Question 1

-Refer to above figure.With free trade and no tariffs,what is the quantity of Widgets produced domestically?

Accepted Answer

The answer of 
-Refer to above figure.With free trade and...

Question 2

If the tariff on computers is not changed,but domestic computer producers shift from domestically produced semiconductors to imported components,then the effective rate of protection in the computer industry will
A)increase.
B)decrease
C)remain the same.
D)depend on whether computers are PCs or "Supercomputers."
E)no longer apply.

Accepted Answer

The answer of If the tariff on computers is not...

Question 3

If a good is imported into (large)country H from country F,then the imposition of a tariff in country H
A)raises the price of the good in both countries (the "Law of One Price").
B)raises the price in country H and cannot affect its price in country F.
C)lowers the price of the good in both countries.
D)lowers the price of the good in H and could raise it in F.
E)raises the price of the good in H and lowers it in F.

Accepted Answer

The answer of If a good is imported into (large)country...

Question 4

Of the many arguments in favor of tariffs,the one that has enjoyed significant economic justification has been the
A)cheap foreign labor argument.
B)infant industry argument.
C)even playing field argument.
D)balance of payments argument.
E)domestic living standard argument.

Accepted Answer

The infant industry argument states that tariffs can be used to protect and promote new industries in a developing economy that would otherwise not have the resources to compete with established industries in other countries. This argument has some economic justification as it can help to stimulate domestic production and create jobs in the early stages of a new industry. However, this argument is often criticized for potentially leading to inefficiencies and higher prices for consumers.

Question 5

The effective rate of protection is a weighted average of nominal tariffs and tariffs on imported inputs.It has been noted that in most industrialized countries,the nominal tariffs on raw materials or intermediate components or products are lower than on final-stage products meant for final markets.Why would countries design their tariff structures in this manner? Who tends to be helped,and who is harmed by this cascading tariff structure?

Accepted Answer

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Question 6

-Refer to above figure.With a specific tariff of $3 per unit,what is the quantity of Widgets imported?

Accepted Answer

The answer of 
-Refer to above figure.With a specific tariff...

Question 7

-Refer to above figure.The lowest specific tariff which would be considered prohibitive is ________.

Accepted Answer

The answer of 
-Refer to above figure.The lowest specific tariff...

Question 8

-Refer to above figure.With a specific tariff of $3 per unit,what is the quantity of Widgets consumed domestically?

Accepted Answer

The answer of 
-Refer to above figure.With a specific tariff...

Question 9

If a good is imported into (small)country H from country F,then the imposition of a tariff In country H
A)raises the price of the good in both countries (the "Law of One Price").
B)raises the price in country H and does not affect its price in country F.
C)lowers the price of the good in both countries.
D)lowers the price of the good in H and could raise it in F.
E)raises the price of the good in H and lowers it in F.

Accepted Answer

The imposition of a tariff in country H raises the price of the imported good in country H, as the tariff is an additional cost added to the price. It does not affect the price in country F, as the producer in country F still offers the good at the same price. Thus, the price difference between the two countries increases, benefiting domestic producers in country H. This is known as the "effective rate of protection."

Question 10

The effective rate of protection measures
A)the "true" ad valorem value of a tariff.
B)the quota equivalent value of a tariff.
C)the efficiency with which the tariff is collected at the customhouse.
D)the protection given by the tariff to domestic value added.
E)the difference between domestic and foreign prices of the import.

Accepted Answer

The effective rate of protection measures the protection given by the tariff to domestic value added. It considers the tariffs on inputs as well as on final goods and calculates the percentage increase in value added due to protection.

Question 11

When a government allows raw materials and other intermediate products to enter a country duty free,this generally results in a(an)
A)effective tariff rate less than the nominal tariff rate.
B)nominal tariff rate less than the effective tariff rate.
C)rise in both nominal and effective tariff rates.
D)fall in both nominal and effective tariff rates.
E)rise in only the effective tariff rate.

Accepted Answer

When raw materials and other intermediate products enter a country duty-free, the nominal tariff rate decreases as there is no tariff on these items. However, the effective tariff rate may still be high if the finished goods made from these raw materials are subject to high tariffs when exported. Therefore, the nominal tariff rate will be less than the effective tariff rate.

Question 12

As globalization tends to increase the proportion of imported inputs relative to domestically supplied components
A)the nominal tariff automatically increases.
B)the rate of (effective)protection automatically decreases.
C)the nominal tariff automatically decreases.
D)the rate of (effective)protection automatically increases.
E)the amount of tariffs levied increases.

Accepted Answer

The answer of As globalization tends to increase the proportion...

Question 13

The imposition of tariffs on imports results in deadweight (triangle)losses.These are
A)production and consumption distortion effects.
B)redistribution effects.
C)revenue effects
D)efficiency effects.
E)distortion of incentives.

