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- Many countries impose tariffs or quotas to protect the domestic industry from competition. True FalseA tariff protecting domestic monopolist will generally lead to a higher level of domestic welfare than an equívalent quota O be always equal to an equívalent quota generally lead to a lower level of domestic welfare than an equívalent quota O always improve welfare of a domestic countryOne problem with the infant industry argument is that a) it must be approved by th choicese Federal Reserve Board. b) the protection is typically never removed, creating a domestic monopoly. c) it must be approved by the IMF and the World Bank. d) it fails to protect domestic industries from foreign competition.
- Building materials company wants to expand its business in Iran. What mode of entry should be used to enter this international market? Why have you chosen this method? Explain advantages and disadvantages.What are known firms who successfully compete internationally in the United States?With the $20 tariff, what is the 'new' price in the domestic contact lens market? Price Quantity Supplied Quantity Demanded World Price World Price + Tariff 0 0 240 100 120 20 20 220 100 120 40 40 200 100 120 60 60 180 100 120 80 80 160 100 120 100 100 140 100 120 120 120 120 100 120 140 140 100 100 120 160 160 80 100 120 180 180 60 100 120 200 200 40 100 120 220 220 20 100 120 240 240 0 100 120
- GlobalCell is an American firm producing cell phones. GlobalCell imports cell phone components from Japan and assembles them domestically. Suppose that in the United States, a cell phone sells for $100 and that 60% of the cell phone's value comes from the value of the imported components. The United States imposes a 30% tariff on cell phones and a 10% tariff on the cell phone's components. Assume that costs of producing components are the same in the United States and Japan and that transit costs are nonexistent. Based on the information provided, the effective rate of protection that GlobalCell receives from the tariff is A. 60% B. -20% C. -13.3% D. 26.7%The aim of a tariff is to: (a) maximise total surplus. (b) protect domestic consumers. (c) protect domestic producers. (d) create deadweight loss.Quotas may be set on worldwide imports or on imports from a specific country.True or False
- Suppose the domestic industry is a Monopoly, with which commercial policy instrument ( quota or tariff? - assuming both of them yields the same level of imports- ) would it prefer to be protected and why?Which of the following might be considered a cost to protecting domestic jobs in the steel producing industry by blocking steel imports? Less consumer surplus for those who use products made of domestic steel Fewer jobs in industries that use steel Higher prices of steel for domestic industries that use steel All of these might be considered costsYou have become a (well-paid) consultant to the Government of Indonesia on trade policy. Indonesia is an importer of Cars and an exporter of Steel. Suppose that you are choosing between advocating an import tariff on steel and an export subsidy on cars. If you assume perfect competition on each of these markets, which of the trade policies will you suggest? Please explain