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Exam 4: Tariffs

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Question 61

Multiple Choice

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Consider Figure 4.1.In the absence of trade,Mexico's producer surplus and consumer surplus respectively equal:

A) $120,$240
B) $180,$180
C) $180,$320
D) $240,$240

E) A) and B)
F) None of the above

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Question 62

Multiple Choice

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If I purchase a stereo from South Korea,I obtain the stereo and South Korea obtains the dollars.But if I purchase a stereo produced in the United States,I obtain the stereo and the dollars remain in America.This line of reasoning is:

A) Valid for stereos,but not for most products imported by the United States
B) Valid for most products imported by the United States,but not for stereos
C) Deceptive since Koreans eventually spend the dollars on U.S.goods
D) Deceptive since the dollars spent on a stereo built in the United States eventually wind up overseas

E) C) and D)
F) B) and C)

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Question 63

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If a "small" country levies a tariff on an imported good,its overall welfare increases if the monetary value of the tariff's consumption effect plus protective effect is less than the monetary value of the terms-of-trade effect.

A tax of 15 percent per imported item would be an example of:

Consider Figure 4.1.The tariff would be prohibitive (i.e.,eliminate imports) if it equaled:

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

There is widespread agreement among economists that import tariffs increase overall employment in the levying country.

The imposition of tariffs on imports results in deadweight welfare losses for the home economy.These losses consist of the:

Figure 4.4 Market for Gasoline in a Small Nation -Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in consumer surplus would be

-Consider Table 4.1.Prior to the tariff,the total price of domestically-produced VCRs is:

Which of the following is a fixed percentage of the value of an imported product as it enters the country?

Is it possible for a low nominal tariff rate to understate the effective rate of protection? What is tariff escalation?

Figure 4.2.Import Tariff Levied by a "Large" Country -Referring to Figure 4.2,the tariff's deadweight welfare loss to the United States totals:

According to Figure 4.1,Mexican manufacturers gain ____ because of the tariff.

The protective effect of a tariff occurs to the extent that less efficient domestic production is substituted for more efficient foreign production.

An import tariff will worsen the terms of trade for a "small" country but improve the terms of trade for a "large" country.

According to Figure 4.1,the deadweight cost of the tariff totals:

-Consider Table 4.1.The nominal tariff rate on imported VCRs equals:

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; the U.S.terms of trade:

-Consider Table 4.1.The effective tariff rate equals: