ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
14th Edition
ISBN: 9781337912396
Author: Baumol
Publisher: CENGAGE L
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Chapter 34, Problem 5DQ
To determine
The advantages or disadvantages of the surplus to Country A and Country B.
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Students have asked these similar questions
Small Island Developing States (SIDS), particularly our Caribbean islands, are normally accused by our economists of being import dependent. Why then are we always hesitant to impose Tariffs on imports to solve our Balance of Payments problems? Why would it be slow to work on our appetites? Discuss this issue in relation to the concept of Elasticity of Demand.
Also, why is the Government always imposing more and more sin taxes on alcohol and cigarettes? Is the Government so concerned about our sins when we consume these demerit goods?
Please no written by hand and no emage
Countries use a variety of ways to protect their trade. One way is to enact tariffs, which tax imports. This immediately raises the price of imported goods, making them less competitive when compared to locally produced goods. This works especially well for a country like the U.S., which imports a lot of consumer products and oil.
The most famous example is the Smoot-Hawley Tariff of 1930. It was originally designed to protect farmers from agricultural imports from Europe, which was stepping up farming after the destruction of World War I.
Go online and find out about the Smoot-Hawley Act. What role did the Smoot-Hawley Act play in the Great Depression?
Into which ideological perspective would you classify the Smoot-Hawley Act? Explain your reasoning.
An import Tariff does:
Increase domestic consumption
Decrease domestic production
Decrease domestic prices
Increase government revenue
Chapter 34 Solutions
ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
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- Should the Trade Embargo on Cuba Be Lifted? Three years after Fidel Castro took power in Cuba and installed a Communist regime, the U.S. government initiated a trade embargo against the nation. The embargo was intended to put economic pressure on the Cuban government. Today the embargo is still in effect— one of the longest trade embargos in modern history. Opponents on each side of the issue debate its effectiveness. Who is right? As you read the selections, ask yourself: Should the trade embargo on Cuba be lifted or remain in place? PRO A HALF-CENTURY OF FAILURE For almost half a century, the U.S. government has tried to isolate Cuba economically in an effort to undermine the [Communist] regime [of Fidel Castro] and deprive it of resources. Since 1960, Americans have been barred from trading with, investing in, or traveling to Cuba. . . . As a foreign policy tool, the embargo actually enhances Castro’s standing by giving him a handy excuse for the failures of his…arrow_forwardSome people argue for protectionism by pointing out that other countries with whom we trade engage in “unfair trade practices,” and that we should retaliate with our own protectionist measures. One such policy is the policy of some countries to subsidize exporting industries. India, for example, subsidizes its steel industry. Obviously, U.S. steel producers are hurt by this policy and would like to restrict imported steel from India. Is this a good reason to place tariffs on Indian steel? Why or why not?arrow_forwardWhat does Mexico export?arrow_forward
- Why do countries often protect their economies from imports?arrow_forwardWhich of the following is not included in the objectives of tariffs? To promote indigenous research and development To protect domestic industries from foreign competition None of the above To guard against dumpingarrow_forwardWould the U.S. government gain any advantage from using tariffs or quotas to restrict imports?arrow_forward
- Questions 1 and 2 refer to a big home country exporting good Q to ROW (Rest OF the World). The export supply and import demand for good Q are as follows: XS = P MD = 100 –P - Where XS, MD, and P are respectively export supply, import demand, and price Under free trade a. The equilibrium Q and Pare respectively. b. The welfare gains from free trade of the Home country and ROW are respectively. Suppose the Home country gives a subsidy of $20 per unit of exports. With the subsidy a. The equilibrium Q and Pare respectively. o. In comparison with free trade, the changes in home government expenditure, in ROW's welfare, in exporters' welfare, in Home welfare, and in world welfare are and and and and respectively.arrow_forwardWhy not have State governments levy tariffs on imports, or tax other states' products. Would this be a sensible way to raise revenues? What are the advantages/disadvantages? Provide research support for your positions. Respond to at least two of your fellow students’ postings.arrow_forwardWhat are used to convince other governments to voluntarily limit their exports and are in effect export quotasarrow_forward
- Exporting countries Which of the following will be true, everything else remaining constant, for a country that exports some good? a)The greater the price elasticity of supply for the good in the exporting country, the greater the volume of exports. b) The more that consumers in the exporting country respond to a change in price, the greater will be the gains from trade. b) The smaller the price elasticity of demand and supply in the exporting country, the greater the gains from trade. c) Some domestic suppliers will lose surplus while others will gain surplus. Choose the statements that match the question and briefly explain your reasoning to understand the question better. Thankyou.arrow_forwardThe world has two countries, A and Z, which each produce two products, gadgets and whizbangs. Without world trade, the domestic price of gadgets in A is lower than the price of gadgets in Z. We can say that Country Z has a comparative advantage in gadgets and should be exporting them. Country Z should specialize in producing gadgets. Country A has a comparative advantage in gadgets and should be exporting them. Country A has a comparative advantage in whizbangs and should be importing them.arrow_forwardThe potentially valid arguments for tariff protection— protection against dumping, infant industry protection, and military self-sufficiency—are also the most easily abused." a). Which of the following illustrates the potential for abuse of tariff protection? A. There is a tendency for trade barriers to remain in place even after a so-called infant industry becomes established. B. Dumping cases by foreign firms in Canada are frequent but difficult to prove. C. Military self-sufficiency eliminates subsidies for other sectors. D. Protected industries shoulder the burden of tariff protection b). Which of the following are valid arguments for tariff protection? A. Increasing domestic employment B. Ensuring adequate production levels in sectors deemed to be essential in the event of war C. Protection from foreign low-wage labour D. Increasing domestic output growtharrow_forward
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