What does the protection cost or deadweight loss represent?

• A) Non-tariff revenue
• B) Tariff revenue
• C) Inefficiencies caused by the tariff
• D) Increased consumer surplus

Which of the following formula is used to determine the rate of effective protection?

• A) g = (t - 2ai) / ti
• B) g = (t +2 ai) / ti
• C) g = (t +ai) / ti
• D) g = (t - ai) / ti

When a nation imposes an optimum tariff, its trade partner is likely to decrease its own tariffs.

• A) True
• B) False
• C)
• D)

Sporadic dumping involves selling a commodity:

• A) All of the given options
• B) Occasionally at a lower price to unload surplus in a foreign market without reducing domestic prices
• C) Below cost temporarily abroad
• D) At a lower price domestically than abroad

Which of the following is the difference between what consumers would be willing to pay and what they actually pay?

• A) Producer surplus
• B) Increase in supply
• C) Consumer surplus
• D) Increases in demand

If a lower tariff rate is imposed on the imported input than on the final commodity, the effective rate of protection will:

• A) Exceed the nominal tariff rate
• B) Be equal to zero
• C) Be equal to the nominal tariff rate
• D) Be lower than the nominal tariff rate

When a nation imposes a 100 percent tariff on imports of commodity X, consumer surplus:

• A) Increases
• B) Remains unchanged
• C) Decreases
• D) Becomes maximum

Which type of tariff is calculated as a fixed percentage of the value of the imported goods?

• A) Specific tariff
• B) Ad valorem tariff
• C) Compound tariff
• D) Specific tariff and ad valorem tariff

What do technical, administrative, and other regulations include?

• A) Health regulations for imported food products
• B) All of the given options
• C) Labeling requirements for origin and contents
• D) Safety regulations for automobiles and electrical equipment

What is the likely outcome if both nations continue retaliating in a trade war?

• A) The origin equilibrium point becomes the new equilibrium.
• B) Both nations gain more from trade.
• C) Both nations lose most or all of the gains from trade.
• D) One nation gains and other nation losses from trade.

An import tariff imposed by a nation leads to the redistribution of income from:

• A) Domestic consumers to domestic producers.
• B) Foreign consumers to domestic consumers.
• C) Domestic producers to foreign producers.
• D) Domestic producers to foreign consumers.

An international cartel is an organization that:

• A) Is considered illegal like OPEC
• B) Promotes free trade and competition
• C) Restricts the output and exports of a commodity
• D) Controls the production of a commodity in a single nation

Labor unions in industrial nations generally favor import tariffs to:

• A) Decrease the earnings of labor and increase the returns of capital
• B) Increase the earnings of labor
• C) Benefit both labor and capital equally
• D) Decrease the earnings of labor

Consumer surplus is calculated as the area:

• A) Above the supply curve and below the market price.
• B) Above the demand curve.
• C) Under the demand curve and above the market price.
• D) Above the supply curve.

Which type of tariff is a fixed amount that is levied on each unit of imported goods?

• A) Ad valorem tariff
• B) Specific tariff
• C) Compound tariff and specific tariff
• D) Compound tariff

Voluntary export restraints are generally less effective in limiting imports than import quotas.

• A) True
• B) False
• C)
• D)

According to the Stolper-Samuelson theorem, what happens to the return or earnings of a factor used intensively in the production of a commodity when the relative price of the commodity increases due to a tariff?

• A) It remains constant.
• B) It becomes unpredictable.
• C) It decreases.
• D) It rises.

A small nation imposes a 100% ad valorem tariff on imports of commodity X. What will happen to the price of commodity X in the domestic market?

• A) It will become minimum.
• B) It will increase.
• C) It will not change.
• D) It will decrease.

Which factor of production benefits from the imposition of a tariff according to the Stolper-Samuelson theorem?

• A) Both abundant and factors get equal benefits
• B) Scarce factor
• C) Abundant factor
• D) Neither abundant factor nor scare factor get benefits

What did the Uruguay Round require in relation to voluntary export restraints (VERs)?

• A) Increasing the use of VERs in international trade
• B) Phasing out all VERs by the end of 1999
• C) Applying VERs to all developed nations
• D) Applying VERs to all developing nations