1. When consumers do not have enough time or opportunity to aoid price increases, governments can levy sales taxes that distort resource allocations among producers to a smaller degree.
a. True
b. False
2. If domestic producers lobby to gain quota protection, the consumer will lose more than producers gain, plus some of the consumer losses will be transferred to foreign producers who receive higher prices.
a. True
b. False
3. By combining a specific tariff and a percentage of value tariff you get an ad valorem tariff.
a. True
b. False
4. Because tariffs distort prices, scarce domestic resources are shifted away from more efficient industries and into less efficient protected industries while consumers are induced to purchasing less preferred goods.
a. True
b. False
5. One way to offset dumping and the effects of foreign subsidies is by imposing a countervailing duty.
a. True
b. False
6. All else held constant, sales taxes increase the amount of private resources in a community.
a. True
b. False
7. The idea of using trade restrictions to protect domestic jobs is clearly a first-best trade policy that has no negative consequences.
a. True
b. False
8. Trade barriers are like taxes in that consumers tend to pay more and there are losses in economic efficiency that result, but one difference is that with trade restrictions there is often a small and better organized group of producers that benefit.
a. True
b. False
9. One of the problems with the easier to calculate percentage tariff is that it provides an incentive for manufacturers to substitute more expensive items for export.
a. True
b. False
10. The quantity of imports can be effected directly by a tariff and indirectly through price distortions caused by a quota.
a. True
b. False