Question

56.

Countries can gain from trade as long as the differences in the prices of a trade good between two countries is:

	A.	greater than the cost of transporting it between the countries.
	B.	equal to the cost of transporting it between the countries.
	C.	less than the cost of transporting it between the countries.
	D.	none of these is true.

57.

A tariff of 15% on imported artwork is an example of a(n):

	A.	specific tariff.
	B.	compound tariff.
	C.	ad valorem tariff.
	D.	quota.

60.

Suppose Canada forms a free-trade agreement with the Netherlands and increases the quantity of tulips it imports. Canadian tulip consumers will be _____ and Canadian tulip producers will be _____.

	A.	worse off; worse off
	B.	worse off; better off
	C.	better off; better off
	D.	better off; worse off

61.

The argument that industries should be temporarily protected by tariffs or quotas to allow firms to develop a competitive product is called the:

	A.	countervailing duty argument.
	B.	infant industry argument.
	C.	antidumping argument.
	D.	competitive relief argument.

62.

In international trade, when we say that Brazil is “dumping” in the United States, this is indicating that:

	A.	Brazil's firms are selling goods at prices below the cost by which U.S. firms can produce that same good.
	B.	Brazil's firms are selling goods at prices below what they charge in Brazil or below their production costs.
	C.	Brazil's firms can produce goods at lower cost than U.S. firms can.
	D.	Brazil is profiting from tariffs placed on U.S. goods.

Answer 1

56.

Countries can gain from trade as long as the differences in the prices of a trade good between two countries is:

A.	greater than the cost of transporting it between the countries.

Because, when transport cost (which is cost of arbitrage here ) is lower than the price difference (which will generate revenue) there will be a profit (total revenue - total cost).

57.

A tariff of 15% on imported artwork is an example of a(n):

C.	ad valorem tariff.

ad valorem tariff is levied on a good based on a percentage of that good's value(ad valorem is Latin for "according to value,").

60.

Suppose Canada forms a free-trade agreement with the Netherlands and increases the quantity of tulips it imports. Canadian tulip consumers will be _____ and Canadian tulip producers will be

D.	better off; worse off

As a result of free trade, the supply of tulips in Canadian market will increase. Demand remaining same the price will decrease in domestic market, so the consumers will be better off.

Canada is importing tulip because it has less supply than demand and as there is less supply domestic price is higher than international price(which is enjoyed by domestic producers). When there is a free trade agreement, the price will decline to the level of international price. This will not allow the domestic producers to charge high price, they will be worse off.

61.

The argument that industries should be temporarily protected by tariffs or quotas to allow firms to develop a competitive product is called the:

B.	infant industry argument.

The purpose is to create a level field between a backdated industry (or a new )and a highly advanced industry producing similar commodities. The government protection to the industry holds good for a certain period of time and when the industry is able to compete in the market, trade barriers are removed.

62.

In international trade, when we say that Brazil is “dumping” in the United States, this is indicating that:

B.	Brazil's firms are selling goods at prices below what they charge in Brazil or below their production costs.

Lower price in foreign market than in domestic market. Dumping involves substantial export volumes of a product, it endangers the financial viability of the product's manufacturers or producers in the importing nation.