Exam 8: Import Tariffs and Quotas Under Perfect Competition

Suppose that the equations S = 2P and D = 6 - P represent a small country's home supply and home demand curves, and the free-trade world price is $1. 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.)

The following table gives the hypothetical supply and demand of television sets in Guatemala. Guatemala is a small country that is unable to affect world prices. The world price (free-trade price) is $300 per TV set. With free trade, how many TV sets will Guatemala import?

When a tariff is imposed, there is always an additional loss. One loss occurs when consumers purchase fewer units of the good because prices have risen, so society loses the value of that consumption. This loss is the:

Suppose that consumer demand is given by this equation: P = 10 - Q. What is the value of consumer surplus when P = 5?

(Figure: Home's Import-Competing Industry) What is this nation's "welfare" before trade?

Which of the following is NOT an effect of an import quota imposed by a small nation?

A free-trade area is defined as:

In 2002 the United States relied on GATT's ________ to impose tariffs on imported steel.

(Figure: Home's Import-Competing Industry) Based on the graph, which of the following statements is (are) correct?

Which statement best describes the result of a small country imposing a quota on imported sugar?

(Figure: Consumer Surplus) When the price of the product is $15, the consumer surplus is:

We can measure producer and consumer surplus by looking at a graph of supply and demand. Producer surplus is:

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

The difference between the price consumers are willing to pay and the price that they actually pay is known as:

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. What is the purpose of this €60-per-ton tariff?

An import quota is different from a voluntary export restraint because:

If S = 1P represents a country's home supply curve and D = 100 - 1P represents its home demand curve, then the equation representing its import demand curve is:

(Figure: The Import-Competing Industry) What is the increase in producer surplus if the demand for the product increases and the new equilibrium price is 30 and quantity is 50?

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

Which of the following is NOT an effect of an import tariff?