Question

Which is a likely outcome and might serve as an argument against the imposition of a tariff on a country from which we import manufacturing goods because that country can produce them at a lower cost than our domestic manufacturers of that good?

	A.	Our domestic manufacturers will benefit, create jobs, and our economy will be larger than if we had not imposed that tariff.
	B.	We will increase our total surplus since revenues will be generated from the tariff.
	C.	Another country that can also produce that good at a lower price than our domestic manufacturers will replace the country on which we imposed tariffs and will export (almost) the same amount of the good to us.
	D.	The country on which we imposed the tariffs will still be able to export the same quantities of that good to us.

Consider a country that exports good X. We have that________?

	A.	The domestic producers win more than domestic consumers win.
	B.	The domestic producers win more than domestic consumers lose.
	C.	The domestic consumers win more than domestic producers lose.
	D.	The domestic consumers win more than domestic producers win.

Answer 1

1. Which is a likely outcome and might serve as an argument against the imposition of a tariff on a country from which we import manufacturing goods because that country can produce them at a lower cost than our domestic manufacturers of that good?

Option D (The country on which we imposed the tariffs will still be able to export the same quantities of that good to us.) is correct.

Reason: With higher tariff, the domestic importer have to pay higher prices while the exporting country can sell the same quantity to the domestic importer. Therefore, tariff may not reduce the quantity imported from foreign.

2.  Consider a country that exports good X. We have that________?

Option B (The domestic producers win more than domestic consumers lose) is correct.

Reason: The producers of exporting countries will get higher price in the foreign market while this will also raises the domestic price. The producer will get more benefit because they can sell the goods in the foreign market which remain unsold in the domestic market.