AGEC 3300 Exam 2

tariff

A ________ is a tax or duty levied on the traded commodity as it crosses a national boundary.

quota

A _________ is a direct quantitative restriction on the amount of a commodity allowed to be imported or exported in a nation.

specific tariff

A ___________ __________ is a fixed amount of money per physical unit of an imported product tax per unit of the good (ex: $ per automobile)

the large nation has gained

A large nation imposes a tariff on an imported good, which causes the world price to fall by $4. At the new world price the large nation has deadweight losses of $500 and imports of 300.

import-competing

A tariff will help the _____________________________ sector.

consumption effect

A trade restriction's loss of welfare that occurs

higher

An export subsidy results in the exporting country's internal price being _________ than the international price by the amount of the subsidy.

exporting

An export subsidy will help the ___________________ sector.

domestic producers

Both tariff and export subsidies support ________________________________________.

anti-dumping policies

Designed to punish foreign firms that engage in dumping. It is designed to protect domestic producers from unfair foreign competition.

lowers

Effects of export subsidy in a large nation __________the equilibrium world market price

world prices

Effects of export subsidy in a small nation does not affect ______________________>

Tariff revenues equal $110

If a tariff in a small country produces a deadweight loss of $50, reduces consumer surplus by $200, and increases producer surplus by $40, which of the following is correct?

both the price of the imported good and the price of the domestic competing good will increase

If a tariff is imposed on an imported goos by small nation, which of the following will occur?

domestic consumers pay $6 of the $10 per unit tariff

If a tariff of $10 per unit reduces the world price by $4, then

decrease by 90 units

If the consumption effect of a tariff were 50 units and the production effect of a tariff were 40 units, then imports would

Decrease by 100 units

If the consumption effect of a tariff were 60 units and the production effect of a tariff were 40 units, then imports woul

countervailing duty

Imposed if a foreign government is subsidizing exports to the nation

government revenue

Money that goes to the government

if the world price changes

Tariffs allow imports to change -when demand and supply conditions in the domestic market change and

Under free trade, both import and export benefit the U.S. Imports make domestic consumers better off, and encourage competition. Domestic producers lose, but consumers gain more than producers lose. Domestic producers gain from export, domestic consumers lose because they have to pay a higher price. But producers gain more than consumers lose. Social welfare increase with both imports and exports.

Under free trade, both import and export benefit the U.S. Do you agree? Why? -under free trade, both import and export benefit the U.S. Imports make domestic consumers better off, and encourage competition.... Domestic producers....

anti-dumping

WTO allows trade restrictions to be imposed to counteract predatory dumping. - Use anti-dumping duty to offset price differential

world market price changes

What are the effects of an import quota? -domestic demand and supply changes - world market price changes Isolates the domestic market from world market conditions

The effects of an import quota are identical to those of an equivalent import tariff, except that with a quota the government may not collect tariff revenue (unless it auctions off import quotas to the highest bidder). The quota involves the distribution of import licenses. With a given import quota, an increase in demand will result in a higher domestic price and greater domestic production than with equivalent import tariff. On the other hand, with a given import tariff, an increase in demand will leave the domestic price and production unchanged but will result in higher consumption and imports. The import quota is also more restrictive than an equivalent import tariff because foreign producers cannot increase their exports by lowering their prices. The import quota limits imports to the specified level with certainty, while the trade effect of an import tariff may be uncertain.

What is the difference between import tariffs and quotas? -The effects of an import quota are identical to those of an equivalent import tariff...

The import quota is also more restrictive than an equivalent import tariff because foreign producers cannot increase their exports by lowering their prices. The import quota limits imports to the specified level with certainty, while the trade effect of an import tariff may be uncertain.

What is the difference between import tariffs and quotas? -The import quota is also more restrictive than an equivalent import tariff because foreign producers cannot increase their exports by lowering their prices. The import.......

With a given import quota, an increase in demand will result in a higher domestic price and greater domestic production than with equivalent import tariff. On the other hand, with a given import tariff, an increase in demand will leave the domestic price and production unchanged but will result in higher consumption and imports.

What is the difference between import tariffs and quotas? With a given import quota, an increase in demand will result in a higher domestic price and greater domestic production than with equivalent import tariff. On the other hand,....

Quota involves the distribution of import licenses

What is the difference between tariffs and quotas - Import quota creates windfall gains for importing firms that hold licenses to import - Creates incentives for firms to spend resources to seek rents

the price received by foreign producers will fall

What must be true if a large nation imposes a tariff on an imported good?

Domestic producers and foreign consumers

Who gains from export subsidy?

Domestic consumers and foreign producers

Who loses from the export subsidy?

tariff

___________ is preferable to a Quota in society.

dumping

___________________: the export of a commodity at below cost or at a lower price than the commodity is sold domestically.

ad valorem

a fixed percentage of the price of a good (ex: 5% of the price of an automobile

export subsidy

a payment from a government to a firm as a reward for exporting products

voluntary export restraints

a self-imposed restriction by an exporting country on the volume of its exports of a particular good.

countervailing duty

a special tax that increases the price of goods to a competitive level

export tariff

a tax on the exported commodity

import tariff

a tax on the imported commodity

production effect

an improvement in recall and recognition resulting from saying the material aloud during rehearsal

tariffication

change quotas and other non tariff barriers into equivalent tariffs (Uruguay Round)

Imposed if a foreign government is subsidizing exports to the nation

countervailing duty

the imposition of a tariff does alter the international price

effects of tariff in a large nation

the imposition of a tariff does not alter the international price

effects of tariff in a small nation

a tax on the imported commodity

import tariff

social welfare

programs to help certain groups of people

a fixed amount of money per physical unit of an imported product

specific tariff

producer surplus

the amount a seller is paid for a good minus the seller's cost of providing it

consumers surplus

the difference between what consumers are willing to pay for a specific quantity of a product and what they actually pay