Question

1. For strategic trade protectionism to be effective, the:

Select one:

a. good in question must be produced with high-tech equipment.

b. supply of the good in question must be elastic.

c. supply of the good in question must be inelastic.

d. good in question must be one of many goods that the country exports.

2. Which statement provides an explanation for tariffs decreasing market efficiency?

Select one:

a. The supply of goods is not purchased by the buyers with the highest willingness to pay.

b. The supply of goods is not produced by the lowest-cost suppliers.

c. Prices are not equal to the equilibrium price.

d. Deadweight loss is equal to zero.

3. History has shown that one of the most effective tools against child labor is:

Select one:

a. regulations.

b. laws.

c. economic growth.

d. quotas.

Answer 1

1) For the success of strategic trade protectionism,supply of good in question has to be elastic or in other words,the domestic suppliers have to be more responsive to any price change due to the imposition of protectionist policies towards the importing good in the domestic market as now due to imposition of protectionism the imported good would become relatively expensive and the demand for domestic good would increase.Therefore,to respond to the increase in domestic demand and protectionism to be effective,the suppliers have to take advantage of the higher price in domestic market and increase the supply accordingly.

Thus,option b) or supply of good in question must be elastic is the correct answer.

2) The major source of economic welfare shift due to tariff is the gain in producer surplus in domestic economy due to higher domestic demand for the good and the higher domestic price following imposition of tariff.Hence,if the cost of production also increases proportionately then the respective gain in producer curplus due to tariff would be offset and affect the market efficiency consequently.Thus,the domestic producers can attainn economies of scale and enhance producer surplus by reducing production cost.

Thus,option-b) or the supply of good is not produced by lost-cost suppliers is the right answer.

3) Historically,the enforcing various strict child labor laws can be the most effective tool in combating child labor.

Therefore,option-b) would be the correct option here.