Exam 4: Tariffs

Figure 4.4 Market for Gasoline in a Small Nation -Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in producer surplus would be

Bonded warehouses and foreign trade zones have the effect of allowing domestic importers to postpone and prorate over time their import duty obligations.

A $100 specific tariff provides home producers more protection from foreign competition when:

If the world price of steel is $600 per ton,a specific tariff of $120 per ton is equivalent to an ad valorem tariff of 25 percent.

A tariff quota is a combination of a specific tariff and an ad valorem tariff.

For the United States,a foreign trade zone (FTZ)is

Should the home country be "large" relative to the world,its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms-of-trade effect exceeds the sum of the:

According to the tariff escalation effect,industrial countries apply low tariffs to imports of finished goods and high tariffs to imports of raw materials.

A tariff can increase the welfare of a "large" levying country if the favorable terms-of-trade effect more than offsets the unfavorable protective effect and consumption effect.

Consider Figure 4.1.With free trade,Mexico's producer surplus and consumer surplus respectively equal:

A ad valorem tariff provides domestic producers a declining degree of protection against import-competing goods during periods of changing prices.

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.

Which trade policy results in the government levying a "two-tier" tariff on imported goods?

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

Which of the following is true concerning a specific tariff?

Suppose an importer of steel is required to pay a tariff of $20 per ton plus 5 percent of the value of steel.This is an example of a (an):

For a "small" country,a tariff raises the domestic price of an imported product by the full amount of the duty.

A specific tariff is expressed as a fixed percentage of the total value of an imported product.

Suppose that the production of $500,000 worth of steel in the United States requires $100,000 worth of iron ore.The U.S.nominal tariff rates for importing these goods are 15 percent for steel and 5 percent for iron ore.Given this information,the effective rate of protection for the U.S.steel industry is approximately:

Consider Figure 4.1.With a per-unit tariff of $3,the quantity of imports decreases to: