Question 1

Give an example of a nontariff measure that could reduce the quantity of imports or exports.

Accepted Answer

Special fees imposed on importers,burden...

Question 2

Nontariff barriers to trade are less transparent than tariffs.

Accepted Answer

A) True 
 B)False

Question 3

In order for large countries to successfully use tariffs to increase well-being,

Accepted Answer

A)  they must have significant market power .
B)  the deadweight loss created by the tariff must be greater than the government revenue the tariff generates.
C)  domestic production must increase more significantly than for the small country case.
D)  domestic consumption and imports must decrease more significantly than in the small country case. A

Question 4

Deadweight losses are the only potential cost associated with tariffs,which is why they are preferred to quotas.

Accepted Answer

A) True 
 B)False

Question 5

Tariffs reallocate income from

Accepted Answer

A)  consumers to producers.
B)  producers to consumers.
C)  government to producers.
D)  consumers to foreigners.

Question 6

Carefully explain how the imposition of a tariff is different for a large country (that can affect the world price)than a small country.

Accepted Answer

For a small country,imposition of a tari...

Question 7

In economic terms,tariffs are preferred to quotas because

Accepted Answer

A)  domestic manufacturers gain more producer surplus.
B)  there is less loss of consumer surplus.
C)  quotas create a greater production inefficiency.
D)  given the way quotas are usually administered, tariffs cause a smaller net national welfare loss.

Question 8

Which of the following is FALSE?

Accepted Answer

A)  Tariffs are a relatively easy tax to administer and often form an important part of revenue for low-income countries.
B)  Taxes on income, sales, and property require more complex accounting systems than do tariffs.
C)  Low-income countries often have large informal markets with the sales of many goods and services not being recorded, which makes it difficult to apply many kinds of taxes.
D)  Tariffs are not an attractive tax option for most low-income countries, so they mostly rely on quota licenses for revenue.

Question 9

Average tariff rates are highest for

Accepted Answer

A)  high-income countries.
B)  middle-income countries.
C)  low-income countries.
D)  industrialized countries.

Question 10

How is the Agreement on Textiles and Clothing impacting trade today?

Accepted Answer

It phased out quotas as of 200...

Question 11

The new GATS and TRIPS are separate agreements negotiated within the WTO framework as part of the Uruguay Round that apply to

Accepted Answer

A)  services and transportation.
B)  agriculture and textiles.
C)  services and intellectual property.
D)  textiles and transportation.

Question 12

The graph above shows a small country that can import at the world price of Pw and currently imports (Qd-Qs).Suppose that the government imposes quota of 80% of the current import amount (and suppose that this does not raise the domestic price so much that there will be no trade).
Use the graph above to illustrate the effects of the quota.Show the new areas of consumer surplus,producer surplus,and any other relevant areas,and the deadweight losses due to the quota.Who wins and who loses from the tariff?

Accepted Answer

See Figure 6.7 in the text.Consumer surp...

Question 13

What has been the most significant obstacle to progress in the Doha Round?

Accepted Answer

Agricultur...

Question 14

Why is the Doha Round called the Doha Development Round?

Accepted Answer

Because it pays part...

Question 15

An increase in domestic demand for a product protected by a quota results in an increase in producer surplus for domestic firms,while for a tariff it would result in more imports.

Accepted Answer

A) True 
 B)False

Question 16

Nominal rates of protection

Accepted Answer

A)  are always greater than effective rates of protection.
B)  are always smaller than effective rates of protection.
C)  refer to the tariffs placed on intermediate goods used to make the final good or service.
D)  cannot be negative.

Question 17

Over time,quotas usually lead to larger deadweight losses than tariffs.

Accepted Answer

A) True 
 B)False

Question 18

Based on Scenario 6.1 above,if a tariff of 20 percent is placed on imports of dining room tables,the effective rate of protection is

Accepted Answer

A)  20 percent.
B)  25 percent.
C)  30 percent.
D)  40 percent. B

Question 19

Which of the following is FALSE?

Accepted Answer

A)  Consumer surplus increases after a tariff is placed on imports.
B)  Producer surplus increases after a tariff is imposed.
C)  Government revenue increases after a tariff is imposed.
D)  Deadweight losses result from tariffs.

Question 20

Based on Scenario 6.1 above,if a tariff of 20 percent is placed on imports of dining room tables,and another tariff of 50 percent is placed on imports of wood and parts,then the effective rate of protection on tables made in the United States is

Accepted Answer

A)  70 percent.
B)  50 percent.
C)  20 percent.
D)  12.5 percent. D

Exam 6: The Theory of Tariffs and Quotas

Give an example of a nontariff measure that could reduce the quantity of imports or exports.

Correct Answer
verified
Special fees imposed on importers,burden...
View Answer

Nontariff barriers to trade are less transparent than tariffs.

