IPE Week 4 (extra)

Question 1

Tariffs:

1. Specific Tariff
2. Ad valorem tariff

Answer 1

1. fixed charge for each good imported
2. a % of imported goods value

Question 2

Tariffs:
Winners:
1.
2.
3.

Answer 2

1. Government
2. Domestic producers (at least in the short run
3. Employees of protected industries keep their job

Question 3

Tariffs:
Losers:
1.
2.
3.

Answer 3

1. Consumers who pay higher prices
2. The economy , which remains inefficient
3. Employees of protected industries who don’t develop new skills

Question 4

Subsidies
Forms:
1.
2.
3.
4.

Answer 4

1. Cash grants
2. low-interest loans
3. tax breaks
4. equity participation

Question 5

Effects of Subsidies:
1.
2.
3.
4.

Answer 5

1. Compete against cheaper imports
2. Gain export markets
3. Increase domestic employment
4. Help local producers achieve first-mover advantage in emerging industries

Question 6

Import Quotas
Benefits:

Answer 6

1. benefit domestic producers
2. raise the prices of imported goods