MGEC82H3 Lecture Notes - Import Quota, Economic Surplus, Government Procurement

Which of the following is NOT an effect of an import tariff in a small country?

a. It improves efficiency in the economy

b. It reduces consumer surplus by raising the market price domestically. 

c. It generates a net welfare loss in the country.

d. It raises government revenues.

e. It increases producer surplus by raising the market price and allowing more production.

40) The main difference between a tariff and an "equivalent" voluntary export restriction (VER) is that A) a tariff allows the government of the importing country to appropriate the extra market value of the imported good, but with a VER the extra market value accrues to the good's producers. B) a tariff allows the extra market value of the good to accrue to the supplier, but a VER allows the extra market value to be appropriated by the government of the importing country. C) a tariff restricts free trade between two countries and a VER does not. D) a tariff keeps the price in the importing country higher than it would otherwise be; a VER does not. E) none of the above.

There are two questions related to Tariffs

Is it possible for a low nominal tariff rate to understate the effective rate of protection? What is tariff escalation?

How can tariffs be justified?

There are two questions related to Nontariff Trade Barriers

1. Describe some of the differences between tariffs and quotas?

2. What are the intent and impact of domestic content requirements?