1. Most efficient firms in a Melitz industry make greater profits under free trade is because they A. Operate under increasing marginal costs. B. Operate under FDI. C. Operate under low transport costs. D. Operate under increasing returns to scale. 2. A country imposing a tariff can benefit in terms of social welfare if A. The terms-of-trade benefit exceeds the sum of production and consumption distortion loss. B. The tariff revenue exceeds the sum of production and consumption distortion loss. C. The consumer surplus loss is less than the producer surplus gain. D. The terms-of-trade benefit exceeds the consumer surplus loss.

1. Most efficient firms in a Melitz industry make greater profits under free trade is because they A. Operate under increasing marginal costs. B. Operate under FDI. C. Operate under low transport costs. D. Operate under increasing returns to scale. 2. A country imposing a tariff can benefit in terms of social welfare if A. The terms-of-trade benefit exceeds the sum of production and consumption distortion loss. B. The tariff revenue exceeds the sum of production and consumption distortion loss. C. The consumer surplus loss is less than the producer surplus gain. D. The terms-of-trade benefit exceeds the consumer surplus loss.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 2PA

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