8.4 Trade Costs and Export Decisions
1) In the model of monopolistic competition, trade costs between countries will cause domestic and foreign markets to have ________ prices, ________ quantities sold, and ________ profit levels.
A) different; different; different
B) identical; different; different
C) different; different; identical
D) identical; different; identical
E) identical; identical; different
2) In the model of monopolistic competition, trade costs between countries cause
A) marginal costs of exported goods to exceed the marginal costs of goods sold domestically.
B) marginal costs of goods sold domestically to exceed the marginal costs of exported goods.
C) all firms that can earn a profit on domestic sales to export their goods at lower prices.
D) all firms that can earn a profit on domestic sales to export their goods at higher prices.
E) countries to negotiate the elimination of trade costs by mutual subsidization of trade.
3) In the model of monopolistic competition, trade costs between countries cause
A) some firms that can earn a profit on domestic sales to refrain from exporting their goods.
B) prices of goods sold domestically to exceed the prices of exported goods.
C) marginal costs of goods sold domestically to exceed the marginal costs of exported goods.
D) all firms that can earn a profit on domestic sales to export their goods at higher prices.
E) countries to negotiate the elimination of trade costs by mutual subsidization of trade.
8.5 Dumping
1) The most common form of price discrimination in international trade is
A) dumping.
B) non-tariff barriers.
C) Voluntary Export Restraints.
D) preferential trade arrangements.
E) product boycotts.
2) If an industry is imperfectly competitive, and markets are segmented then
A) a firm may find that it is profitable to engage in dumping.
B) a firm may find that international trade is unprofitable.
C) a firm may find that it should promote scale economies.
D) a firm may find that it has lost its comparative advantage.
E) a firm may find that it should become more specialized.
3) Complaints are often made to the International Trade Commission concerning foreign “dumping” practices. These complaints typically claim that
A) U.S. firms are harmed by the unfair pricing of foreign exporters.
B) foreign companies are charging exorbitant prices that are higher than the true value of the products.
C) foreign companies are charging prices that are lower than prices they charge countries other than the U.S.
D) U.S. consumers are harmed by the lack of quality control or health concerns in foreign countries.
E) U.S. consumers cannot differentiate between the foreign and domestic goods.
4) The figure above represents the demand and cost functions facing a Brazilian Steel producing monopolist. If it were unable to export, and was constrained by its domestic market, what quantity would it sell at what price?
5) The figure above represents the demand and cost functions facing a Brazilian Steel producing monopolist. The Brazilian firm is charging its foreign (U.S.) customers one half the price it is charging its domestic customers. Is this good or bad for the real income or economic welfare of the United States? Is the Brazilian firm engaged in dumping? Is this predatory behavior on the part of the Brazilian steel company?
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