The imposition of a tariff becomes a gain for one nation at the expense of:

• A) All of the given options
• B) Its domestic industries
• C) Its trade partners
• D) The global economy

The productivity of labor increases as each unit of labor (L) is combined with more capital (K) in the production of commodities.

• A) True
• B) False
• C)
• D)

Import quotas are used for which of the following purposes?

• A) All of the given options
• B) Protecting domestic industry
• C) Balance-of-payments reasons
• D) Protecting domestic agriculture

What will happen to producer surplus when a nation imposes a 100 percent tariff on imports of commodity X?

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

Producer surplus is calculated as the area:

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

A compound tariff is a combination of an ad valorem tariff and a specific tariff.

• A) False
• B) True
• C)
• D)

When a nation imposes a tariff, its offer curve shifts or rotates toward the axis measuring its importable commodity by the amount of the import tariff.

• A) False
• B) True
• C)
• D)

A specific tariff of $10 on imported bicycles means that customs officials collect the fixed sum of-------- on each imported bicycle regardless of its price.

• A) $10
• B) $5
• C) $20
• D) $15

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