A 2 b 3 a 4 c 5 b 6 a 7 b 8 d 9 b 10 a 11 a 12 b 13 c

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1. a 2. b 3. a 4. c 5. b 6. a 7. b 8. d 9. b 10. a 11. a 12. b 13. c 14. d 15. a 16. b 17. b 18. a 19. a 20. b 21. d 22. a 23. b 24. a 25. c 26. c 27. d 28. a 29. b 30. a 31. c 32. b 33. d 34. d 35. a 36. b 37. c 38. b 39. a 40. d 41. d 42. b 43. a 44. c 45. d 46. c 47. c 48. c 49. b 50. c 51. a 52. c 53. d 54. b 55. b 56. b 57. b 58. c 59. c 60. c ANSWERS TO TRUE-FALSE QUESTIONS 18
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Chapter 5: Tariffs 19 ANSWERS TO TERM EXPLANATION 1. Trade or commercial policies omit 2. Import tariff: levied on imports 3. Export tariff: levied on exported goods as they leave the country 4. Ad valorem tariff: Levied as a percentage of the value of the product 5. Specific tariff: Fixed monetary fee per unit of the product 6. Compound tariff: A combination of the above, often levied on finished goods whose components are also subject to tariff if imported separately 7. Consumption effect of a tariff: The residual not accounted for elsewhere, which arises from the decrease in consumption resulting from the increase in price due to the tariff. 8. Production effect of a tariff: omit. 9. Trade effect of a tariff: the analysis of both the consumption effect and production effect. 10. Revenue effect of a tariff: The loss of consumer surplus, in monetary terms, which is transferred to the government. 11. Consumer surplus: The difference between the price buyers would be willing to pay and what they actually pay 12. Rent or producer surplus: The revenue producers receive above the minimum amount required to induce them to produce a good 13. Protection cost or deadweight loss of a tariff: The real costs to society, not a transfer to other sectors of the economy 14. Nominal tariff: omit 15. Rate of effective protection: omit 16. Domestic value added: omit 17. Prohibitive tariff:omit 18. Stolper –Samuelson theorem: omit 19. Metzler paradox:omit 20. Optimum: omit ANSWERS TO QUESTIONS 1-8: omit. 9: economic loss. 10: developing country. 11: redistributive effect: The transfer of consumer surplus, in monetary term, to the domestic producers 19
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Chapter 5: Tariffs 20 of the import-competing product. revenue effect.The loss of consumer surplus, in monetary terms, which is transferred to the government. consumption effect:The residual not accounted for elsewhere, which arises from the decrease in consumption resulting from the increase in price due to the tariff. 12: Specific tariff:Fixed monetary fee per unit of the product. Ad valorem tariff: Levied as a percentage of the value of the product. Compound tariff: A combination of the above, often levied on finished goods whose components are also subject to tariff if imported separately 13-14: omit. 15: tariff increases the production costs. 16: Consumer surplus: The difference between the price buyers would be willing to pay and what they actually pay. Producer surplus: The revenue producers receive above the minimum amount required to induce them to produce a good. 17: The transfer of consumer surplus, in monetary term, to the domestic producers of the import-competing product. 18-20: omit. 21: Other nations may retaliate, further restricting trade 22-23: omit. 20
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