30 in certain industries japanese employers do not

30. 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:
a. Orderly marketing
b. Trigger pricing
c. Domestic content pricing
d. Dumping

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Test Bank for International Economics, 9e
Figure 6.1 illustrates the steel market for Mexico, assumed to be a “small” country that is unable to affect the
world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican
steel industry is able to obtain trade protection, as discussed in the questions below. Answer the next 12 questions
on the basis of this information.
Figure 6.1. Alternative NTBs Levied by a “Small” Country
31. Consider Figure 6.1. With free trade, the quantity of steel imported by Mexico equals:
32. Consider Figure 6.1. With free trade, Mexico’s consumer surplus and producer surplus respectively equal:

Chapter 6: Nontariff Trade Barriers
109
33. Referring to Figure 6.1, suppose the Mexican government imposes an import quota equal to 2 tons of steel.
If Mexican steel importers behave as monopoly buyers and foreign exporters behave as competitive sellers,
the overall welfare loss of the quota to Mexico equals:
a. $200
b. $400
c. $600
d. $800
34. Referring to Figure 6.1, again consider the steel import quota of Question #33. If foreign exporters behave
as monopoly sellers, and Mexican importers behave as competitive buyers, the overall welfare loss of the
quota to Mexico equals:
a. $200
b. $400
c. $600
d. $800
35. Referring to Figure 6.1, again consider the steel import quota of Question #33. If the Mexican government
auctions import licenses to the highest foreign bidder, the overall welfare loss of the quota to Mexico
equals:
a. $200
b. $400
c. $600
d. $800
36. Consider Figure 6.1. Suppose instead that the Mexican government provides a subsidy of $200 per ton to
its steel producers, as indicated by the supply schedule S
M (with subsidy)
. The quantity of imports equals:
a. 1 ton
b. 2 tons
c. 3 tons
d. 4 tons
37. Consider Figure 6.1. Referring to Question #36, the total cost of the subsidy to the Mexican government
equals:
a. $200
b. $400
c. $600
d. $800
38. Consider Figure 6.1. As a result of the subsidy referred to in Question #36, Mexican steel producers gain
__________ of producer surplus.
a. $200
b. $400
c. $600
d. $800

110
Test Bank for International Economics, 9e
39. Consider Figure 6.1. As a result of the subsidy referred to in Question #36, the welfare loss to Mexico due
to inefficient domestic production equals:
a. $200
b. $400
c. $600
d. $800
40. Consider Figure 6.1. As the result of the subsidy referred to in Question #36, the overall deadweight
welfare loss to Mexico equals:
a. $200
b. $400
c. $600
d. $800
41. Consider Figure 6.1. Suppose instead that the rest of the world voluntarily agrees to reduce steel shipments
to Mexico vis-à-vis an export quota equal to 2 tons. Assuming Mexican importers behave as competitive
buyers while foreign exporters behave as monopoly sellers, the overall welfare loss of the quota to Mexico
is:
a.