QUESTION 12 Arguments for protection against imported products assume that:

a.restricting trade will provide economicbenefits to developing nations

b.restricting trade by limiting competition will encourage growth in a particular industry sector in the domestic market

c.restricting trade will decrease the level of national security

d.all of these

13.The infant industry argument:

a. is a retaliatory measure enacted by the World Trade Organization

b.supports offering shortrun protection for developing industries

c. is a tax break offered to multinational enterprises to encourage investment

d. is an educational subsidy designed to promote pre-school programs

14.A central policy lesson of the principle of comparative advantage is that a nations gains from international trade:

a.if it is larger than its trading partners

b.if GDP grows by more than 5% a quarter

c.by generating larger export surpluses

d.by producing those goods for which it is relatively more efficient than other nations

15.Firms should regularly assess from where their foreign products are beingsourced to ensure:

a.they are taking advantage of lower tariffs in countries being offered preferential treatment as a result of a program or agreement

b.they are minimizing competitionin the existing industry

c.the government is collecting revenue

d.costs stay constant over time

QUESTION 16 A firm that faces problems of falling sales and excess productive capacity might resort to sporadic product dumping if it:

a.can sell the product at a higher price in the foreign market

b.can charge higher prices in markets that are elastic to price changes

c.earns revenues on foreign sales that, at least,cover variable costs on a limited amount of product

d.is able to force foreign prices below marginal production costs

QUESTION 17 A tariff that is calculated based upon a fixed percentage of the value of a good is known as:

a.a specific tariff

b.a compound tariff

c.an ad valoremtariff

d.a quota tariff

QUESTION 18 Arguments for trade restrictions include all of the followingexcept:

a.enhancing national security

b.encouraging a flying geese pattern of growth

c.equalization of production costs

d.leveling the playing field

QUESTION 19 Globalizationhas been driven by all of the followingexcept:

a.technology

b.speedy transportation

c.access to information

d.cultural norms

QUESTION 20 Adecreasein the import tariff will result in:

a.a decrease in imports but an increase in domestic production

b.an increase in imports but a decrease in domestic production

c.a decrease in theprice of the imported product and a decrease in quantity purchased

d.an increase in the price of the imported product but a decrease in quantity purchased