Chapter 9 ECON

Tariff

A tax on goods produced abroad and sold domestically.

The nation has a comparative advantage in producing steel and would become a steel exporter if it opened up trade

If a nation that does not allow international trade in steel has a domestic price of steel lower than the world price, then

The domestic quantity supplied

If a nation that imports a good imposes a tariff, it will increase

Above the before-trade domestic price of the good

If free trade is allowed, a country will export a good if the world price is....

False, tariffs decrease imports

T or F, A tariff raises the price of a good, reduces the domestic quantity demanded, increases the domestic quantity supplied, and increases the quantity demanded.

False, Producers gain and consumers lose

T or F, If free trade is allowed and a country exports a good, domestic producers of the good are worse off and domestic consumers of the good are better off when compared to the before-trade domestic equilibrium.

True

T or F, trade can make everyone better off if the winners from trade compensate the losers from trade

World Price

The price of a good that prevails in the world market for that good

A tariff increases producer surplus, decreases consumer surplus, increases revenue to the government, and reduces total surplus

What is true about tariffs

producer surplus decreases, but consumer surplus and total surplus both increase

When a nation opens itself to trade in a good and becomes an importer...

Domestic production of coffee falls, and Estonia becomes a coffee importer

When the nation of Ectenia opens itself to world trade in coffee beans the domestic price of beans falls. Which of the following describes this situation?