Exam 4: Tariffs

Assume the United States is a large consumer of steel that is able to influence the world price. Its demand and supply schedules are respectively denoted by DU.S. and SU.S. in Figure 4.2. The overall (United States plus world) supply schedule of steel is denoted by SU.S.+W. Figure 4.2. Import Tariff Levied by a "Large" Country ? -Consider Figure 4.2.Of the $100 tariff, ____ is passed on to the U.S.consumer via a higher price, while ____ is borne by the foreign exporter.

According to the infant-industry argument, temporary tariff protection granted to an infant industry will help it become competitive in the world market.When international competitiveness is achieved, the tariff should be removed.

If the domestic value added before an import tariff for a product is $500 and the domestic value added after the tariff is $550, the effective rate of protection is

Most American importers support tariffs because, in the United States, tariffs are levied directly on exporters.

Can import duties have unintended side effects? Describe one example.

An ad valorem tariff provides domestic producers less protection against import-competing goods during periods of changing prices.

When a tariff on imported inputs exceeds the tariff on the finished good,

With a specific tariff, the degree of protection afforded domestic producers varies directly with changes in import prices.

In the absence of international trade, assume that the equilibrium price and quantity of motorcycles in Canada is $14,000 and 10 units respectively. Assuming that Canada is a small country that is unable to affect the world price of motorcycles, suppose its market is opened to international trade. As a result, the price of motorcycles falls to $12,000 and the total quantity demanded rises to 14 units; out of this total, 6 units are produced in Canada while 8 units are imported. Now assume that the Canadian government levies an import tariff of $1,000 on motorcycles. With the tariff, 8 units are produced in Canada and quantity demanded is 12 units. -Refer to Exhibit 4.2.The tariff leads to a deadweight welfare loss for Canada totaling $1,000.

Assume that the United States imports televisions from Taiwan at a price of $300 per unit and that these televisions are subject to an import tariff of 25 percent.Also assume that U.S.components are used in the televisions assembled by Taiwan and that these components have a value of $100.Under the Offshore Assembly Provision of U.S.tariff policy, the price of an imported television to the U.S.consumer after the tariff has been levied is $375

When a nation imports materials and other inputs for production duty free, its tariff policy generally results in

Which of the following is an implication of President Obama's tariffs on Chinese tariffs?

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price. Figure 4.1. Import Tariff Levied by a "Small" Country -According to Figure 4.1, Mexican manufacturers gain ____ because of the tariff.

What happens to effective protection when the value added by the domestic producer declines?

If Germany is considered a "large" country, a tariff will ______ increase its national welfare.

Although an import tariff provides the domestic government additional tax revenue, it benefits domestic consumers at the expense of domestic producers.

If Venezuela is a small country its terms of trade will improve when it levies a tariff on imports.

If the world price of steel is $600 per ton, a specific tariff of $120 per ton is equivalent to an ad valorem tariff of 25 percent.

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price. Figure 4.1. Import Tariff Levied by a "Small" Country -Consider Figure 4.1.With a per-unit tariff of $3, the quantity of imports decreases to

A tariff on imports will necessarily improve the national welfare of a large country but it will worsen the national welfare of a small country.