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3 Nov 2020

4. The main difference between an import tariff and an import quota is

a. A quota reduces the quantity of imports more than a tariff.

b. A tariff raises the price of imports more than a quota.

c. A tariff generates government revenue, while a quota, unless it is sold, does not.

d. A tariff does not harm foreign producers.

 

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Related questions

Under a binding price ceiling, what does the change in consumer surplus represent?
A) The gain in surplus for those buyers who can still purchase the product at the lower price.
B) The loss in surplus for those buyers who previously purchased some units of the good at the higher price, but these units are no longer produced at the lower price.
C) The loss in surplus for those buyers who would like the purchase the excess demand created by the price ceiling policy.
D) Both A and B are correct.
E) Both A and C are correct.

When the market price is held above the competitive level, the deadweight loss is composed of:

A) producer surplus losses associated with units that used to be traded on the market but are no longer exchanged.

B) consumer surplus losses associated with units that used to be traded on the market but are no longer exchanged.
C) producer and consumer surplus losses associated with units that used to be traded on the market but are no longer exchanged.
D) There is no deadweight loss if the government uses a price floor policy to increase the price.

Compared to a tariff, an import quota, which restricts imports to the same amount as the tariff, will leave the country as a whole
A) worse off than a comparable tariff.
B) not as bad off as a comparable tariff.

C) about the same as a comparable tariff.

D) Any of the above can be true.

What is the welfare impact of a subsidy policy?
A) Producer surplus increases, consumer surplus declines, and total welfare declines.
B) Producer and consumer surplus increase, and these gains are larger than the government cost.

C) Producer and consumer surplus increase, and these gains are smaller than the government cost.

D) Producer surplus increases, consumer surplus declines, and total welfare increases due to the subsidy program.

Why is there a deadweight loss associated with subsidy payments?
A) There is no deadweight loss from a subsidy.
B) Quantity supplied is less than the equilibrium amount, so consumers and producers lose surplus value on those units that are no longer produced.
C) Quantity supplied exceeds the equilibrium amount, and consumer willingness to pay for these additional units is smaller than the marginal cost of producing them.
D) The subsidy payment does not distort quantities in the market, but the government cost exceeds consumer willingness to pay for the quantity demanded.

4. Assume that Thailand and India are potential trading partners of China. Thailand is a member of ASEAN but India is not. Suppose the import price of textiles from India (PIndia) is 50 per unit under free trade and is subject to a 20% tariff. As of January 1st 2010, China and Thailand entered into the China-ASEAN freetrade area, eliminating tariffs on Thai imports. Use the following figure to answer these questions:

a. Before the China-ASEAN free-trade area, how much does China import from each trading partner? What is the import price? Calculate the tariff revenue.

b. After the China-ASEAN free-trade area, how much does China import from each trade partner? What is the import price? What is the total tariff revenue of China?

c. Based on your answer to part (b), what is the impact of the China-ASEAN free-trade area on the welfare of China?

d. What is the effect of the China-ASEAN free-trade area on the welfare of Thailand and India?

e. As mentioned in the Headlines: China-ASEAN Treaty Threatens Indian Exporters, the China-ASEAN agreement may lead to a similar one between China and India. How would this affect China

Suppose with free trade, the United States importing a backpack from Mexico costs $10, and the cost of importing a backpack from China costs $9, while a backpack produced in the US costs $14. Before NAFTA (members are US-Canada-Mexico), the US maintained a tariff of $60 against all backpack imports. Then under NAFTA, all tariffs between the US and Mexico are removed, while the tariff against China remains in effect. Assume that tariff does not affect the world price of a backpack.

1. Before NAFTA, the US imported backpack from:

a. China b. Both Mexico and china c. Mexico d. Neither Mexico nor China?

2. Under NAFTA, the US imports backpack from:

a. both Mexico and china b. neither Mexico nor china c. Mexico d. china?

3. As a result of NAFTA, consumers in the US (Loses- Gains - Neither Lose nor gain)? , and the US government (Loses -Gain -Neither gains nor loses) ? tariff revenue. Mexico (neither gain nor lose - gain- lose)? And china (gain - lose -neither gain nor lose)?

4. This is an example of trade (creation - diversion)? Resulting from a regional agreement.

 

 

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