Exam 8: Import Tariffs and Quotas Under Imperfect Competition

SCENARIO: PRODUCTION IN NORWAY Suppose that Norway is a small country and currently produces 100,000 Board feet of lumber at $600 per 1,000 board feet.Then it begins to trade At the world price of $500 per 1,000 board feet.As a result of trade, Norway's production falls to 50,000 board feet and its consumption Increases to 200,000 board feet. Reference: Ref 8­2 (Scenario: Production in Norway) How many board feet of lumber does Norway now import?

A country that becomes a member of the World Trade Organization agrees To bind its tariffs."Binding" means that the country agrees not to increase Existing tariffs and that it will not introduce new tariffs.However, GATT Allows three exceptions to binding.Which of the following is NOT an Exception to binding?

What is the MOST recent set of negotiations at WTO called?

Figure: Home Market I (Figure: Home Market I) The government revenue due to the tariff is:

How many units will a country import if S = 1P represents its home supply Curve, D = 100 - 1P represents its home demand curve, and the world Price is $25?

Under the GATT framework, nations negotiated for up to six years, Resulting in new trade agreements.These are known as:

To help its domestic producers, the United States unilaterally raised tariffs On ____ in early 2002, but after a ruling against the United States by the WTO, it was forced to rescind the tariff.

WTO is the acronym for:

The following graph shows the relationship between a large country importer of a good, say steel, and its tariff rate (in percentages).Explain why the curve reaches maximum and then declines.

(Scenario: Guatemala's Television Market) In the absence of trade, how Many TV sets will Guatemala produce?

When a tariff is imposed, there is always an additional loss.One loss Occurs when production moves from more efficient foreign producers to Less efficient domestic producers.This loss is the:

(Scenario: Guatemala's Television Market) With free trade, how many TV Sets will Guatemala produce?

Which of the following is an exception to the most favored nation Principle?

Why did no U.S.tire producer support the 2009 U.S.tariff on tires imported from China?

Why do countries persist in using these protective measures even though most economists believe that tariffs and quotas yield welfare losses to countries?

The escape clause in U.S.trade law:

Suppose that the equations S = 2P and D = 6 - P represent a small Country's home supply and home demand curves.If the government Imposed a 50% tariff on imports, how much revenue would it collect as a Result of the tariff? (Note: It is possible to consume partial units of this Product, such as 2.5 units.)

SCENARIO: PRODUCTION IN NORWAY Suppose that Norway is a small country and currently produces 100,000 Board feet of lumber at $600 per 1,000 board feet.Then it begins to trade At the world price of $500 per 1,000 board feet.As a result of trade, Norway's production falls to 50,000 board feet and its consumption Increases to 200,000 board feet. Reference: Ref 8­2 (Scenario: Production in Norway) What is Norway's total gain in consumer Surplus once it begins to trade?

(Figure: Home Market I) What is the deadweight loss because of the Tariff?

If there is free trade in a small economy, the nation will be able to import Unlimited quantities of the product at: