Revision class ITF

What is one reason why firms in infant industries struggle to invest in production processes?

• Strong property rights

• Imperfect financial asset markets

• High consumer demand

• Low tariffs

What is a second-best policy if creating better functioning markets is not feasible?

• Tax cuts for consumers

• Subsidies for all industries

• High tariffs

• Lower tariffs

What is the problem of appropriability in the context of infant industries?

• Firms cannot privately appropriate benefits of their investments

• Firms have too many property rights

• Firms can borrow easily

• Firms can easily sell their products

What is one way the U.S. subsidizes research and development?

• By increasing corporate taxes

• By providing direct cash grants

• Through tax deductions for R&D expenses

• By lowering tariffs on imports

What does the environmental Kuznets curve illustrate?

• A constant level of pollution regardless of income

• A direct correlation between trade and environmental protection

• A linear relationship between income and pollution

• An inverted U-shaped relationship between income and environmental degradation

What is a pollution haven?

• A location where environmentally hazardous activities are moved due to lax regulations

• A country with strict environmental regulations

• A region with high environmental standards

• A place where pollution is heavily regulated

What is the definition of dumping in international trade?

• Selling goods at a higher price domestically

• Charging lower prices for exported goods than for domestic sales

• Offering discounts to local consumers

• Increasing tariffs on imported goods

What is internalization in the context of foreign direct investment?

• Selling products in foreign markets

• Investing in local businesses

• Outsourcing production to other firms

• Conducting transactions within a single organization

What is a specific tariff?

• A fixed charge for each unit of imported goods

• A tax that varies with market conditions

• A tax based on the value of imported goods

• A tax that is applied only to luxury items

What is one argument for free trade?

• Producers and consumers allocate resources most efficiently

• It distorts market prices

• It leads to higher prices for consumers

• It benefits only large corporations