4.26.10 – Lecture Notes, Econ 201

4.26.10 – Lecture Notes, Econ 201 - Valid...

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Review session Wed. May 5 th 10 AM in S107 Kedzie 4.26.10 – Lecture Notes, Econ 201 Tariffs- A tax levied upon a product when it crosses a national border Rationale: - Revenue for the government - Protection for domestic industry Types of Tariffs - Specific Tariff- A fixed amount of money per physical amount - Ad Valorem- A percent of the value - Compound Tariff- A combination of fixed and ad valorem Quotas- Government imposed absolute limit on quantity of goods imported - Usually implemented by issuing licenses to importers - Quota “Rent” – Not to Government --> Foreign Govn’t
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Unformatted text preview: Valid Arguments-Infant Industry- Temporary protection for new (baby) industries in developing countries Invalid Argument-Job saving- protecting jobs-Consumer surplus lost / 1 job saved o Autos - $180,00 /1 job o Steel- $1,000,000 / 1 job o Textiles- $43,000 /1job Smoot-Hawley Tariff (1930)-Average rate 59.1% over 12,000 products Reciprocal Trade Agreements Act (1934)-Congress authorized President to negotiate tariff reductions with other nations. Temporary 3 years...
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