Scenario & Question 7: A country decides to impose higher tariffs on imported goods to encourage domestic production. This policy change impacts the circular flow of income and expenditure by altering the dynamics of international trade. In this scenario, the imposition of tariffs on imports primarily: A) Acts as a leakage in the circular flow B) Functions as an injection into the circular flow C) Has no significant impact on the circular flow D) Reduces government expenditure in the circular flow

Scenario & Question 7: A country decides to impose higher tariffs on imported goods to encourage domestic production. This policy change impacts the circular flow of income and expenditure by altering the dynamics of international trade. In this scenario, the imposition of tariffs on imports primarily: A) Acts as a leakage in the circular flow B) Functions as an injection into the circular flow C) Has no significant impact on the circular flow D) Reduces government expenditure in the circular flow

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the free trade price is IP and this country imposes a trade tariff of $6, the loss to the economy as a result of this tariff is represented by (a) area (a) in this graph (b) area (b) in this graph (c) areas (c) + (d) (d) areas (b) + (c) + (d) + (e) (e) areas (a) + (b) + (c) + (d)
What happens to the equilibrium price and quantity when a country sets a low or medium tariff or import quota? Group of answer choices The equilibrium price and quantity will be lower than with no trade. The equilibrium price and quantity will be somewhere between those that prevail with no trade and those with completely free trade. The equilibrium price and quantity will be the same as with no trade. The equilibrium price will be lower, and the quantity will be higher than the case with no trade.
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Q1: Using a domestic-market demand- and supply-curve graph, (a) show the impact of tariff on a small country's import price, domestic demand, domestic supply, import quantity, consumer surplus, producer surplus, government revenue, and total welfare; (b) Is the country unambiguously worse off as a result of the tariff? (c) In the same graph, show how to achieve the same import quantity with an import quota; (d) When would the tariff and the import quota lead to the same amount of welfare change? (e) How would the answers to (a) and (b) change for a large country?
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