Chapter 5 Nontariff Trade Barriers

To maintain that South Koreans are dumping their VCRs in the United States is to maintain that

• the cost of manufacturing VCRs in Korea is higher in Korea than in the United States because wages are higher in Korea

• the cost of manufacturing VCRs in Korea is lower in Korea than in the United States because wages are lower in Korea.

• Koreans are selling VCRs in the United States above their production cost.

• Koreans are selling VCRs in the United States below their production cost.

. If import licenses are auctioned off to domestic importers in a competitive market, their scarcity value (revenue effect) accrues to

• the domestic government.

• domestic corporations.

• foreign workers.

• foreign corporations.

In certain industries, Japanese employers do not lay off workers. Therefore, they sometimes have excess supplies of goods that they cannot sell on the home market without lowering prices. To hold down losses, they sell goods in overseas markets at prices well beneath those in Japan. This practice is best referred to as

• dumping.

• domestic content pricing.

• trigger pricing.

• orderly marketing.

Import quotas tend to lead to all of the following, except

• prices falling in the exporting country.

• prices increasing in the importing country.

• domestic consumers of the imported good being harmed.

• domestic producers of the imported good being harmed.

Domestic content legislation applied to autos would tend to

• increase profits of American auto companies.

• encourage American automakers to locate production overseas.

• lower auto prices for American autoworkers.

• support wage levels of American autoworkers.

A firm that faces problems of falling sales and excess productive capacity might resort to international dumping if it

• is able to force foreign prices below marginal production costs.

• can sell at that price where domestic and foreign demand elasticities equate.

• earns revenues on foreign sales that at least cover variable costs.

• can charge higher prices in markets that are elastic to price changes.

Which of the following refers to a market-sharing pact negotiated by trading partners to moderate the intensity of international competition?

• trigger price mechanism

• local content requirements

• import quota

• orderly marketing agreement

The imposition of a domestic content requirement by the United States would cause consumer surplus for Americans to

• impose downward pressure on wages of workers.

• remain unchanged.

• fall.

• rise.

Government subsidies may take the form of all of these, except

• insurance arrangements.

• bank credits.

• tax breaks.

• cash disbursements.

Antidumping law has been called unfair for all of the following reasons, except

• U.S. firms selling at home are not subject to the same rules.

• it is based on average total cost.

• it is based on average variable cost.

• it does not reflect currency fluctuations.