Correct Answer
verified

In order for large countries to successfully use tariffs to increase well-being,

Correct Answer
verified
A

Deadweight losses are the only potential cost associated with tariffs,which is why they are preferred to quotas.

Correct Answer
verified

Tariffs reallocate income from

Correct Answer
verified

Carefully explain how the imposition of a tariff is different for a large country (that can affect the world price)than a small country.

Correct Answer
verified
For a small country,imposition of a tari...
View Answer

In economic terms,tariffs are preferred to quotas because

Correct Answer
verified

Which of the following is FALSE?

Correct Answer
verified

Average tariff rates are highest for

Correct Answer
verified

How is the Agreement on Textiles and Clothing impacting trade today?

Correct Answer
verified
It phased out quotas as of 200...
View Answer

The new GATS and TRIPS are separate agreements negotiated within the WTO framework as part of the Uruguay Round that apply to

Correct Answer
verified

Correct Answer
verified
See Figure 6.7 in the text.Consumer surp...
View Answer

What has been the most significant obstacle to progress in the Doha Round?

Correct Answer
verified
Agricultur...
View Answer

Why is the Doha Round called the Doha Development Round?

Correct Answer
verified
Because it pays part...
View Answer

An increase in domestic demand for a product protected by a quota results in an increase in producer surplus for domestic firms,while for a tariff it would result in more imports.

Correct Answer
verified

Nominal rates of protection

Correct Answer
verified

Over time,quotas usually lead to larger deadweight losses than tariffs.

Correct Answer
verified

Based on Scenario 6.1 above,if a tariff of 20 percent is placed on imports of dining room tables,the effective rate of protection is

Correct Answer
verified
B

Which of the following is FALSE?

Correct Answer
verified

Based on Scenario 6.1 above,if a tariff of 20 percent is placed on imports of dining room tables,and another tariff of 50 percent is placed on imports of wood and parts,then the effective rate of protection on tables made in the United States is

Correct Answer
verified
D

Exam 6: The Theory of Tariffs and Quotas

Give an example of a nontariff measure that could reduce the quantity of imports or exports.

Correct AnswerverifiedSpecial fees imposed on importers,burden...View AnswerShow Answer

Nontariff barriers to trade are less transparent than tariffs.

Correct AnswerverifiedShow Answer

In order for large countries to successfully use tariffs to increase well-being,

Correct AnswerverifiedA

Deadweight losses are the only potential cost associated with tariffs,which is why they are preferred to quotas.

Correct AnswerverifiedShow Answer

Tariffs reallocate income from

Correct AnswerverifiedShow Answer

Carefully explain how the imposition of a tariff is different for a large country (that can affect the world price)than a small country.

Correct AnswerverifiedFor a small country,imposition of a tari...View AnswerShow Answer

In economic terms,tariffs are preferred to quotas because

Correct AnswerverifiedShow Answer

Which of the following is FALSE?

Correct AnswerverifiedShow Answer

Average tariff rates are highest for

Correct AnswerverifiedShow Answer

How is the Agreement on Textiles and Clothing impacting trade today?

Correct AnswerverifiedIt phased out quotas as of 200...View AnswerShow Answer

The new GATS and TRIPS are separate agreements negotiated within the WTO framework as part of the Uruguay Round that apply to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSee Figure 6.7 in the text.Consumer surp...View AnswerShow Answer

What has been the most significant obstacle to progress in the Doha Round?

Correct AnswerverifiedAgricultur...View AnswerShow Answer

Why is the Doha Round called the Doha Development Round?

Correct AnswerverifiedBecause it pays part...View AnswerShow Answer

An increase in domestic demand for a product protected by a quota results in an increase in producer surplus for domestic firms,while for a tariff it would result in more imports.

Correct AnswerverifiedShow Answer

Nominal rates of protection

Correct AnswerverifiedShow Answer

Over time,quotas usually lead to larger deadweight losses than tariffs.

Correct AnswerverifiedShow Answer

Based on Scenario 6.1 above,if a tariff of 20 percent is placed on imports of dining room tables,the effective rate of protection is

Correct AnswerverifiedB

Which of the following is FALSE?

Correct AnswerverifiedShow Answer

Based on Scenario 6.1 above,if a tariff of 20 percent is placed on imports of dining room tables,and another tariff of 50 percent is placed on imports of wood and parts,then the effective rate of protection on tables made in the United States is

Correct AnswerverifiedD

Correct Answer
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Special fees imposed on importers,burden...
View Answer

Correct Answer
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Correct Answer
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A

Correct Answer
verified

Correct Answer
verified

Correct Answer
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For a small country,imposition of a tari...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It phased out quotas as of 200...
View Answer

Correct Answer
verified

Correct Answer
verified
See Figure 6.7 in the text.Consumer surp...
View Answer

Correct Answer
verified
Agricultur...
View Answer

Correct Answer
verified
Because it pays part...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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B

Correct Answer
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Correct Answer
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D