EBK INTERNATIONAL ECONOMICS
7th Edition
ISBN: 9780134523873
Author: Gerber
Publisher: YUZU
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Chapter 4, Problem 8SQ
To determine
Explain Dunning’s OLI theory with the tradeoffs faced by GM.
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The opening statement on the website of the Organization of Petroleum Exporting Countries (OPEC) says its members seek “ … to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.” To achieve these goals, OPEC attempts to coordinate and unify petroleum policies by raising or lowering its members’ collective oil production. However, increased production by the United States, Russia, Oman, Mexico, Norway, and other non-OPEC countries has placed downward pressure on the price of crude oil.
Please explain:
To achieve these goals of stable and fair oil prices, what must OPEC do to maintain the price of oil at its desired level?
How easy is it for OPEC to achieve this goal?
Suppose Japan agreed to a voluntary export restriction (VER) that reduced U.S. imports of Japanese steel by 10 percent. What would be the likely short-run effects of that VER on the U.S. and Japanese steel industries? If this restriction were permanent, what would be its long-run effects in the two nations on (a) the allocation of resources, (b) the volume of employment, (c ) the price level, and (d ) the standard of living?
GlobalCell is an American firm producing cell phones. GlobalCell imports cell phone components from Japan and assembles them domestically. Suppose
that in the United States, a cell phone sells for $100 and that 60% of the cell phone's value comes from the value of the imported components. The United
States imposes a 30% tariff on cell phones and a 10% tariff on the cell phone's components. Assume that costs of producing components are the same in the
United States and Japan and that transit costs are nonexistent.
Based on the information provided, the effective rate of protection that GlobalCell receives from the tariff is
A. 60%
B. -20%
C. -13.3%
D. 26.7%
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EBK INTERNATIONAL ECONOMICS
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