Accepted Answer

The answer of The imposition of tariffs on imports results...

Question 14

If a small country imposes a tariff,then
A)the producers must suffer a loss.
B)the consumers must suffer a loss.
C)the government revenue must suffer a loss.
D)the demand curve must shift to the left.
E)the world price on that item will shift.

Accepted Answer

When a small country imposes a tariff, the cost of imports goes up, making foreign goods more expensive for consumers in the domestic market. This leads to a decrease in demand for these goods as consumers shift to substitute goods produced locally. As a result, producers may experience an increase in demand but they will not suffer a loss. On the other hand, consumers will suffer a loss as they have to pay more for the goods they used to buy at lower prices. The government revenue may or may not suffer a loss depending on the elasticity of demand and supply. The demand curve may shift to the left or right depending on various factors. The world price may or may not shift depending on the size of the country and the market share of the product.

Question 15

In an inflationary environment,then over time
A)a specific tariff will tend to raise more revenue than an ad valorem tariff.
B)an ad valorem tariff will tend to raise more revenue than a specific tariff.
C)an optimum tariff will tend to raise more revenue than an escalating tariff.
D)a tariff quota will tend to raise more revenue than a specific tariff.
E)an import quota would raise more revenue than a specific tariff.

Accepted Answer

In an inflationary environment, the prices of imported goods are likely to rise, which would increase the value of an ad valorem tariff. This means that an ad valorem tariff would tend to raise more revenue than a specific tariff, which is a fixed amount per unit of the good imported.

Question 16

If the tariff on computers is not changed,but the government then adds hitherto nonexistent tariffs on imported semi-conductor components,then the effective rate of protection in the computer industry will
A)increase.
B)decrease.
C)remain the same.
D)depend on whether computers are PCs or "Supercomputers."
E)no longer apply.

Accepted Answer

The answer of If the tariff on computers is not...

Question 17

-Refer to above figure.With a specific tariff of $3 per unit,what is the quantity of Widgets produced domestically?

Accepted Answer

The answer of 
-Refer to above figure.With a specific tariff...

Question 18

The main redistribution effect of a tariff is the transfer of income from
A)domestic producers to domestic buyers.
B)domestic buyers to domestic producers.
C)domestic producers to domestic government.
D)domestic government to domestic consumers.
E)foreign producers to domestic consumers.

Accepted Answer

A tariff acts as a tax on imports, making them more expensive for domestic buyers. As a result, demand for domestic products increases, leading to an increase in price and income for domestic producers. Therefore, a tariff leads to a transfer of income from domestic buyers to domestic producers.

Question 19

Some argue that tariffs always hurt the imposing country's economic welfare,and are typically designed to shift resources from one sector to another,protected or preferred one,within an economy.Find and discuss a counter example to this argument.

Accepted Answer

The answer of Some argue that tariffs always hurt the...

Question 20

-Refer to above figure.With free trade and no tariffs,what is the quantity of Widgets consumed domestically?

Accepted Answer

The answer of 
-Refer to above figure.With free trade and...

Quiz 9: The Instruments of Trade Policy

-Refer to above figure.With free trade and no tariffs,what is the quantity of Widgets produced domestically?

If the tariff on computers is not changed,but domestic computer producers shift from domestically produced semiconductors to imported components,then the effective rate of protection in the computer industry will

If a good is imported into (large) country H from country F,then the imposition of a tariff in country H

Of the many arguments in favor of tariffs,the one that has enjoyed significant economic justification has been the

-Refer to above figure.With a specific tariff of $3 per unit,what is the quantity of Widgets imported?

-Refer to above figure.The lowest specific tariff which would be considered prohibitive is ________.

-Refer to above figure.With a specific tariff of $3 per unit,what is the quantity of Widgets consumed domestically?

If a good is imported into (small) country H from country F,then the imposition of a tariff In country H

The effective rate of protection measures

When a government allows raw materials and other intermediate products to enter a country duty free,this generally results in a(an)

As globalization tends to increase the proportion of imported inputs relative to domestically supplied components

The imposition of tariffs on imports results in deadweight (triangle) losses.These are

If a small country imposes a tariff,then

In an inflationary environment,then over time

If the tariff on computers is not changed,but the government then adds hitherto nonexistent tariffs on imported semi-conductor components,then the effective rate of protection in the computer industry will

-Refer to above figure.With a specific tariff of $3 per unit,what is the quantity of Widgets produced domestically?

The main redistribution effect of a tariff is the transfer of income from

Some argue that tariffs always hurt the imposing country's economic welfare,and are typically designed to shift resources from one sector to another,protected or preferred one,within an economy.Find and discuss a counter example to this argument.

-Refer to above figure.With free trade and no tariffs,what is the quantity of Widgets consumed domestically?