Exam 9: The Instruments of Trade Policy

The fact that industrialized countries levy very low or no tariff on raw materials and semi processed goods

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

Should the home country be "large" relative to its trade partners,its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms of the trade rectangle exceed the sum of the

Suppose the United States eliminates its tariff on ball bearings used in producing exports.Ball bearing prices in the United States would be expected to

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

The imposition of tariffs will help a nation attain which of the following goals?

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

Specific tariffs are

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

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

-Refer to above figure.What is the amount of government revenue resulting from imposition of the tariff?

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

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

An import quota will ________ producer surplus,________ consumer surplus,________ government revenue,and ________ overall domestic national welfare.

The U.S.sugar quota

The tariff levied in a "large country" (Home),lowers the world price of the imported good.This causes

An import quota is similar to a ________ in its effect on imports,EXCEPT that an import quota ________.

Suppose an import-competing firm is imperfectly competitive.Replacement of an export tariff with an import quota that yields the same level of imports will ________ market price,________ producer surplus,________ consumer surplus,________ government revenue,and ________ overall domestic national welfare.

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

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.