Question 1

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 33-1
-Refer to Figure 33-1.Suppose P0 is the world price and Canada imports refrigerators.Suppose the Canadian government then responds to political pressure from domestic refrigerator manufacturers and imposes a tariff high enough that all imports are eliminated.As a result of this tariff,the price and quantity of refrigerators in Canada will be,respectively,

Accepted Answer

When a tariff is imposed that is high enough to eliminate all imports, the domestic market adjusts to the new equilibrium where the domestic supply meets domestic demand without any imports. This results in an increase in the price to P2 and the quantity adjusts to where the domestic supply curve intersects the domestic demand curve at Q3.

Question 2

Suppose that at the current world price bananas are imported into Canada.Suppose also that domestic supply is perfectly inelastic and domestic demand has unit elasticity.If Canada were to place a tariff on imported bananas,the

Accepted Answer

The answer of Suppose that at the current world price...

Question 3

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 33-1
-Refer to Figure 33-1,and assume the world price is P0.The Canadian government now imposes an import quota of the amount Q2Q4.The result would be that the price in Canada would

Accepted Answer

The answer of The diagram below shows the demand and...

Question 4

If Canada reduces the tariff imposed on a commodity from 10% to 5%,we would expect to observe

Accepted Answer

Reducing the tariff on a commodity makes imported goods cheaper relative to domestically produced goods. This leads to an increase in imports and a decrease in the quantity produced domestically, as consumers opt for the now cheaper imported goods.

Question 5

Canada is a net importer of durable consumer goods (washing machines,refrigerators,etc.).If Canada initially has no tariffs and it then imposes a 10% tariff on these goods,we would expect to observe

Accepted Answer

The answer of Canada is a net importer of durable...

Question 6

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 33-1
-Refer to Figure 33-1.The free-market equilibrium price of refrigerators in Canada is P0,implying that P0 is the

Accepted Answer

The free-market equilibrium price (P0) is the price that would be established without any external interference, such as tariffs or quotas. As such, P0 is the world price, since it represents the price that would be established based on global market forces alone.

Question 7

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 33-1
-Refer to Figure 33-1.At the price P0,the quantity of refrigerators imported into the Canadian market is

Accepted Answer

The answer of The diagram below shows the demand and...

Question 8

If a tariff is imposed in a country that is too small to have global market power,the domestic consumer will face a price,and the price paid to foreign producers will .

Accepted Answer

The answer of If a tariff is imposed in a...

Question 9

Over the long run,protecting a domestic industry using a high tariff is likely to new products and production methods,thus making it to compete in the global marketplace.

Accepted Answer

By protecting a domestic industry with a high tariff, the industry may become complacent and not invest in new products and production methods. This lack of investment in innovation will discourage the industry from developing and becoming more able to compete in the global marketplace.

Question 10

Suppose lumber,a homogeneous product,is exported from Canada at the current world price.If Canada imposes a 25% tariff on imported lumber,we would expect to observe

Accepted Answer

The answer of Suppose lumber,a homogeneous product,is exported from Canada...

Question 11

Suppose a $1 per-litre tariff on all wine imported into Canada was introduced.The effect of this tariff would be to

Accepted Answer

A $1 per-litre tariff would increase the price of all imported wines by the same amount. Therefore, cheaper wines will experience a relatively larger increase in price than expensive wines. This will give Canadian wines a cost advantage in the market for cheaper wines, which will protect the production of cheaper Canadian wines more than expensive ones.

Question 12

Canada is a net importer of durable consumer goods (washing machines,refrigerators,etc.).If Canada,a small country in global markets,imposes a 10% tariff on these goods,we would expect to observe

Accepted Answer

Imposing a tariff on imported durable consumer goods would increase the cost of these goods when they enter Canada. This cost is typically passed on to consumers, leading to an increase in the price paid by Canadian consumers for these goods.

Question 13

If a country is small in world markets and imports some product at the world price,the country effectively faces a horizontal foreign supply curve for that product.If the country then restricts the volume of imports by imposing an import quota,the effect on the domestic market for that product is to

Accepted Answer

Imposing an import quota restricts the quantity of goods that can be imported, effectively making the foreign supply curve vertical at the permitted quantity of imports, as the quantity is fixed regardless of the price.

Question 14

Suppose a 10% tariff on all wines imported into Canada was introduced.The effect of this tariff would be to

Accepted Answer

The answer of Suppose a 10% tariff on all wines...

Question 15

Canada is a net importer of durable consumer goods (washing machines,refrigerators,etc.).If Canada,a small country in global markets,imposes a 15% tariff on these goods,it will cause

Accepted Answer

A tariff on durable consumer goods would increase the cost of importing these goods into Canada. This higher cost is typically passed on to consumers in the form of higher prices. As prices increase, the quantity demanded by consumers would decrease, leading to a reduction in the consumption of these goods.

