ECO hw 5

A lower tariff on imported steel would most likely benefit domestic consumers of steel. foreign producers at the expense of domestic consumers. domestic manufacturers of steel. workers in the steel industry. foreign consumers of steel.

domestic consumers of steel

A tax of 20 percent per unit of imported garlic is an example of a(n) Answers: ad valorem tariff. specific tariff. nominal tariff. effective protection tariff. a disadvantageous tariff

ad valorem tariff

"In the country levying the tariff, the tariff will" Answers: increase both consumer and producer surplus. decrease both the consumer and producer surplus. increase consumer surplus and decrease producer surplus decrease consumer surplus and increase producer surplus. decrease consumer surplus but leave producers surplus unchanged.

decrease consumer surplus and increase producer surplus

The imposition of tariffs on imports results in deadweight (triangle) losses. These are Answers: production and consumption distortion effects. distortion of incentives. redistribution effects. revenue effects efficiency effects.

distortion of incentives

The U.S. sugar quota A) generates government revenue. B) results in net welfare benefits to the U.S. economy. C) results in benefits to sugar producers that exceed the cost to consumers. D) results in costs to consumers that exceed the benefits to sugar producers. E) does not result in an efficiency loss.

ANSWER: results in costs to consumers that exceed the benefits to sugar producers

Tariff rates on products imported into the U.S. were prohibited by the Constitution. reached an all time high in 2002. have risen steadily since 1920. were the government's main source of income in 2006. have dropped substantially over the past 50 years.

Have dropped substantially over the past 50 years

The most vocal political pressure for tariffs is generally made by consumers lobbying for export tariffs. consumers lobbying for import tariffs. producers lobbying for import tariffs. consumers lobbying for lower import tariffs. producers lobbying for export tariffs.

Producers lobbying for import tariffs

The change in the economic welfare of a country associated with an increase in a tariff equals efficiency gain - terms of trade loss. efficiency loss + tax revenue gain. efficiency loss + tax revenue gain + terms of trade gain. efficiency loss - tax revenue gain. efficiency loss - terms of trade gain.

efficiency loss - terms of trade gain

The excess supply curve of a product we (H) import from foreign countries (F) increases as Answers: excess supply of country F increases. excess demand of country H increases. excess demand of country F increases. excess supply of country H increases. excess supply of country F decreases.

excess supply of country F increases

"The tariff levied in a ""large country"" (Home), lowers the world price of the imported good. This causes" foreign consumers to demand less of the good on which was levied a tariff. foreign suppliers to produce less of the good on which was levied a tariff. domestic demand for imports to decrease. domestic demand for imports to increase. no change in the foreign price of the good it imports.

foreign suppliers to produce less of the good on which was levied a tariff

An important difference between tariffs and quotas is that tariffs generate tax revenue for the government. raise the price of the good. stimulate international trade. help domestic producers. are paid by foreign producers.

generate tax revenue for the government

"In the exporting country, an export subsidy will" help consumers and raise the overall economic welfare of the exporting country. hurt consumers and lower the overall economic welfare of the exporting country. hurt consumers but raise the overall economic welfare of the exporting country. help consumers but lower economic welfare of the exporting country. help consumers and have no effect on the economic welfare of the exporting country.

hurt consumers and lower the overall economic welfare of the exporting country

Specific tariffs are import taxes stated in specific legal statutes. import taxes calculated as a fraction of the value of the imported goods. the same as import quotas. import taxes calculated as a fixed charge for each unit of imported goods. import taxes calculated based solely on the origin country.

import taxes calculated as a fixed charge for each unit of imported goods

Tariffs are NOT defended on the grounds that they Answers: protect jobs and reduce unemployment. promote growth and development of young industries. prevent over-dependence of a country on only a few industries. improve the terms of trade of foreign nations. protect domestic producers from foreign low prices.

improve the terms of trade of foreign nations

Suppose the United States eliminates its tariff on ball bearings used in producing exports. Ball bearing prices in the United States would be expected to Answers: "increase, and the foreign demand for U.S. exports would increase." "decrease, and the foreign demand for U.S. exports would increase." "increase, and the foreign demand for U.S. exports would decrease." "decrease, and the foreign demand for U.S. exports would decrease." "decrease, and the foreign demand would be unchanged."

increase, and the foreign demand for U.S. exports would decrease

What is a TRUE statement concerning the imposition in the U.S. of a tariff on cheese? Answers: It lowers the price of cheese domestically. It raises revenue for the government. It raises the price of cheese internationally. It will always result in retaliation from abroad. It leads to higher domestic demand for cheese.

it raises revenue for the government

An export subsidy is a fee that is charged to a country that ships goods to the U.S. a payment made to a foreign government in return for preferential trade treatment. illegal in the U.S. but is fairly common in the rest of the world. a limit on the quantity of a good or service that can be sold abroad. a payment to a firm or individual that ships a good abroad.

payment to a firm or individual that ships a good abroad

"If a good is imported into (large) country H from country F, then the imposition of a tariff in country H raises the price of the good in H and lowers it in F. "raises the price of the good in both countries (the ""Law of One Price"")." raises the price in country H and cannot affect its price in country F. lowers the price of the good in both countries. lowers the price of the good in H and could raise it in F.

raises the price of the good in H and lowers it in F