T f 30 a subsidy granted to import competing

This preview shows 15 out of 17 pages.

T F 30. A subsidy granted to import-competing producers reduces overall domestic welfare by the same amount as would a tariff or quota that restricts imports by the same amount. T F 31. To the extent that subsidies granted to exporting firms reduce the foreign price of their goods, the subsidizing country’s terms of trade worsen. T F 32. If the U.S. demand for Korean steel is price elastic, an export subsidy granted to Korean steel firms will increase Korea’s export revenue. T F 33. International dumping occurs when foreign buyers are charged higher prices than domestic buyers for an identical product, after allowing for transportation costs and tariff duties. T F 34. Sporadic (distress) dumping would occur if domestic orange producers dispose of an excess quantity of oranges, resulting from an abnormally large harvest, by selling them at lower prices abroad than at home. 15
Image of page 15

Subscribe to view the full document.

Chapter 6: Nontariff Trade Barriers T F 35. Predatory dumping would occur if Toyota Inc. of Japan sells autos to U.S. consumers at lower prices than to Japanese consumers in order to put Chrysler Inc. out of business. T F 36. A firm would increase profits from dumping if it charges a lower price at home, where demand is inelastic, and a higher price abroad where demand is elastic. T F 37. The purpose of international dumping is to decrease a firm’s costs and increase its profits, compared to what would be realized in the absence of dumping. T F 38. A firm granting lifetime employment to its workers has the incentive to engage in international dumping during periods of business recession and excess production capacity. T F 39. A firm suffering idle plant capacity would minimize losses by selling its product abroad at a lower price than at home, provided that the foreign price more than covers average variable cost. T F 40. Under U.S. antidumping law, an antidumping duty can be levied when the U.S. Commerce Department determines that a foreign product is being sold in the United States at less than fair value and the U.S. International Trade Commission determines that the dumped product is causing economic harm to domestic producers. T F 41. The margin of dumping equals the amount by which the foreign price is greater than the domestic price, or the amount by which the foreign price exceeds the cost of production. T F 42. For most nations, the ratio of imports to total purchases in the public sector is much higher than in the private sector. T F 43. According to the U.S. Buy American Act, federal government agencies cannot purchase materials and products from U.S. suppliers if their prices are higher than those of foreign competitors. T F 44. For the United States, the Buy American Act has tended to increase consumer surplus for U.S. buyers of protected merchandise. T F 45. An effective Buy American law would tend to increase U.S. producer surplus at the expense of U.S. consumer surplus.
Image of page 16
Image of page 17
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern