SCENARIO: FINNISH STEEL
Suppose that the freetrade price of a ton of steel is €500.(Note: € is the
Symbol for the euro, a common currency used in 16 European countries,
Including Finland.) Finland, a small country, imposes a €60 perton
Specific tariff on imported steel.With the tariff, Finland produces 300,000
Tons of steel and consumes 600,000 tons of steel.
Reference: Ref 85
(Scenario: Finnish Steel) What is the purpose of this €60perton tariff?
A)Its purpose is to protect Finnish steel consumers from foreign competition.
B)Its purpose is to protect Finnish steel producers and consumers from the World Trade Organization.
C)Its purpose is to protect Finnish steel producers from foreign competition.
D)Its purpose is to cause Finland to comply with provisions of the General Agreement on Tariffs and Trade.

Question

SCENARIO: FINNISH STEEL
Suppose that the free­trade price of a ton of steel is €500.(Note: € is the
Symbol for the euro, a common currency used in 16 European countries,
Including Finland.) Finland, a small country, imposes a €60 per­ton
Specific tariff on imported steel.With the tariff, Finland produces 300,000
Tons of steel and consumes 600,000 tons of steel.
Reference: Ref 8­5
(Scenario: Finnish Steel) What is the purpose of this €60­per­ton tariff?
A)Its purpose is to protect Finnish steel consumers from foreign competition.
B)Its purpose is to protect Finnish steel producers and consumers from the World Trade Organization.
C)Its purpose is to protect Finnish steel producers from foreign competition.
D)Its purpose is to cause Finland to comply with provisions of the General Agreement on Tariffs and Trade.

Quizplus · Accepted Answer

The purpose of the €60-per-ton tariff is to protect Finnish steel producers from foreign competition. This tariff makes importing steel more expensive and, therefore, makes it more feasible for Finnish steel producers to compete in the domestic market. Since Finland is producing 300,000 tons of steel, it shows that the tariff is having the desired effect of promoting domestic steel production.

SCENARIO: FINNISH STEEL Suppose That the Free­trade Price of a Ton of Steel

SCENARIO: FINNISH STEEL Suppose That the Freetrade Price of a Ton of Steel