Question : 31) For most products, Canada a small economy with no : 1384529

31) For most products, Canada is a small economy with no market power in the global market. If Canada imposed a tariff on imported goods from a low-wage foreign country, this would

A) reduce the price of the imported good in Canada.

B) improve Canada’s terms of trade.

C) increase the Canadian price of the imported good.

D) equalize the costs of production between the two countries.

E) increase wages in the low-wage foreign country.

32) Many people argue that the imposition of tariffs in industry X will increase factor incomes in that industry and therefore be good for the country as a whole. The counter-argument is that

A) the increase in industry X factor incomes would be more than offset by reductions in real incomes to all other domestic residents.

B) the increase in factor incomes would increase unemployment.

C) the increase in factor incomes in industry X would reduce profits to business owners by an equal amount.

D) factor incomes would first rise and then decrease in industry X.

E) factor incomes overall would increase, but wages in industry X would fall, which would hurt workers in that industry.

33) Assume Canada is trading with a country that has lower costs of production for some good and can therefore sell that good at a lower price. If Canada imposes a tariff large enough to equalize the foreign country’s price with ours, then

A) this tariff will eliminate exploitation of Canadian markets.

B) Canada would gain absolute advantage.

C) a “level playing field” will be created.

D) all Canadians would realize an increase in their standard of living.

E) the gains from international specialization would be reduced.

34) The imposition of a tariff on an imported good causes consumer surplus to ________ and producer surplus to ________.

A) increase; increase

B) decrease; decrease

C) decrease; increase

D) increase; decrease

E) remain the same; decrease

35) The effect of imposing a tariff on a specific imported good is to ________ the domestic price of the good and ________ the domestic production of the good.

A) decrease; decrease

B) decrease; to leave unaffected

C) decrease; increase

D) increase; increase

E) increase; decrease

36) If a tariff is imposed by a country that is large enough to have market power in global markets, the domestic consumer will face an autarkic price ________ than the world price for the product, and this world price will be ________ by the tariff.

A) higher; reduced

B) higher; increased

C) lower; increased

D) lower; unaffected

E) lower; reduced

37) Over the long run, protecting a domestic industry using a high tariff is likely to ________ new products and production methods, thus making it ________ to compete in the global marketplace.

A) encourage it to develop; less able

B) encourage it to develop; more able

C) discourage it from developing; less able

D) discourage it from developing; more able

E) discourage it from developing; more focused on investing in its ability

38) If a tariff is imposed in a country that is too small to have global market power, the domestic consumer will face a ________ price, and the price paid to foreign producers will ________.

A) higher; fall

B) higher; not change

C) higher; rise

D) lower; not change

E) lower; rise

39) Canada is a net importer of durable consumer goods (washing machines, refrigerators, etc.). If Canada, a small country in global markets, imposes a 15% tariff on these goods, it will cause

A) a reduction in the consumption of these goods in Canada.

B) an increase in the quantity imported of these goods.

C) an upward shift in the demand curve for these goods.

D) a decrease in the price consumers pay for these goods in Canada.

E) a reduction in tariff revenue collected by the Canadian government.

40) Canada is a net importer of durable consumer goods (washing machines, refrigerators, etc.). If Canada, a small country in global markets, imposes a 10% tariff on these goods, we would expect to observe

A) a reduction in the production of these goods in Canada.

B) an increase in the quantity imported of these goods.

C) an upward shift in the demand curve for these goods.

D) an increase in the price paid by Canadian consumers.

E) a decrease in the price paid by Canadian consumers.