Reference no: EM133126905

1. The imposition of an optimum tariff by a small nation:

a. improves its terms of trade

b. reduces the volume of trade

c. increases the nation's welfare

d. none of the above

2. The imposition of an optimum tariff by a large nation:

a. improves the terms of trade of the trade partner

b. reduces the volume of trade

c. increases the trade partner's welfare

d. all of the above

3. If two large countries impose an optimum tariff

a. the welfare of the both nations decrease

b. the welfare of the both nations increase

c. the welfare of the larger nation will increase and that of the other nation decreases

d. the welfare of the larger nation will decrease and that of the other nation increases

4. If one nation imposes an optimum tariff and the other nation does not retaliate

a. the welfare of the first nation increases and that of the welfare of the second nation falls

b. the welfare of the second nation increases and that of the welfare of the second nation falls

c. the welfare of both nations fall

d. the welfare of both nations increase

5. If one nation imposes an optimum tariff and the other nation does not retaliate

a. the welfare of the first nation increases more than the fall in the welfare of the second nation

b. the welfare of the first nation increases more than the fall in the welfare of the second nation

c. the welfare of the second nation increases less than the fall in the welfare of the first nation

d. the welfare of the first nation increases by the same amount as the fall in the welfare of the second nation

6. The nominal tariff is the tariff calculated on the

a. price of the input used in the production of the commodity

b. price of the commodity or service

c. value added

d. all of the above

7. The effective tariff rate is the tariff calculated on the

a. price of the input used in the production of the commodity

b. commodity or service

c. value added in the nation

d. all of the above

8. If the nominal tariff on a commodity is higher than the nominal tariff on the imported input used in the production of the commodity, then the rate of effective protection is

a. higher on the commodity than on the input

b. lower on the commodity than on the imported input

c. equal on the commodity and on the imported input

d. any of the above