4.2 Types of Trade Protection

Question 1

What is a tariff?

Answer 1

A tariff is a tax on imported goods/services. IT is a form of protectionism against free trade.

Question 2

How do you draw a tariff diagram?

Answer 2

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Question 3

Where is the producer surplus after the tariff is implemented?

Answer 3

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Question 4

Where is the consumer surplus after the tariff is implemented?

Answer 4

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Question 5

What area shows the government revenue after the tariff is implemented?

Answer 5

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Question 6

How do you draw a subsidies diagram?

Answer 6

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Question 7

What is the government expenditure in the subsidies diagram?

Answer 7

E + F

Question 8

What is an export subsidy?

Answer 8

Subsidy given to producers who export their output to other countries. Focus is on expanding production for exports. This is also done to increase foreign exchanged earned through exports.
–> Difference between Qd and Qs is exported

Question 9

How would you draw an export subsidy?

Answer 9

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Question 10

What is an import quota?

Answer 10

Legal restriction on the quantity of imports allowed in a country.
For example, only 50 tonnes of wheat quota –> allowing only 50 tonnes of wheat to be imported into the country.

Question 11

How would you draw an import quota?

Answer 11

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