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| 1 | If prices fall you are able to find the increase in consumer surplus as the area above the demand curve? |
 | A) | True |
| B) | False |
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| 2 | If prices fall you are able to find the decrease in producer surplus as the area above the supply curve? |
| A) | True |
| B) | False |
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| 3 | The import demand curve is: |
| A) | always upward sloping. |
| B) | the horizontal difference between the domestic demand and supply curves. |
| C) | the vertical sum of the domestic demand and supply curves. |
| D) | a reflection of the cost of producing the imported goods. |
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| 4 | The import supply curve is: |
| A) | usually downward sloped. |
| B) | a reflection of how much it costs foreigners to supply the goods. |
| C) | the horizontal difference between the domestic demand and supply curves. |
| D) | the marginal value of foreign consumption. |
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| 5 | The purpose of analysing of a non-discriminatory liberalization, is to examine the addition of a tariff on imports from all import partners. |
| A) | True |
| B) | False |
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| 6 | The border price shows what foreigners are willing to sell a certain quantity for. When a tariff is imposed foreigners need to lower their price accordingly to be able to sell, i.e. export, this quantity to the home country. |
| A) | True |
| B) | False |
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| 7 | The trade volume effect shows the welfare effects of a change in the volume of imports, ignoring the impact of the price change on: |
| A) | the initial level of imports. |
| B) | domestic production. |
| C) | foreign welfare. |
| D) | tariff revenue. |
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| 8 | Complete the sentences below mentioning the five effects on price and quantities from a non-discriminatory tariff:
i) The price facing Home firms and consumers (domestic price) to P′.
ii) The border price (i.e. the price Home pays for imports) ; this also means that the price received by Foreigners .
iii) The Home import volume to M′.
iv) The higher domestic price makes production .
v) The higher domestic price makes consumption . |
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| 9 | The tariff foreign welfare since it means it sells less and receives a lower price.
- The tariff creates private-sector winners and losers (Home firms gain, Home consumers lose), but the losers (consumers) lose more than the gainers (firms) gain.
- Home collects tariff revenue.
- The overall Home welfare change may be positive or negative; the relative sizes depend upon the slopes of the MD and MS curves and on the size of T.
ii) The global impact of the tariff, adding Home and Foreign welfare changes together, is definitely |
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| 10 | Tariffs are divided into different categories according who gets the rent of the tariff. Of the following names of different categories of rents, only three are valid answers. |
| A) | Domestically Captured Rents (DCR) |
| B) | Foreign Captured Rents (FCR) |
| C) | Border price Rents |
| D) | Frictional Barriers. |
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| 11 | If the price of a nation’s imports rise, this is _________ for domestic producers and ________ for domestic consumers. |
| A) | bad, good |
| B) | neutral, good |
| C) | good, neutral |
| D) | good, bad |
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| 12 | Taking account of domestic and foreign welfare changes, the overall impact of a tariff |
| A) | is positive |
| B) | is neutral |
| C) | is negative |
| D) | depends on the relative sizes of the trade volume and the border price effects |
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| 13 | The equilibrium border price is where the import supply and import demand curves . |
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| 14 | An MFN tariff is a non-discriminatory tariff |
| A) | True |
| B) | False |
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| 15 | Although the unilateral imposition of a tariff may improve the home nation’s welfare, the tariff harms the foreign nation than it helps the home nation. |
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| 16 | Imposing a tariff unilaterally on imports may improve a nation’s welfare because, the tariff is, in effect, paid by foreigners. |