problem: When a nation imports a good at a world price below the home country's equilibrium price for that good and then imposes a tariff on the import, what happens to the quantity imported of the good by the home nation?

a) The quantity imported by the home nation increases.
b) The quantity imported by the home nation decreases.
c) The quantity imported by the home nation does not change.
d) Not enough information is given to answer the problem.

problem: Which of the following statements regarding a tariff is FALSE?

a) A tariff always reduces consumer welfare.
b) A tariff always increases producer surplus.
c) A tariff always creates some loss in welfare.
d) A tariff always reduces government revenue for the imposing nation.

problem: When a tariff is imposed on an imported good, what happens to producer surplus in the importing nation?

a) Producer surplus does not change.
b) Producer surplus decreases.
c) Producer surplus increases.
d) Producer surplus is eliminated.

problem: When a nation imports a good at a world price below the home country's equilibrium price for that good, what happens to the quantity imported of the good by the home nation?

a) The quantity imported by the home nation increases.
b) The quantity imported by the home nation decreases.
c) The quantity imported by the home nation does not change.
d) Not enough information is given to answer the problem.

problem: Which of the following is NOT a type of barrier to trade?

a) Ad valorem tariff
b) Specific tariff
c) Import quota
d) Income trade tax

problem: When a tariff is imposed on an imported good, what happens to the price of the imported good in the rest of the world?

a) The price does not change.
b) The price is reduced by the size of the tariff.
c) The price increases by the size of the tariff.
d) The tariff only affects the world price of the good.

problem: When a tariff is imposed on an imported good, what happens to the price of the imported good in the importing nation?

a) The price does not change.
b) The price is reduced by the size of the tariff.
c) The price increases by the size of the tariff.
d) The tariff only affects the world price of the good.

problem: When a nation imports a good at a world price below the home country's equilibrium price for that good, what happens to the quantity supplied of the good by the home nation?

a) The quantity supplied by the home nation increases.
b) The quantity supplied by the home nation decreases.
c) The quantity supplied by the home nation does not change.
d) Not enough information is given to answer the problem.

problem: When a tariff is imposed, some consumer surplus is lost and NOT converted to government revenue. This unrecoverable loss in surplus is called __________.

a) Efficiency loss
b) Terms of trade gain
c) Trade creation
d) Government profit loss

problem: Which of the following statements is TRUE regarding the loss in consumer surplus from a tariff?

a) Lost consumer surplus becomes producer and government welfare gain with no inefficiency.
b) Lost consumer surplus becomes producer and government welfare gain with some inefficiency.
c) Consumer surplus lost becomes deadweight or efficiency loss.
d) Consumer surplus becomes producer surplus exclusively when a tariff is imposed.