Trade Policies For the Developing Nations – MCQs

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1.If firms form a cartel and coordinate their production, what is the optimal total output for the cartel, the corresponding market price, and the resulting total profit?

2 million barrels daily, $100 per barrel, $60 million profit4 million barrels daily, $80 per barrel, $160 million profit6 million barrels daily, $60 per barrel, $60 million profit8 million barrels daily, $40 per barrel, $20 million profit

2.Compared to wealthy developed countries, do less developed nations generally apply __________ tariffs on imported goods?

3.What has been a notable reaction to China's membership in the World Trade Organization?

The Chinese government has considered it a minor concern.China joined the WTO during the 1950s.Several labor and human rights groups internationally have criticized it.It has had little impact on trade relations between China and the U.S.

4.Which concept explains how nations advance technologically by emulating the development paths of more advanced countries?

Flying geese modelImport substitution strategyExport-led growthCommodity-driven expansion

5.Why might developing nations that focus their production on agricultural goods or raw materials experience a long-term decline in their terms of trade on the global market?

Because the demand for these goods in developed countries is not very responsive to price changesDue to significant growth in global supply caused by policies promoting export expansionAs a result of weak demand for these goods in industrialized nationsAll of the above factors contribute to this decline

6.An export quota agreement aimed at stabilizing bauxite prices is more effective when the member producing countries make up a share of global production and when it is for these members to stockpile bauxite?

a small portion; harder to stockpilea small portion; easier to stockpilea large portion; harder to stockpilea large portion; easier to stockpilenone of the above

7.If the demand for tin is highly inelastic and the supply of tin alternately decreases and increases along the demand curve, how will the magnitude of price changes compare to the magnitude of quantity changes in this market?

significantly larger thanconsiderably smaller thanequal toany of the above

8.Given Px as the export price index, Pm as the import price index, Qx as the export quantity index, and Qm as the import quantity index, developing nations often claim that their commodity terms of trade have deteriorated over time. Which ratio is indicated to have decreased in this context?

The ratio of export prices to import prices (Px divided by Pm)The ratio of import prices to export prices (Pm divided by Px)The product of import price-to-export price ratio and import quantity index ((Pm/Px) × Qm)The product of export price-to-import price ratio and export quantity index ((Px/Pm) × Qx)None of the above

9.Which type of policy aims to encourage industrial development by imposing significant restrictions on imported goods to support domestic manufacturing?

10.Which principle is primarily emphasized in export-driven growth strategies when allocating resources?

Distributing resources according to absolute advantageAllocating resources based on comparative advantageImplementing trade barriers to shield domestic import industriesApplying trade restrictions to protect firms competing in exportsFocusing on self-sufficiency through import substitution

11.Import substitution is best classified as which type of economic growth strategy?

The concept of comparative advantageThe idea of absolute advantageA strategy focused on external marketsA strategy centered on domestic development

12.Given that the supply and demand for primary commodities are highly price inelastic, how do their prices typically behave?

They have consistently increased over the past several decadesThey remain more constant compared to the prices of manufactured itemsThey vary roughly the same amount as the prices of manufactured productsThey usually experience significant volatility from one year to the next

13.Which method have developing nations typically avoided when addressing the challenge of fluctuating export markets?

Agreements involving multiple countriesRegulating output and exportsMaintaining reserve stock systemsApplying tariff-rate quota measures

14.What factor restricts OPEC's ability to maximize its profits?

The absence of alternative energy sources to oilComparable production costs among its member countriesThe world demand for oil being largely unresponsive to price changesEconomic downturns in countries that import oilNone of the above

15.Which of the following is NOT considered a trade challenge faced by developing nations?

volatile export marketsenhancing terms of traderestricted entry to industrialized countries' marketsproducts exhibiting highly elastic demand curves

16.Which characteristic makes a commodity suitable for forming an export cartel?

It should be a finished industrial productIt must be a raw materialIt needs to exhibit low supply responsiveness to price changesIt ought to have a highly responsive demand to price variations

17.Which type of industrialization strategy have Hong Kong and South Korea, as developing countries, recently adopted?

substituting imports with local productsencouraging exports to boost growthengaging in unfair trade by dumping goodssigning agreements with multiple countriesnone of the above

18.Which of the following was NOT an effect of the rising oil prices during the 1970s and early 2000s on countries that import oil?

19.Which commonly used measure helps distinguish developed nations from developing ones?

Trade volume per personActual income per individualUnemployment rate per personAverage calorie consumption per person

20.Suppose global economic growth leads to an increase in the demand for tin by 4 million pounds at every price level. To keep the price of tin stable at the target price, what action should you take?

Sell 4 million pounds of tinSell 8 million pounds of tinPurchase 4 million pounds of tinPurchase 8 million pounds of tin