Questions . 1. What are the two official definitions 2. "U.S. antidumping policy uses its injury test to ensu and by the U.S. government enhance U.S. national well-being. Do y Problems Why? 3. Which of the following three beverage exporters is dumping in the U.S. market? Which is V not? How do you know? Banzai Brewery Tipper Laurie Ltd. Bigg Redd Inc. (UK) (Canada) (Japan) $10 $10 Average cost $10 Price charged at the brewery 12 9 for domestic sales 10 Price charged at the brewery 11 for export sales 11 Price when delivered to the 12 13 10 U.S. port 4. What is persistent dumping? Does an exporter lose profit because of the low export price? Does persistent dumping harm the importing country? 5. You have been asked to propose a specific revision of U.S. antidumping policy to make the policy more likely to contribute to U.S. well-being. What will you propose? 6. What is a countervailing duty? V . 7. What would happen to world welfare if the United States paid exporters a subsidy of $5 for every pair of blue jeans they sold to Canada, but Canada charged a $5 countervailing duty on every pair imported into Canada? Would the United States gain from the combi- nation of the export subsidy and import tariff? Would Canada? Explain. (In your answer, assume that the blue jeans market is perfectly competitive.) 8. Consider the case of an export subsidy for an importing country that has some monop- sony power-that is, the case in which the foreign supply-of-exports curve is upward- sloping. Use a graph like that in Figure 11.4. a. In comparison with free trade, what is the effect of the export subsidy on the interna- tional price and the quantity traded? b. The importing country now imposes a countervailing duty that returns the market to the initial free-trade quantity traded. In comparison with the market with just the export V subsidy, explain why the countervailing duty is good for the world. Explain why the countervailing duty can also increase the well-being of the importing country. 9. In the Airbus-versus-Boeing example in Figure 11.7, what strategy should the EU govern- ments follow if the upper-left box (a) gives Airbus and Boeing each a sure gain of 5 or (b) gives Boeing a gain of 5 and Airbus a gain of 0? In each case, should the EU offer a subsidy to Airbus? Explain. 10. Consider the export subsidy shown in Figure 11.3. Assuming that the export subsidyChapter 11 Pushing Exports 233 SVlowT remains $20, what are the effects of a decline in the world price from $100 to $90? Show V the effects using a graph, and explain them. 11. You have been hired to write a defense of the idea of having a government plan to subsi- dize the expansion of an export-oriented industry, taking resources away from the rest of the economy. Describe how you would defend such an industrial targeting strategy as good for the nation as a whole. 12. You have been hired to discredit the argument you just presented in answering question 11. Present a strong case against getting the government into the export- pushing business