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Exam 7: Trade Policies for the Developing Nations

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Question 1

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If the countries that export bauxite form a cartel to boost the price of bauxite in order to increase sales revenue, then they believe that the demand for bauxite

A) is inelastic with respect to price changes.
B) is elastic with respect to price changes.
C) will increase in response to a price increase.
D) will not change in response to a price change.

E) A) and C)
F) A) and B)

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Question 2

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A sweatshop is a factory that has poor and unsafe working conditions, unreasonable hours for workers, low wages and benefits, and child labor.

A) True
B) False

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Question 3

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One factor that has prevented the formation of cartels for producers of commodities is that

For most developing countries, the majority of their exports consists of

The majority of developing-nation exports are primary products, such as agricultural goods and raw materials; of the manufactured goods exported by developing nations, most are labor-intensive goods.

The developing countries tend to reside in all of the following regions EXCEPT

A key factor underlying the instability of primary product prices and export receipts of developing nations is the

Which device has been used by the International Wheat Agreement to stipulate the minimum prices at which importers will buy stipulated quantities from producers and the maximum prices at which producers will sell stipulated quantities to importers?

Figure 7.3. World Oil Market -Consider Figure 7.3.Under competitive conditions, the price of a barrel of oil equals

Export-led growth tends to

Not only do changes in demand induce relatively wide fluctuations in price when supply is inelastic, but changes in supply also induce relatively wide fluctuations in price when demand is inelastic.

Which device uses the International Tin Agreement to stabilize tin prices?

Figure 7.3. World Oil Market -Consider Figure 7.3.Under a profit-maximizing cartel, the price of a barrel of oil equals

The developing nations are most of those in Africa, Asia, North America, and Western Europe.

Which nation accounts for the largest amount of OPEC's oil reserves and production?

The replacement of imports of one nation with imports of another nation is known as "import substitution."

During the late 1980s and early 1990s, China dismantled much of its centrally-planned economy and permitted free enterprise to replace it.

The diagram below illustrates the international tin market. Assume that the producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound. Figure 7.2. Defending the Target Price in Face of Changing Supply Conditions ? -Consider Figure 7.2.Assume there exists a cartel of several producers that is maximizing total profit.If one producer cheats on the cartel agreement by decreasing its price and increasing its output, then the rational action of the other producers is to

Are economic downturns helpful to cartels?

Rather than conduct massive stabilization operations, buffer stock officials will periodically revise target prices should they move out of line with long-term price trends.