Question 1

Assume that the U.S.government is working on a large-sized infrastructure project and approaches China, Canada, and France for various products it needs.Then, it would have to take an exception from adhering to the ________ policy.

Accepted Answer

The exception that the U.S. government would have to take from following the "Buy American" policy means that they would be allowed to purchase products from foreign countries. However, given the domestic supply and demand for wine in the U.S. shown in Figure 5.6, it would be more beneficial for the U.S. government to choose a domestic supplier for their wine needs rather than importing from China, Canada, or France. Therefore, the best choice in this scenario would be to adhere to the "Buy American" policy and purchase wine from a domestic supplier.

Question 2

Which is true about an elimination of nontariff barriers on import of furniture?

Accepted Answer

Elimination of nontariff barriers on import of furniture would likely decrease the profits of import-competing furniture producers because it would increase competition from imported furniture, potentially reducing the market share and prices that domestic producers can command.

Question 3

The U.S.government, through explicit laws, openly discriminates against __________ in its purchasing decisions.

Accepted Answer

The question mentions that the U.S. government discriminates in its purchasing decisions, and the only option that suggests discrimination against a certain group is foreign suppliers. Therefore, C) is the best choice.

Question 4

A removal of an import quota tends to result in

Accepted Answer

Removal of an import quota would lead to an increase in the supply of wine, leading to lower prices for domestic consumers. This would increase consumer surplus, and may lead to a decrease in profits for domestic producers, as they may face more competition from imported wines. However, this depends on the elasticity of demand for domestic wines and the degree of substitutability between domestic and imported wines.

Question 5

Import quotas will increase the price consumers pay for imported goods and

Accepted Answer

Import quotas restrict the volume of imports allowed into a country. As there is less supply, the price for the imported goods will increase. This will make domestic products more competitive, potentially leading to an increase in domestic production and a decrease in imports. It will not affect the volume of exports.

Question 6

The California Transit Authority implemented the Buy American policy when rebuilding portions of the earthquake-damaged San Francisco-Oakland Bay Bridge.The learning from the project was that the policy

Accepted Answer

The implementation of the Buy American policy led to higher costs for the government project, as it limited the options for cheaper foreign suppliers and forced the use of domestic suppliers that may have been more expensive. This suggests that the policy may not be economically efficient and may not yield welfare gains for the nation.

Question 7

Similar to import tariffs, quotas on imports result in

Accepted Answer

Quotas on imports result in limiting the supply of imported goods which leads to higher prices for domestic consumers. This is because the domestic producers can charge a higher price due to reduced competition from imports. The consumer surplus may reduce due to increased prices, and there may be a redistribution of the consumer surplus to the domestic producers in the form of increased producer surplus. However, the overall welfare effects are ambiguous as it may result in inefficient allocation of resources and deadweight loss. Foreign consumers may not be affected directly by quotas, but they may face higher prices due to reduced competition in the domestic market.

Question 8

A licensing requirement, or an unreasonable standard regulating the safety or quality of a product that is imported into a country, is called a

Accepted Answer

A licensing requirement regulating the safety or quality of an imported product is an example of a nontariff barrier to trade. Nontariff barriers are any obstacles to trade that are not in the form of a traditional tariff or tax on imports. They can include regulations, standards, and other bureaucratic obstacles that limit imports and protect domestic industries.

Question 9

Import quotas

Accepted Answer

Import quotas limit the supply of foreign wine, causing an increase in the price of wine for the domestic consumer. This is due to the decreased availability of foreign wine, which allows domestic producers to charge higher prices without fear of competition. Import quotas can have a protective effect by protecting domestic producers from foreign competition, but they do not necessarily have a consumption effect. There is also a deadweight welfare loss associated with import quotas, as they prevent the market from reaching its efficient equilibrium.

Question 10

Which is NOT true about the practices in Japanese ports?

Accepted Answer

The passage does not mention whether the Japanese government approved or disapproved of the practices in Japanese ports. However, it does mention that the government attempted to regulate the practices and introduced new legislation to encourage competition and prevent monopolies.

Question 11

If Canada was to levy a quota on chocolate imported from Denmark

Accepted Answer

If Canada were to levy a quota on chocolate imported from Denmark, it would limit the amount of chocolate that could be imported into Canada from Denmark. This reduction in competition would lead to an increase in the price of chocolate in Canada, resulting in a decline in consumer surplus. There is no reason to believe that Canada's exports of chocolate would be affected, or that the employment of workers in Denmark's chocolate industry would increase.

Question 12

An example of a nontariff trade barrier would be

Accepted Answer

The answer of An example of a nontariff trade barrier...

Question 13

Throughout the world, governments auction quota licenses

Accepted Answer

The answer of Throughout the world, governments auction quota licenses
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Question 14

Nontariff trade barriers include all of the following EXCEPT

Accepted Answer

Customs duties are a form of tariff, not a nontariff trade barrier. Nontariff barriers include measures like subsidies, quotas, and regulations that countries use to control the amount of trade across their borders, without resorting to the imposition of tariffs.

Question 15

The following are quotes received by U.S.government for a particular work.Which is the most likely quote to get selected based on the government procurement policies?

Accepted Answer

According to government procurement policies, preference is given to domestic suppliers or providers if the quoted prices are within a reasonable range, typically within 6% of the lowest foreign bid. In this case, the domestic supplier 1 is within a reasonable range compared to the Chinese and French suppliers, and hence is most likely to get selected.

Question 16

Assume that a truck manufacturer has light trucks with the following fuel economy.Which would NOT meet the CAFÉ standard?

Accepted Answer

The CAFÉ standard for light trucks currently requires a fuel economy of 27.5 miles per gallon. The option D has a fuel economy of 27.2 miles per gallon, which is below the standard and would not meet the requirements. Options A, B and C all have fuel economies that exceed the standard and would meet the requirements.

Question 17

__________________ are large buyers of goods and services.

Accepted Answer

Government agencies, such as the Department of Defense, are some of the largest buyers of goods and services in the world.

Question 18

Government imposed limits on the quantities of goods traded between nations are called

Accepted Answer

Government-imposed limits on the quantities of goods traded between nations are called quotas. Domestic content requirements refer to the requirement of using domestic components in the production of goods. Customs duties and tariffs refer to taxes imposed on imported goods.

Question 19

Nontariff barriers on import of automobiles tend to

Accepted Answer

Nontariff barriers, such as quotas or regulations, increase the cost of imported automobiles by limiting supply or adding compliance costs, making them more expensive.

Question 20

In the long run, increased import quotas by Mexico's government would tend to

Accepted Answer

Increased import quotas restrict the amount of goods that can be imported, leading to a decrease in imports. This can also lead to a decrease in exports as other countries may retaliate with their own trade barriers, reducing Mexico's export opportunities.

Quiz 5: Nontariff Trade Barriers