Exam 9: The Instruments of Trade Policy

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 counterexample to this argument.

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

Economic theory in general, and trade theory in particular are replete with equivalencies. For example, it is argued that for any specific tariff one can find an equivalent ad valorum tariff; and that for any quota one can calculate a tariff equivalent. Discuss conditions or situations under which a specific and an ad valorum tariff are not equivalent. Discuss conditions or situations when a tariff and a quota are not equivalent.

Tariff rates on products imported into the U.S.

Tariffs are not defended on the ground that they

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

The principle benefit of tariff protection goes to

It is argued that a tariff may help promote employment in a single industry, but is not likely to help employment in general. Discuss.

-Refer to above figure. The loss of Consumer Surplus due to the tariff equals ________.

-Refer to above figure. The lowest specific tariff which would be considered prohibitive is ________.

The main redistribution effect of a tariff is the transfer of income from

An important difference between tariffs and quotas is that tariffs

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

The Metzler Paradox is a special case of the optimum tariff concept. Discuss this assertion. Would the optimum tariff tend to be a high one or a low one in the case where this paradox exists? What conditions would be needed in the international markets for a country's exports for this paradox to exist? Why do you suppose empirical support for the existence of this paradox has not been forthcoming to date?

Ad valorem tariffs are

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

A specific tariff provides home producers more protection when

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.

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

Specific tariffs are