The claim that lower environmental standards in foreign countries reduce industrial competitiveness for high standard countries is on firm theoretical ground because
A) higher environmental standards requirements raise the cost of production to a firm or industry abiding by the rules.
B) there will be a race-to-the-bottom competition on environmental standards.
C) the interests of firms that are subject to the high standards coincide with the nation's interests, one-for-one.
D) environmental standards in most countries have gotten more lax over time.
Question 2 - Describe the policies a nation would follow to correct a current account deficit. What are the primary purposes of each type of policy?
What will be an ideal response?
Question 3 - Using the HO model, assume that the United States is capital abundant and Mexico is labor abundant. If soybeans are capital intensive and avocados are labor intensive,
A) Mexico will produce more soybeans once trade is introduced.
B) the United States will produce more avocados once trade is introduced.
C) avocado prices in the United States will fall once trade begins.
D) soybean prices in Mexico will rise once trade begins.
Question 4 - Gains from the Single European Act were expected to be from
A) reduction of transactions costs from having a single currency.
B) reduced trade barriers and customs problems.
C) increased competition and economies of scale.
D) harmonization of environmental and labor standards.
Question 5 - One claim that trade barrier proponents use to enforce environmental standards is that
A) environmental standards do not reduce industrial competitiveness and do not induce race-to-the-bottom, where countries are forced to rescind their standards in order to maintain employment.
B) high standards in industrialized nations motivates some firms to export pollution to developing countries by relocating their dirty industries.
C) enforcing environmental standards is essential, as there are no differences between labor standards and environmental standards.
D) all environmental impacts are non-transboundary.
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