Unit 8

Question 1

Tariffs

Answer 1

A tax imposed on goods traded across countries, usually collected by customs officials at a place of entero

Question 2

Specific tariffs

Answer 2

Stipulated as a money amount per unit of imports

Dollars per ton of steel bars or dollars per eight-cylinder two door sports car

Question 3

Ad valorem - on the value tariffs

Answer 3

A percentage of the estimated market value of the goods when they reach the importing country.

Question 4

A small Country Tariff - definition

Answer 4

a small country is defined as one whose consumption and /or production cannot affect the world price of the good it imports

Question 5

A small Country Tariff - meaning

Answer 5

This means that such a country can increase or decrease its demand for an imported product without affecting the price of that good not he global market

Question 6

Result of import tariffs

Answer 6

domestic production of the good increases while domestic consumption of the good falls. Consequently the amount of import decreases.

Question 7

Import Tariff

Answer 7

is level on imports by an importing country.

increases the price of the good in the importing country

Question 8

The effective rate of protection

Value added:

Answer 8

is the amount that is available to make payments to the primary production factors in the industry

Question 9

WTO - World Trade Organisation

Answer 9

overseas the global rules for government policies toward international trade. more then 150 members - established 1995

Question 10

World Trade Organisation - principles

Answer 10

1. Reductions of barriers to trade
2. Nondiscrimination among countries, often called the most favourable nation (MFN) principle
3. No unfair encouragement for exports

Question 11

are average tariffs higher in developing countries?

Answer 11

YEs

Question 12

why use tariffs?

Answer 12

Governments place tariffs on imports of the product, the domestic price of the imported product will rise. Makes imports less competitive for the domestic market

Question 13

Producer surplus

Answer 13

amount that producers gain from being able to sell bikes at the gong market price.

Question 14

Producer surplus - graphically

Answer 14

the area above the supply curve and below the market price line

Question 15

what happens when tariffs are imposed?

Answer 15

domestic producers can also raise the price that they charge for their bikes

Question 16

Domestic producer surplus after tariff - graph

Answer 16

area g + a

the area below the new price line and above the domestic supply curve

= the area is increased by a

Question 17

consumer surplus - graphically

Answer 17

the area below the demand curve and above the market price

Question 18

consumer surplus

Answer 18

the amount that consumers gain from being able to buy ie. bikes at going market price

Question 19

net loss to consumers

Answer 19

a + b + c + d

Question 20

one-dollar, one-vote metric

Answer 20

every dollar of gain or loss is just as important as every other dollar gain or loss, regardless of who the gainers or losers are

Question 21

Almost no tariffs

Answer 21

Singapore, Hong Kong & Macau

Question 22

tariff average rates 2012

Answer 22

2.4 - 4.2 % on nonagricultural products

Question 23

the production effect

Answer 23

A tariff shifts some purchases from foreign products to home products.

This costs more resources to make at home than to buy abroad.” (This describes area b)

Question 24

the consumption effect

Answer 24

“A tariff discourages some purchases that were worth more than they cost the nation.” (This describes area d)

Question 25

What happens when one raises the price on strictly domestic sales

Answer 25

By raising the price on strictly domestic sales, a tariff redistributes incomes from consumers to producers.

The amount redistributed is the price increase times the average quantity of domestic sales.”