Exam 4: Tariffs

Refer to Exhibit 4.2.All of the import tariff is shifted to the Canadian consumer via a higher price of motorcycles.

Can import duties have unintended side effects?

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.

Tariffs are not defended on the ground that they:

An import tariff will worsen the terms of trade for a "small" country but improve the terms of trade for a "large" country.

The offshore assembly provision in the U.S.

There is widespread agreement among economists that import tariffs increase overall employment in the levying country.

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

A tariff can be thought of as a tax on imported goods.

A compound tariff is a combination of a (an):

The deadweight losses of an import tariff consist of the protection effect plus the consumption effect.

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

A decrease in the import tariff will result in:

When material inputs enter a country at a very low duty while the final imported product is protected by a high duty,the result tends to be a high rate of protection for domestic producers of the final product.

Which of the following is a fixed percentage of the value of an imported product as it enters the country?

A limitation of a specific tariff is that it provides a constant level of protection for domestic commodities regardless of fluctuations in their prices over time.

Arguments for U.S.trade restrictions include all of the following except

A nation whose imports constitute a very small portion of the world market supply is a price taker,facing a constant world price for its import commodity.

Assume the United States is a large consumer of steel that is able to influence the world price. Its demand and supply schedules are respectively denoted by DU.S. and SU.S. in Figure 4.2. The overall (United States plus world) supply schedule of steel is denoted by SU.S.?W. Figure 4.2. Import Tariff Levied by a "Large" Country -Consider Figure 4.2.With free trade,the United States achieves market equilibrium at a price of $____.At this price,____ tons of steel are produced by U.S.firms,____ tons are bought by U.S.buyers,and ____ tons are imported.

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: