Suppose that a country's "unweighted-average (nominal) tariff rate" (call it "t_U") and "weighted-average (nominal) tariff rate" (call it "t_W") are calculated both with and without the inclusion of prohibitive tariffs, and that the country does in fact have some prohibitive tariffs. In this situation, the t_U that includes the prohibitive tariffs __________ the same as the t_U that excludes the prohibitive tariffs, and the t_W that includes the prohibitive tariffs __________ the same as the t_W that excludes the prohibitive tariffs. A) would not be; would not be B) would not be; would be C) would be; would not be D) would be; would be

Question

Quizplus · Accepted Answer

Prohibitive tariffs are tariffs that prohibit imports completely. When calculating the unweighted-average tariff rate, the prohibitive tariffs are included in the calculation because they are, technically, tariffs. Therefore, including prohibitive tariffs in the calculation will increase the unweighted-average tariff rate, and the t_U that includes prohibitive tariffs would be greater than the t_U that excludes prohibitive tariffs. However, when calculating the weighted-average tariff rate, the prohibitive tariffs are excluded from the calculation because they do not allow for any trade. Therefore, including prohibitive tariffs in the calculation would have no effect on the weighted-average tariff rate, and the t_W that includes prohibitive tariffs would be the same as the t_W that excludes prohibitive tariffs.

Suppose That a Country's "Unweighted-Average (Nominal) Tariff Rate" (Call It