's official journal.

The duty referred to in this passage is an examples of....

A- Boycott

B- anti-dumping tariffs

C- Voluntary Export Restraint

D - import quota

2-Consider a standard Heckscher-Ohlin model with two countries—Country M is capital-abundant, Country N labor-abundant. Each country uses labor and capital to produce two goods—capital-intensive Good 1 and labor-intensive Good 2. According to the theorem, allowing both countries to trade with each other will result in the following pattern of trade:

A - Country M will export Good 2

B- Country M will export Good 1.

C- Country M will export both Goods 1 and 2

D -Country M is at a disadvantage compared to country N

5 - The ________________ model essentially states that international trade occurs because countries differ in their relative factor endowments and commodities. Relative endowments of factors of production (land, labor and capital) determine a country’s comparative advantage. Countries have comparative advantages in those goods for which the required factors of production are relatively abundant and cheap locally. This is because the prices of goods are ultimately determined by the prices of their inputs. Goods that require inputs that are locally abundant will be cheaper to produce than those goods than require inputs that are locally scarce. For example, a country where capital is abundant but labor is scarce will have comparative advantage in the production of capital intensive goods that require lots of capital but little labor. If capital is abundant, its price will be low.

A- National Diamond Framework

B -Merchantilistic

C -Heckscher-Ohlin

D -Free Trade

7-Which of the following statements is true about clusters.

A -the presence of clusters is a way for a nation to become competitive and innovative

B - Cluster is a way for a country to take advantage of international trade.

C -Cluster is a powerful geographic distance indicator in the CAGE framework

D -the advent of clusters is one of the ten world flatteners as discussed by Tom Friedman

Explanation / Answer

1. B- anti-dumping tariffs

When a country is selling same good at lower price in other countries and charges higher price in domestic country then it is called dumping. To protect countries from dumping, foreign countries charges tariffs which is called anti-dumping tariffs.

2. B- Country M will export Good 1.

According to HO model, a country will export that good in which it has abundant factor. A country with capital abundance will export that good in which capital is used more than labor i.e. capital intensive good. On the other hand, a country will labor abundance will export that good in which labor is used more than the capital i.e. labor intensive good.

5. C -Heckscher-Ohlin

HO model examines the role of resource difference in international trade. This model shows that comparative advantage is influenced by interaction between resources of countries and technology of production. Since HO model emphasise the inter relation between proportion in which different factors of production are available in different countries and the proportion in which they are used in producing different good. So, it is also referred as factor proportion theory.

7. A -the presence of clusters is a way for a nation to become competitive and innovative

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