Exam 9: Application International Trade: Part B

Domestic consumers gain and domestic producers lose when the government imposes a tariff on imports.

GATT is an example of a successful unilateral approach to achieving free trade.

If a country allows free trade and its domestic price for a given good is lower than the world price,then it will import that good.

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade,thus reducing the gains from trade.

The greater the elasticities of supply and demand,the smaller are the gains from trade.

The small-economy assumption is necessary to analyze the gains and losses from international trade.

When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off.