9.2 Costs and Benefits of a Tariff
1) If a good is imported into (large) country H from country F, then the imposition of a tariff in country H
A) raises the price of the good in both countries (the “Law of One Price”).
B) raises the price in country H and cannot affect its price in country F.
C) lowers the price of the good in both countries.
D) lowers the price of the good in H and could raise it in F.
E) raises the price of the good in H and lowers it in F.
2) If a good is imported into (small) country H from country F, then the imposition of a tariff In country H
A) raises the price of the good in both countries (the “Law of One Price”).
B) raises the price in country H and does not affect its price in country F.
C) lowers the price of the good in both countries.
D) lowers the price of the good in H and could raise it in F.
E) raises the price of the good in H and lowers it in F.
3) If a small country imposes a tariff, then
A) the producers must suffer a loss.
B) the consumers must suffer a loss.
C) the government revenue must suffer a loss.
D) the demand curve must shift to the left.
E) the world price on that item will shift.
4) The imposition of tariffs on imports results in deadweight (triangle) losses. These are
A) production and consumption distortion effects.
B) redistribution effects.
C) revenue effects
D) efficiency effects.
E) distortion of incentives.
5) The main redistribution effect of a tariff is the transfer of income from
A) domestic producers to domestic buyers.
B) domestic buyers to domestic producers.
C) domestic producers to domestic government.
D) domestic government to domestic consumers.
E) foreign producers to domestic consumers.
6) The principle benefit of tariff protection goes to
A) domestic consumers of the good produced.
B) foreign consumers of the good produced.
C) domestic producers of the good produced.
D) foreign producers of the good produced.
E) the domestic government.
7) Should the home country be “large” relative to its trade partners, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms of the trade rectangle exceed the sum of the
A) revenue effect plus redistribution effect.
B) protective effect plus revenue effect.
C) consumption effect plus redistribution effect.
D) production distortion effect plus consumption distortion effect.
E) terms of trade gain.
8) The deadweight loss of a tariff
A) is a social loss because it promotes inefficient use of national resources.
B) is a social loss because it reduces the revenue of the government.
C) is not a social loss because it merely redistributes revenue from one sector to another.
D) is not a social loss because it is paid for by rich corporations.
E) is not a social loss because it aids domestic consumers.
9) A policy of tariff reduction in the computer industry is
A) in the interest of the United States as a whole and in the interest of computer producing regions of the country.
B) in the interest of United States as a whole but not in the interest of computer producing regions of the country.
C) not in the interest of the United States as a whole but in the interests of computer producing regions of the country.
D) not in the interest of the United States as a whole and not in the interests of computer consumers.
E) not in the interest of the United States as a whole but in the interests of foreign computer producers.
10) The fact that industrialized countries levy very low or no tariff on raw materials and semi processed goods
A) helps developing countries export manufactured products.
B) has no effect on developing country exports.
C) hurts developing country efforts to export manufactured goods.
D) hurts developing country efforts to export raw materials.
E) does not affect industrialized countries’ exports.
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