MRU9.1: Tariffs and Protectionism
What are the two results of a tariff on sugar? - Domestic resources are wasted producing sugar, and too much sugar is consumed. - Domestic resources are wasted producing sugar, and some domestic buyers are willing to pay for sugar but can't buy it. - Some low-cost domestic producers of sugar do not produce sugar, and some domestic buyers are willing to pay for sugar but can't buy it. - Too much sugar is consumed, and some low-cost domestic producers of sugar do not produce sugar.
A: Domestic resources are wasted producing sugar, and some domestic buyers are willing to pay for sugar but can't buy it.
A tariff is a tax that consumers pay to the government. What impact does the act of paying this tax have on total gains from trade? - It increases total gains from trade because the government earns tax revenue. - It has no impact because the gains from trade are transferred from consumers to the government. - It reduces total gains from trade because consumer surplus falls as a result of the tax payment. - It has no impact because tariffs are also paid by producers, so the two payments cancel each other out.
A: It has no impact because the gains from trade are transferred from consumers to the government.
Which of the following is NOT one of the results of a tariff? - The total gains from trade rises. - The domestic quantity supplied rises. - The amount of imports falls. - The domestic quantity demanded falls.
A: The total gains from trade rises.
How are the demand and supply curves labeled when analyzing international trade? - We label them as "domestic demand" and "domestic supply" respectively. - We label them as "private demand" and "private supply" respectively. - We label them as "world demand" and "world supply" respectively. - We label them as "export demand" and "import supply" respectively.
A: We label them as "domestic demand" and "domestic supply" respectively.
With completely free trade, the world supply curve is shown as: - a horizontal line at the domestic equilibrium price. - a horizontal line at the prevailing world price. - a line parallel to and below the domestic supply curve. - a line parallel to and above the domestic supply curve.
A: a horizontal line at the prevailing world price.
Protectionist policies are those that: - burden foreign buyers but not domestic buyers. - burden domestic producers but not foreign producers. - burden domestic buyers but not foreign buyers. - burden foreign producers but not domestic producers.
A: burden foreign producers but not domestic producers.
With free trade and a world price that is lower than the domestic market equilibrium price: - domestic consumption will rise and domestic production will fall. - domestic consumption will fall and domestic production will rise. - domestic consumption and domestic production will both rise. - domestic consumption and domestic production will both fall.
A: domestic consumption will rise and domestic production will fall.
As a result of a tariff, domestic consumption _______, and this causes total gains from trade to _______. - rises; rise - falls; fall - falls; rise - rises; fall
A: falls; fall
The amount of imports under completely free international trade can be calculated as: - domestic quantity supplied minus quantity demanded, at the prevailing world price. - quantity supplied minus quantity demanded, at the domestic market equilibrium price. - quantity demanded minus quantity supplied, at the domestic market equilibrium price. - quantity demanded minus quantity supplied, at the prevailing world price.
A: quantity demanded minus quantity supplied, at the prevailing world price.
A tariff is a _______, and it is shown on the demand and supply diagram as _______. - tax on exports; a downward shift of the world supply curve - tax on exports; an upward shift of the world supply curve - tax on imports; a downward shift of the world supply curve - tax on imports; an upward shift of the world supply curve
A: tax on imports; an upward shift of the world supply curve