Midterm2-462_SAMPLE

Midterm2-462_SAMPLE - FBE 462 Sample Midterm #2 UNIVERSITY...

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Unformatted text preview: FBE 462 Sample Midterm #2 UNIVERSITY OF SOUTHERN CALIFORNIA School of Business Administration INTERNATIONAL TRADE AND COMMERICAL POLICY/FBE 462 SAMPLE MIDTERM #2 Aris Protopapadakis Multiple Choice Questions 1. Ch8-?? The optimal tariff for a small country is (a) positive, since the small country can use the tariff to maximize its welfare. (b) is equal to the prohibitive tariff rate. (c) positive, since the small country can use the tariff to maximize the world welfare. (d) zero, since a tariff creates distortions. 2. Ch7-?? Export-biased growth in the standard trade model of a large country, (a) will definitely worsen the growing country's terms of trade, at the expense of the rest of the world. (b) will definitely improve the growing country's terms of trade, to the benefit of the rest of the world. (c) will definitely improve the growing country's terms of trade, at the expense of the rest of the world. (d) will definitely worsen the growing country's terms of trade, to the benefit of the rest of the world. 3. Ch7-19 Large countries are _____susceptible to immiserizing growth than small countries because when large countries expand their exports, their terms of trade _____. (a) Less; improve. (b) Less; worsen. (c) More; improve. (d) More; worsen. 1 FBE 462 Sample Midterm #2 4. Ch12-?? that (a) (b) China receiving most-favored-nation status after joining the WTO, this implies China can receive better treatment in trade than other WTO member nations. China should still receive unfavorable treatment in trade because it is a developing country. China should still receive unfavorable treatment in trade because it is such a large trading nation. China should receive the same treatment in trade as any other WTO member nations. (c) (d) Figure 7.1 Wheat Cloth 5. Ch7-?? Referring to figure 7.1 above, the shift to the right of the production possibilities frontier is likely the result of: (a) A fall in production costs. (b) The move from autarky to free trade. (c) An increase in farmable land. (d) An increase in the labor force. 6. Ch9-35 Which of the following is an effect of the Uruguay Round? I. The Uruguay Round included provisions for future negotiations to liberalize trade in services. II. The Uruguay Round included agreement requiring member countries to protect intellectual property. III. The Uruguay Round included the conversion of import quotas in agricultural products to import tariffs. (a) (b) (c) (d) I and II I I, II, and III II and III 2 FBE 462 Sample Midterm #2 Figure 9.1: The. Market for MP3 Players in a Small Country Price Sd Sd + QQ Quota Q Domestic price with quota World price $90 $80 Dd 10 12 17 Quantity (Millions of MP3 players per ) 22 7. Ch9-11 Referring to Figure 9.1, how much revenue can the government expect to receive if it implements a competitive auction? (a) $20 million (b) $120 million (c) $50 million (d) $170 million 8. Ch9-31 (a) (b) (c) (d) A voluntary export restraint (VER): Ensures foreign exporting firms are unable to exercise monopoly power. Raises more revenue for the government than a tariff or quota. Usually requires the foreign exporting firms act like a cartel, restricting sales and raising prices. Lowers world prices. 