Question
1 ) Under free trade, a digital SLR camera sells for $1000. If the U.S. imported the parts to produce a digital SLR, the free
1 ) Under free trade, a digital SLR camera sells for $1000. If the U.S. imported the parts to produce a digital SLR, the free trade price of the parts would be $550. If U.S. producers produce digital SLRs under these conditions:
Group of answer choices:
A. their value-added equals $450.
B. their value-added equals $0.
C. their value-added equals $1000.
D. their value-added equals $550.
2) Which of the following is NOT true about the VER?
Group of answer choices
It benefits the exporting country as a whole.
They are frequently imposed at the request of an importer.
It is an export quota.
It always produces a loss for the importing country.
13Suppose the U.S. decided to use a quota to limit cell phone imports. Assume the U.S. is a small country. If the U.S. used an auction to allocate quota rights
a. the U.S. welfare would be lower than it would be if the exporting countries used voluntary export restraints instead.
*b. the auction could generate revenue that was roughly equal to the revenue generated by a tariff which limited imports to the level allowed under the quota.
c. the U.S. welfare would be higher than it would be if U.S. continued to have a free trade policy.
d. the auction would generate much more revenue than would be generated by a tariff which limited imports to the level allowed under the quota.
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