Multiple Choice Questions
1. A tax on imports that is stipulated as a money amount per unit is called:
a. A specific tariff.
b. An ad valorem tariff.
c. An effective tariff.
d. An optimal tariff.
2. A tariff generally __________ domestic producers of import-competing products and ____ domestic consumers of imports and import-competing goods.
a. Helps; helps
b. Hurts; hurts
c. Helps; hurts
d. Hurts; helps
3. A tariff allows domestic producers of import-competing goods to:
I. Expand their own production and sales.
II. Raise the price they charge.
III. Begin to export their product.
a. I
b. I and II
c. I, II, and III
d. I and III
4. If a small country imposes a tariff on imported motorcycles, the world price of motorcycles will __________ and the domestic price of motorcycles will __________.
a. Rise; rise
b. Fall; rise
c. Stay constant; rise
d. Stay constant; fall
5. If a small country imposes a tariff on imported motorcycles, the surplus of domestic producers of motorcycles will __________ and the surplus of domestic consumers of motorcycles will __________.
a. Rise; rise
b. Fall; fall
c. Fall; rise
d. Rise; fall
6. Which of the following refers to the loss consumers in the importing country suffer based on their reduction in the consumption of a good after a tariff is imposed on that good?
a. Production effect.
b. Consumption effect.
c. Deadweight loss.
d. Consumer surplus.
7. Which of the following refers to the extra cost of shifting to more expensive home production following the imposition of a tariff?
a. Production effect.
b. Consumption effect.
c. Deadweight loss.
d. Producer surplus.
Figure 8.1: The U.S. Market for Shoes
Price
8. Referring to Figure 8.1, the impact of a tariff on shoes on the amount of domestic producer surplus is a __________ measured by area __________.
a. Gain; a
b. Loss; a
c. Gain; (a+b)
d. Loss; (a+b)
9. Referring to Figure 8.1, the impact of a tariff on shoes on the amount of domestic consumer surplus is a __________ measured by area __________.
a. Gain; d
b. Loss; d
c. loss; (a+b+c+d)
d. Loss; (b+d)
10. Referring to Figure 8.1, the revenue collected by the U.S. government as a result of the tariff on shoes is shown by area __________.
a. a
b. a + b
c. c
d. b + c + d