3 FBE 462 Sample Midterm #2 9. Ch8-24 The United States is considering imposing a $5 per bottle tariff on imported wine. Economists have estimated the following figures based on this tariff amount: World price of wine (free trade): Domestic production (free trade): Domestic production (after tariff): Domestic consumption (free trade): Domestic consumption (after tariff): $20 500,000 600,000 750,000 650,000 By how much will the imposition of a tariff on wine cause US government tariff revenue to rise? (a) $1.25 million (b) $250,000 (c) $3.5 million (d) $500,000 Figure 8.1: The U.S. Market for shoes Price Sd(domestic supply curve) a b c Domestic price with tariff World price d Dd(domestic demand curve) S0 S1 D1 Quantity D0 10. Ch8-8 Referring to Figure 8.1, the imposition of a tariff on shoes causes economic welfare in the US to ____ by an amount measured by area ____. (a) Fall; c (b) Fall; (b+d) (c) Fall; (b+c+d) (d) Rise; (a+c) 4 FBE 462 Sample Midterm #2 11. Ch10.1 Which of the following is not an expected effect of a tariff or nontariff barrier (NTB) on a product? (a) An increase in domestic production of the product. (b) An increase in domestic consumption of the product. (c) An increase in the employment of labor and other resources used in the domestic production of the product on which the tariff or NTB is being imposed. (d) An increase in government revenue. 12. Ch10-4 A “first-best” world is one in which: (a) Social marginal benefit (SMB) > Price (P) = Buyer’s private marginal benefit (MB) = Seller’s private marginal cost (MC) = Social marginal cost (SMC) (b) Price (P) = Buyer’s private marginal benefit (MB) = Seller’s private marginal cost (MC) = Social marginal cost (SMC) = Social marginal benefit (SMB) (c) Social marginal cost (SMC) > Price (P) = Buyer’s private marginal benefit (MB) = Seller’s private marginal cost (MC) = Social marginal benefit (SMB) (d) Social marginal benefit (SMB) > Social marginal cost (SMC) 13. Ch10-11 Which of the following is a plausible solution to a distortion? I. Impose a tax or subsidy in order to adjust for the fact that either SMB or SMC exceeds price. II. Rearrange property rights in order to make the decision makers consider the distorting effects when making their decisions. III. Impose an importation ban. (a) (b) (c) (d) I only I and II II only. I, II, and III 5 FBE 462 Sample Midterm #2 Figure 11.1: The U.S. Market for Wheat Price $/ton Sd (domestic supply curve) $180 $160 subsidy World price Dd (domestic demand curve) 40 60 120 150 Quantity (millions of tons) 14. Ch11-17 According to Figure 11.1, the net loss in national well-being as a result of the subsidy is: (a) $500 million (b) $200 million (c) $300 million (d) $2.2 billion 15. Ch11-12 Referring to Figure 11.1, with free trade and a world price of $160 per ton, the United States produced ____ ton of grain, consumed ____ tons of grain, and exported ____ tons of grain. (a) 120 60 60 (b) 60 120 60 (c) 60 120 120 (d) 120 40 60 16. Ch.11-18 Which of the following countries provides price supports to its farmers? (a) All of the above. (b) The United States (c) Japan (d) The European Union 6 FBE 462 Sample Midterm #2 17. Ch12-29 Who is harmed by a trade embargo? (a) Both the target country and the country initiating the embargo. (b) Only the target country. (c) Only the country that initiates the embargo. (d) The target country and those countries that did not join the embargo. 18. Ch12-5 The NAFTA is an example of a: (a) Free trade area (b) Customs union (c) Common market (d) Economic union 7 FBE 462 Sample Midterm #2 Answer Key to Sample Exam 1) 2) 3) 4) 5) 462 M2 Ch8 ?? Ch7 ?? Ch7-19 Ch12 ?? Ch7-?? D D D D C 6) 7) 8) 9) 10) Ch9-35 Ch9-11 Ch9-31 Ch8 24 Ch8-08 C C C B B 11) 12) 13) 14) 15) Ch10-01 Ch10-04 Ch10-11 Ch11-17 Ch11-12 B B B A A 16) 17) 17) Ch11-18 Ch12-29 Ch12-05 A A A 8 FBE 462 Sample Midterm #2 1) 2) 3) 4) 5) 462 M2 Ch8.ChenM2.2 Ch7.ChenM2.3 Ch7.19 Ch12.ChenM2.5 Ch11.ChenM2 D D D D D 6) 7) 8) 9) 10) Ch7.3 Ch9.35 Ch9.11 Ch9.31 Ch8.24 C C C C B 11) 12) 13) 14) 15) Ch8.11 Ch10.01 Ch10.04 Ch10.11 Ch11.17 B B B B A 16) 17) 18) 19) 20) Ch11.12 Ch11.18 Ch12.29 Ch12.05 A A A A 21) 22) 23) 24) 25) 9 FBE 462 Sample Midterm #2 Answer Key to Sample Exam 10 ...
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This note was uploaded on 02/15/2011 for the course FBE 462 at USC.

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