Submit answers to the following questions in the unit drop box. You must explain your answer and provide your supporting computations. Yes/No answers or simple numbers are not acceptable and will not receive full credit.

1. Why does a sales tax shift a supply curve up and why can't the seller always raise prices by the full amount of the tax?

2. What is the difference between a specific tariff and an ad valorem tariff?

3. If a small country wants to protect its domestic producers from more efficient foreign competition by imposing an import tariff, will it come out ahead?

4. Do consumers lose when a large country protects its less efficient producers from foreign competition by imposing a tariff?

5. What is a countervailing duty, why is it needed, and how does it work?

6. Explain the nature of the deadweight losses that occur from a tariff.

7. Because Japanese auto manufacturers were more efficient than American auto manufacturers at making small, reliable, fuel efficient cars, the Regan administration imposed VER's on Japanese auto exports into the U.S. in the 1980s. Why was this a second-best trade policy and what were some of its costs?