Exam 4: Tariffs

The principal benefit of tariff protection goes to:

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico,a "small" nation that is unable to affect the world price. Figure 4.1.Import Tariff Levied by a "Small" Country -Consider Figure 4.1.In the absence of trade,Mexico produces and consumes:

Should Canada impose a tariff on imports,one would expect Canada's:

Of the many arguments in favor of tariffs,the one that has enjoyed the most significant economic justification has been the:

The difference between the maximum amount buyers are willing to pay for a given quantity of a good and the amount actually paid is called

Assume that Japan is a large country and levies an "optimal tariff." Therefore,the tariff's terms of trade effect more than offsets the consumption and production losses and results in an overall welfare gain.

If Brazil levies a tariff that prohibits imports of oil,the tariff has

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico,a "small" nation that is unable to affect the world price. Figure 4.1.Import Tariff Levied by a "Small" Country -According to Figure 4.1,the tariff results in the Mexican government collecting:

A decrease in the import tariff will result in:

Exhibit 4.2 In the absence of international trade,assume that the equilibrium price and quantity of motorcycles in Canada is $14,000 and 10 units respectively.Assuming that Canada is a small country that is unable to affect the world price of motorcycles,suppose its market is opened to international trade.As a result,the price of motorcycles falls to $12,000 and the total quantity demanded rises to 14 units; out of this total,6 units are produced in Canada while 8 units are imported.Now assume that the Canadian government levies an import tariff of $1,000 on motorcycles. -Refer to Exhibit 4.2.The tariff leads to an increase in Canadian consumer surplus totaling $11,000.

Assume that Mexico is a small country and it imposes a tariff on imported automobiles.As a result of the tariff

If Venezuela is a small country,its terms of trade will improve when it levies a tariff on imports.

When a tariff on imported inputs exceeds that on the finished good,

Graphically,consumer surplus is represented by the area above the demand curve and below the product's market price.

Changes in a "large" country's economic conditions or trade policies can affect the terms at which it trades with other countries.

Under the Offshore Assembly Provision of U.S.tariff policy,U.S.import duties apply only to the value added in the foreign assembly process,provided that U.S.-made components are used by overseas companies in their assembly operations.

Empirical studies show that virtually all U.S.import tariffs are "progressive" in that they bear down harder on upper income groups than lower income groups.

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

If the domestic value added before an import tariff for a product is $500 and the domestic value added after the tariff is $550,the effective rate of protection is:

Figure 4.3 Domestic Market for Gasoline in the United States -Figure 4.3 represents the domestic market for gasoline in the United States.What is the producer surplus in this market?