Exam 9: The Instruments of Trade Policy

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

If an import-competing firm is the only domestic producer of a good, then a transition from autarky to free trade will ________ domestic price, ________ producer surplus, ________ consumer surplus, and ________ overall domestic national welfare.

-Refer to above figure. In the absence of trade, how many Widgets does this country produce?

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 imported?

In the country levying the tariff, the tariff will

What is a TRUE statement concerning the imposition in the U.S. of a tariff on cheese?

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

Tariffs are NOT defended on the grounds that they

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?

Specific tariffs are

If a small country imposes a tariff, then

Throughout the post-World War II era, the importance of tariffs as a trade barrier has

-Refer to above figure. In the absence of a tariff and in the presence of trade, what is the country's consumer surplus?

The two deadweight triangles are the Consumption distortion and Production distortion losses. It is easy to understand why the Consumption distortion constitutes a loss for society. After all, it raises the prices of goods to consumers, and even causes some consumers to drop out of the market altogether. It seems paradoxical that the Production distortion is considered an equivalent burden on society. After all, in this case, profits increase, and additional production (with its associated employment) comes on line. This would seem to be an offset rather than an addition to the burden or loss borne by society. Explain why the Production distortion is indeed a loss to society, and what is wrong with the logic that leads to the apparent paradox.

A tax of 20 percent per unit of imported garlic is an example of a(n)

-Refer to above figure. Given a tariff of $3 per unit, what is the country's consumer surplus?

The excess supply curve of a product we (H) import from foreign countries (F) increases as

A tax of 20 cents per unit of imported garlic is an example of a(n)

If an import-competing firm is imperfectly competitive, than under free trade an import quota will ________ domestic market price, ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.