Question 16

Suppose Canada reduces a tariff on imported solar panels from 20% to 5%.We would expect to observe

Accepted Answer

A reduction in the tariff on imported solar panels would reduce their price for Canadian consumers, which should increase the quantity demanded. Additionally, it would make it more attractive for foreign producers to export solar panels to Canada, which should increase the quantity supplied. Therefore, we would expect to observe an increase in the quantity consumed of solar panels in Canada.

Question 17

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 33-1
-Refer to Figure 33-1.At the price P0,the quantity of refrigerators supplied to the Canadian market by domestic Canadian producers is

Accepted Answer

At price P0, the quantity supplied by domestic producers is represented by Q1 on the supply curve in Figure 33-1.

Question 18

Suppose Canada reduces a tariff on imported solar panels from 20% to 5%.We would expect to observe

Accepted Answer

When Canada reduces the tariff on imported solar panels, the cost of importing solar panels decreases. This makes it more attractive for Canadian firms to import solar panels, leading to an increase in the number of solar panels imported into Canada. Therefore, the correct choice is D.

Question 19

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 33-1
-Refer to Figure 33-1.Suppose P0 is the world price.If Canada imposes a tariff causing the price of refrigerators in Canada to rise from P0 to P1,the consequence would be that

Accepted Answer

A tariff on imported goods increases the domestic price of those goods. This makes domestic products more competitive compared to imports, leading to an increase in domestic production (from Q1 to Q2) and a decrease in domestic consumption (from Q5 to Q4) as the higher price reduces overall demand.

Question 20

The diagram below shows the demand and supply curves for refrigerators in Canada.
  FIGURE 33-1
-Refer to Figure 33-1.Suppose P0 is the world price.If Canada imposes a tariff causing the price of refrigerators in Canada to rise from P0 to P1,the Canadian government will collect tariff revenues equal to

Accepted Answer

Tariff revenues are collected on the imported quantity of refrigerators, which is Q2Q4 after the tariff is imposed. The tariff-induced price increase is P1-P0. Therefore, the tariff revenues are (P1-P0) x (Q2Q4).

Quiz 34: Exchange Rates and the Balance of Payments

Suppose that at the current world price bananas are imported into Canada.Suppose also that domestic supply is perfectly inelastic and domestic demand has unit elasticity.If Canada were to place a tariff on imported bananas,the

The diagram below shows the demand and supply curves for refrigerators in Canada. FIGURE 33-1 -Refer to Figure 33-1,and assume the world price is P0.The Canadian government now imposes an import quota of the amount Q2Q4.The result would be that the price in Canada would

If Canada reduces the tariff imposed on a commodity from 10% to 5%,we would expect to observe

Canada is a net importer of durable consumer goods (washing machines,refrigerators,etc.) .If Canada initially has no tariffs and it then imposes a 10% tariff on these goods,we would expect to observe

The diagram below shows the demand and supply curves for refrigerators in Canada. FIGURE 33-1 -Refer to Figure 33-1.The free-market equilibrium price of refrigerators in Canada is P0,implying that P0 is the

The diagram below shows the demand and supply curves for refrigerators in Canada. FIGURE 33-1 -Refer to Figure 33-1.At the price P0,the quantity of refrigerators imported into the Canadian market is

If a tariff is imposed in a country that is too small to have global market power,the domestic consumer will face a price,and the price paid to foreign producers will .

Over the long run,protecting a domestic industry using a high tariff is likely to new products and production methods,thus making it to compete in the global marketplace.

Suppose lumber,a homogeneous product,is exported from Canada at the current world price.If Canada imposes a 25% tariff on imported lumber,we would expect to observe

Suppose a $1 per-litre tariff on all wine imported into Canada was introduced.The effect of this tariff would be to

Canada is a net importer of durable consumer goods (washing machines,refrigerators,etc.) .If Canada,a small country in global markets,imposes a 10% tariff on these goods,we would expect to observe

If a country is small in world markets and imports some product at the world price,the country effectively faces a horizontal foreign supply curve for that product.If the country then restricts the volume of imports by imposing an import quota,the effect on the domestic market for that product is to

Suppose a 10% tariff on all wines imported into Canada was introduced.The effect of this tariff would be to

Canada is a net importer of durable consumer goods (washing machines,refrigerators,etc.) .If Canada,a small country in global markets,imposes a 15% tariff on these goods,it will cause

Suppose Canada reduces a tariff on imported solar panels from 20% to 5%.We would expect to observe

The diagram below shows the demand and supply curves for refrigerators in Canada. FIGURE 33-1 -Refer to Figure 33-1.At the price P0,the quantity of refrigerators supplied to the Canadian market by domestic Canadian producers is

Suppose Canada reduces a tariff on imported solar panels from 20% to 5%.We would expect to observe

The diagram below shows the demand and supply curves for refrigerators in Canada. FIGURE 33-1 -Refer to Figure 33-1.Suppose P0 is the world price.If Canada imposes a tariff causing the price of refrigerators in Canada to rise from P0 to P1,the consequence would be that