For many purposes, the use of a tariff is said by economists to be “second best.” This means that Group of answer choices Another policy exists that would accomplish the same purpose as the tariff at lower economic cost. The tariff does not help those with the highest incomes, but only those with the second highest. The tariff benefits the country only by making other countries worse off. The tariff cannot be beneficial for the country as a whole.

For many purposes, the use of a tariff is said by economists to be “second best.” This means that Group of answer choices Another policy exists that would accomplish the same purpose as the tariff at lower economic cost. The tariff does not help those with the highest incomes, but only those with the second highest. The tariff benefits the country only by making other countries worse off. The tariff cannot be beneficial for the country as a whole.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter33: International Trade

Section: Chapter Questions

Problem 6QP

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Similar questions

If economy is open to foreign trade of good X, imposing a tariff will reduce total surplus (total surplus being defined as consumer + producer surplus). Which of the following ideas best describes why we observe tariffs being use in practice? Basically, what is the effect of tarrifs? a. The government can be under political pressure to implement inefficient economic policy. b. The tariff revenue raised will outweigh efficiency losses. c. Economic analysis does not fully explain efficiency losses. d. Economic stability is not often a political incentive.
If an economy is open to foreign trade of good X, imposing a tariff will reduce total surplus (total surplus being defined as consumer + producer surplus). Which of the following ideas best describes why we observe tariffs being use in practice? a. The government can be under political pressure to implement inefficient economic policy. b. The tariff revenue raised will outweigh efficiency losses. c. Economic analysis does not fully explain efficiency losses. d. Economic stability is not often a political incentive.
Tariff Jumping occurs when Group of answer choices Countries raise (and lower) their tariffs in an effort to stabilize the price of a product on the domestic market. A firm buys inputs from domestic firms rather than importing them from abroad over a tariff. A firm that otherwise would have exported to a country instead invests there in order to avoid paying the country’s tariff. A country raises a tariff against a foreign exporter who sells to it below cost.
What is the effect of a tariff on consumer and producer surplus? Under which conditions is protectionism advisable? Discuss with reference to at least one case study and examine distributional consequences.
Suppose Russia can produce automobiles relatively cheaply, but they have poor gas mileage and create a great deal of air pollution. The U.S. government, concerned about the quality of air, would like to see fewer Russian automobiles and more cleaner-running American automobiles on the road. What is the nature of the market failure that would justify the U.S. government taking some action against the importation of Russian automobiles? Explain why imposing a tariff is a second-best policy to employ in this case and what policy choice would be more efficient if: i) US carries out its own solution; ii) the two countries governments cooperate.
Which of the following is TRUE about tariffs? Group of answer choices Tariffs increase the price of imported goods, which decreases demand. Tariffs cause imported product prices to fall. Tariffs cause demand for imported products to rise. Tariffs create strong relationships between trading partners.
A government tariff will result in a. deadweight losses. b. higher prices for the goods imposed by a tariff. c. less output for that good. d. reduced consumer surplus. e. all of the above.
Suppose a home country is large. If the large nation places a tariff on imports, an increase in domestic welfare occurs if the terms-of-trade effect is greater than the A. revenue effect plus consumption effect. B. deadweight loss. C. protective effect plus revenue effect. D. consumption effect plus redistribution effect
Suppose that a country implements a $20 tariff. Before the tariff, the country was importing 900 units of the good. After the tariff, the country imported 850 units of the good. What is the deadweight loss from the tariff? Assume that domestic supply and demand are linear.
Q. 1 Assuming that the country is small, compare the welfare effects of placing a tariff on an import with the welfare effects of giving the domestic producers of that good a subsidy for each unit produced. Assume that the tariff and subsidy are equivalent. That is, each one would result in the same increase in domestic production. Draw one diagram for the tariff and another diagram for the subsidy. Then provide an explanation for the differing effects on national welfare.
Part F. If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. Part G. Assume that instead of a specific tariff, an import quota will be used on good Y. What is the amount of the quota that will have identical effects (in terms of amount of good Y imports and the domestic price of good Y) as the specific tariff of $15? Explain your reasoning. Part H. Consider the use of import tariff vs. import quota in Home country that will result in the same amount of good Y imports and the domestic price of good Y. If quota rents are given to Foreign country, which policy, i.e., import tariff vs. import quota, is preferable by Home country on the basis of its effect on social welfare? Explain your reasoning.
The United States currently imports all of its coffee. The annual demand for coffee by U.S. consumers is given by the demand curve Q = 250 – 10P, where Q is quantity (in millions of pounds) and P is the market price per pound of coffee. World producers can harvest and ship coffee to U.S. distributors at a constant marginal (= average) cost of $8 per pound. U.S. distributors can in turn distribute coffee for a constant $2 per pound. The U.S. coffee market is competitive. Congress is considering a tariff on coffee imports of $2 per pound. i. Calculate the tax revenue collected by the government. ii. ii. Does the tariff result in a net gain or a net loss to society as a whole?