Question

Referring to Figure 8.2, under free-trade the U.S. imported __________ computers, but after imposing a tariff the U.S. imported __________ computers.

  

90,000; 100,000

Correct!  

100,000; 70,000

   

70,000; 100,000

   

200,000; 190,000

Question 6

1 / 1 pts

When a tariff is imposed, it is expected that domestic producers will raise their price to the same level as the price of the imported product after the tariff is imposed.

Correct!  

True

   

False

Question 7

1 / 1 pts

A tariff imposed by a small country hurts the tariff imposing country but brings gains to the rest of the world.

  

True

Correct!  

False

Answer 1

a) Under the free trade US was importing 100,000 goods and after the tariff is imposed they will be importing only 70,000 units of goods. under free trade local demand was 200 and supply was 100 so the gap of 100 was imported.

When the tariff is imposed the local demand is 190 and supply is 120 so they are importing 70 .

b) True, when a tariff is imposed the domestic producer will raise the price of the goods to match the price after tariff.

c) False, as the tariff imposed by a small nation doesn't affect the world market and world price but only the local market.

Answer 2

Imported 70