Chapter 7

Question 1

What are the 3 industries that have high tariff rates?

Answer 1

• agriculture
• textiles
• apparel

Question 2

Where are tariffs rates higher?

Answer 2

Higher in middle income countries
lower in high income countries

Question 3

Why imposing higher tariff rates?

Answer 3

to protect an industries where the comparative advantage is lost

Question 4

Which is better opened or closed markets?

Answer 4

open market are better

Question 5

benefits of open market (3)

Answer 5

1) speedy recovery in econ. downturn
2) increase in gains, scaling, product differentiation
3) too high costs of protectionism compare to benefits

Question 6

Benefits of tariffs and quotas?

Answer 6

collective action; costs are spread and benefits are concentrated

Question 7

Why countries protect their industries?

Answer 7

• Revenue;
• To protect jobs;
• Infant industry arguments;
• National security;
• Cultural protection;
• Retaliation.

Question 8

What are antidumping duties? (ADD)

Answer 8

when foreign firms sell goods below faire value
- attempt to prevent predatory pricing by foreign producer

Question 9

What is the most common form of protection?

Answer 9

antidumping duties (ADD)

Question 10

Name some economic sanctions?

Answer 10

• prohibitions on imports and exports
• prohibitions on financial flows
• limit on travel and contact
  // basically isolate a country to force a change in policies or behaviors

Question 11

When do sanctions work?

Answer 11

• small, weak unstable country
• target country is an ally
• small policy change desired