Exam 8: Import Tariffs and Quotas Under Perfect Competition

Which of the following is NOT an important provision of GATT?

The safeguard provision or escape clause allows a country to:

(Figure: Home Market II) The net welfare loss for the home country because of the tariff is:

Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 19 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. Suppose that the €60-per-ton tariff caused Finnish production of steel to increase by 100,000 tons and Finnish consumption of steel to fall by 100,000 tons. What is the value of Finland's welfare loss due to the tariff?

If rent-seeking occurs, then a country's welfare losses from quotas will:

What is a difference between a tariff imposed by a large country and a tariff imposed by a small country?

Producer surplus is:

What happened to the price of U.S. clothing and U.S. clothing production as a result of the expiration of the Multifibre Arrangement in 2005?

Suppose that the United States is a large country and it wishes to impose optimal tariffs on its imports of avocados, bananas, and cherries. The export supply elasticities of avocados, bananas, and cherries are 1, 2, and 3, respectively. Which of the following ranks the products on the basis of their optimal tariffs from lowest to highest tariff?

When firms are able to sell units of a good at a price higher than the marginal cost of production, they are getting:

(Figure: Home's Import-Competing Industry) How would we measure the "gains" from trade in this diagram?

Import tariffs are ___________ on imports, and import quotas are ____________ on imports.

Quota rents are:

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. What is Norway's total welfare gain once it begins to trade?

Rank the following in ascending order of an imposing small country's welfare. If there are any two that are equivalent, explain their equivalencies. I. a tariff of t in a small country resulting in imports of M units II. a quota of M units of imports, with the government auctioning quota licenses to the highest bidders III. a quota of M units of imports in which domestic firms engage in rent-seeking activities IV. an arrangement in which the exporting country voluntarily agrees to limit its exports to M units

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

(Figure: Home Market II) For the large-country in the graph, the free-trade price of the product is ______ and the amount imported is _________.

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.

Suppose that the world price of steel is $500 per ton. Now suppose that the United States imposes a 20% tariff on imported steel (as it did in 2002). What is the U.S. domestic price of steel after the 20% tariff is imposed (rounded to the nearest dollar) if exporters bear two-thirds of the tariff?

Why would a discriminatory tariff against tires imported from China have a higher deadweight loss than a nondiscriminatory tariff against all imported tires?