Qf Uf Ct U. The above figure shows the effect of an import tariff on sector Y in the home country. Which statement is INCORRECT about the effect of this tariff? O The post-tariff 'trade triangle' is smaller than the free trade 'trade triangle' O Tariff caused production of X to increase and production of Y to decrease, relative to free trade production level O Tariff has caused production of X to increase and production of Y to decrease, relative to autarky production level O Tariff leads to a welfare loss relative to free trade but certainly not relative to autarky

Qf Uf Ct U. The above figure shows the effect of an import tariff on sector Y in the home country. Which statement is INCORRECT about the effect of this tariff? O The post-tariff 'trade triangle' is smaller than the free trade 'trade triangle' O Tariff caused production of X to increase and production of Y to decrease, relative to free trade production level O Tariff has caused production of X to increase and production of Y to decrease, relative to autarky production level O Tariff leads to a welfare loss relative to free trade but certainly not relative to autarky

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter28: International Trade

Section: Chapter Questions

Problem 10P

See similar textbooks

Similar questions

Are the gains from international trade more likely to be relatively more important to large or small countries?
Explain how a tariff reduction causes an Increase in the equilibrium quantity of imports and a decrease in the equilibrium price. Hint: Consider the Work It Out Effects of Trade Barriers.
Trade has income distribution effects. For example, suppose that because of a government-negotiated reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you expect this pattern of trade to increase or decrease jobs and wages in the paint industry in Germany? The alarm clock industry in Germany? The paint industry in Czech Republic? The alarm clock industry in Czech Republic? What has to happen for there to be no increase in total unemployment in both countries?
From the Work It Out Effects of Trade Barriers, you can see that a tariff raises the price of imports. What is interesting is that the price rises by less than the amount of the tariff. Who pays the rest of the tariff amount? Can you show this graphically?
If opening up to free trade would benefit a nation, then why do nations not just eliminate their trade barriers, and not bother with international trade negotiations?
The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 34.6 and Table 34.7. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell? What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell? Sketch two supply and demand diagrams, one for each country, in the situation before trade. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade. If the Land of Submarines imposes an anti- dumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country. Does your general answer change if the Land of Submarines imposes an import quota of 70?