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Homework answers / question archive / Q1
Select one:
a. always results in the same loss in net Home welfare compared to an equivalent tariff
b. always results in a larger loss in net Home welfare compared to an equivalent tariff
c. always results in a smaller loss in net Home welfare compared to an equivalent tariff
d. might result in a larger loss in Home welfare compared to an equivalent tariff - it depends on the quota allocation mechanism
Q2. Consider a labor abundant economy in which two factors of production, labor and land, produce two goods, land-intensive watermelons and labor-intensive cherries. Suppose that both factors of production are freely mobile across both sectors.
Suppose that currently there is a free trade. but the Parliament considers imposing a steep tariff on imported good. Who will support this import tariff?
Select one:
a. workers and landowners in watermelon sector
b. workers and landowners in cherry sector
c. workers in watermelon sector and workers in cherry sector
d. landowners in watermelon sector and landowners in cherry sector
Q3. Consider a large Home country which imposes a tariff on imports of konjak from a Foreign country. Home's terms-of-trade gains from the tariff are
Select one:
a. Larger if the Foreign export supply curve is less elastic
b. Larger if the Foreign export supply curve is more elastic
c. Constant and independent of the elasticity of the Foreign export supply curve
d. Sometimes larger and sometimes smaller with a more elastic Foreign export supply curve - we cannot tell
