Question :
11) Domestic producers require time to gain experience and lower : 1388272
11) Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. This statement describes the ________ argument for protectionism.
A) diseconomies of scale
B) protecting national security
C) anti-dumping
D) infant industry
12) Which of the following describes the national security argument for protectionism?
A) Nearly all industries can make some claim to strategic importance so such trade restrictions can get out of hand.
B) Increases in economic surplus outweigh the decreases in consumer surplus that result from protectionism.
C) Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict.
D) Private companies (for example, Coca-Cola) should not be forced to reveal their trade secrets to foreign companies.
13) Economists believe the most persuasive argument for protectionism is to
A) save jobs.
B) protect high wages.
C) protect national security.
D) protect infant industries.
14) Dumping refers to
A) selling inferior products to unsuspecting consumers.
B) selling a product for a price below its cost of production.
C) exporting products that do not meet domestic safety standards.
D) illegally avoiding tariffs by selling products on the black market.
15) It is difficult to determine if foreign companies are selling their products for prices below their costs of production because
A) the true costs of production are difficult to calculate.
B) the firms have no legal obligation to reveal this information.
C) costs are calculated in the firms’ local currencies.
D) domestic taxes increase the firms’ costs but it is difficult to determine the incidence of these taxes.
16) In general, the costs tariffs and quotas impose on consumers are
A) large in total but relatively small per person.
B) small in total but relatively large per person.
C) large in total and large per person.
D) small in total and small per person.
17) The quota on imported sugar costs U.S. consumers more than $2 billion annually and protects very few jobs. Why does Congress maintain a sugar quota that protects only a few thousand workers while forcing millions of people to pay higher prices for sugar products?
A) Most U.S. citizens do not buy sugar products and want to help workers in the sugar industry.
B) Voters fear that if they oppose the sugar lobby, the lobby may oppose issues that they want Congress to support.
C) Citizens are not as involved in social and political issues as they used to be.
D) The per person cost of the sugar quota is too small for many people to lobby Congress to make their views known.
Article Summary
Roberto Azevedo, director-general of the World Trade Organization (WTO), reported that global trade growth estimates will be lowered for 2013 and 2014 because of increasing global protectionism. The current protectionism is based primarily in regulations rather than the more common tariffs and subsidies. Since 2008, almost 700 new trade restrictions have materialized — over 150 of those in 2012 alone — with Russia being singled out as one of the primary offenders.
Source: Kiran Moodley, “WTO warns of trade slowdown due to protectionism,” CNBC, September 6, 2013.
18) Refer to the Article Summary. The protectionism being granted to Russian firms is likely to cause
A) exporting countries to retaliate by placing trade barriers on Russian imports.
B) Russian manufacturers to become more efficient.
C) Russian consumers to pay lower prices for a wider variety of products.
D) most countries to reduce their own trade barriers to be able to better compete with Russian imports at home.
19) The General Agreement on Tariffs and Trade (GATT) was formed to replace the World Trade Organization (WTO) because the WTO was empowered only to reduce barriers to trade in goods. The GATT is an agreement to reduce barriers to trade in goods, services and intellectual property.
20) In 1995, the General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO).
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