International Econs_Chap 9 (part 2)

Payment to a firm or individual that ships a good abroad is called

• an export subsidy.

• an import quota.

• a tariff.

• a voluntary export restraint.

An export subsidy ________ prices in the exporting country while ________ them in the importing country.

• lowers; raising

• raises; lowering

• raises; raising

• lowers; lowering

An export subsidy differs from a tariff in each of the following ways EXCEPT

• a tariff generates revenue.

• a tariff is applied to imports.

• a tariff results in an efficiency loss.

• a tariff is a tax.

An import quota

• limits import without raising the domestic price of the imported goods.

• has no impact on the domestic price of the imported goods.

• always lowers the domestic price of the imported goods.

• always raises the domestic price of the imported goods.

An import quota is similar to a ________ in its effect on imports, EXCEPT that an import quota ________.

• tariff; does not generate government revenue

• tariff; generates government revenue

• subsidy; does not generate government revenue

• tariff; does not result in an efficiency loss.

Import license holders are able to buy imports and resell them at a higher price in the domestic market. The profits received by the holders of import licenses are known as

• license margin.

• import quota.

• quota rents.

• opportunity cost.

The U.S. sugar quota

• generates government revenue.

• results in net welfare benefits to the U.S. economy.

• results in benefits to sugar producers that exceed the cost to consumers.

• results in costs to consumers that exceed the benefits to sugar producers.

A voluntary export restraint is

• a quota on trade imposed from the importing country's side instead of the exporter's.

• a quota on trade imposed from the exporting country's side instead of the importer's.

• generally imposed at the request of the exporter and agreed to by the importer to forestall other trade restrictions.

• an agreement to voluntarily remove all quotas imposed on trade between two countries.

Which of the following are examples of goods that have been subject to voluntary export restraints?

• Japanese sushi and German cars

• Belgian chocolates and French wines

• Japanese cars and Chinese solar panels

• French wines and cheeses

A local content requirement (also called rules of origin)

• is a regulation that requires some specified fraction of a final good to be produced domestically.

• provides no protection for domestic producers.

• produces government revenue and quota rents.

• places a strict limit on imports.