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4. Tariffs Quotas Other Barriers Barriers to Trade International Trade > Barriers to Trade Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/economics?campaign_content=book_5770_section_57&campaign_term=Economics&utm_campaign=powerpoint&utm_medi um=direct&utm_source=boundless

5. Tariffs can be levied on goods being imported in a country (import tariff), or exported from a country (export tariff). They may be levied in order to protect domestic producers (protective tariff), or to raise revenue for the government (revenue tariff). Specific tariffs levy a fixed duty on a good. Ad valorem tariffs are based on a percentage of the good's value. Compound tariffs are a combination of specific and ad valorem tariffs. Tariffs often increase domestic producer surplus and the quantity of a good supplied domestically, but hurt domestic consumer surplus. Tariffs Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/economics/textbooks/alternative-to-economics-3rd-paul-krugman-robin-wells-1464128731-9781464128738/international- trade-8/barriers-to-trade-57/tariffs-212- 12597?campaign_content=book_5770_section_57&campaign_term=Economics&utm_campaign=powerpoint&utm_medium=direct&utm_source=b oundless Effects of a Tariff View on Boundless.com International Trade > Barriers to Trade

6. There are two types of quotas: absolute and tariff-rate. Absolute quotas are quotas that limit the amount of a specific good that may enter a country. Tariff- rate quotas allow a quantity of a good to be imported under a lower duty rate; any amount above this is subject to a higher duty. Justifications for the use of quotas include protection for domestic employment and infant industries, protection against unfair foreign trade practices, and protection of national security. Quotas often hurt domestic consumers and benefit domestic producers. Quotas may also provide incentives for administrative corruption and smuggling. Quotas Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/economics/textbooks/alternative-to-economics-3rd-paul-krugman-robin-wells-1464128731-9781464128738/international- trade-8/barriers-to-trade-57/quotas-213- 12598?campaign_content=book_5770_section_57&campaign_term=Economics&utm_campaign=powerpoint&utm_medium=direct&utm_source=b oundless Sugar: Tariff-Rate Barriers View on Boundless.com International Trade > Barriers to Trade

7. Specific limitations to trade barriers include local content requirements and embargoes. This category of barriers comes from trade regulations. Customs and administrative procedure barriers include bureaucratic red tape and anti-dumping practices. This category of barriers comes from government procedures. Governmental participation barriers include government procurement programs, export subsidies, and countervailing duties. This category of barriers involves the direct participation of government in trade. Technical barriers to trade include sanitary regulations, measurement and labeling standards, and ingredient standards. This category of barriers involves health, safety, and measurement standards. Other Barriers Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/economics/textbooks/alternative-to-economics-3rd-paul-krugman-robin-wells-1464128731-9781464128738/international- trade-8/barriers-to-trade-57/other-barriers-214- 12599?campaign_content=book_5770_section_57&campaign_term=Economics&utm_campaign=powerpoint&utm_medium=direct&utm_source=b oundless View on Boundless.com International Trade > Barriers to Trade

8. Free to share, print, make copies and changes. Get yours at www.boundless.com Appendix

9. Key terms absolute quota A limitation of the quantity of certain goods that may enter commerce during a specific period. countervailing duty A tax levied on an imported article to offset the unfair price advantage it holds due to a subsidy paid to producers or exporters by the government of the exporting country if such imports cause or threaten injury to a domestic industry. Dumping Selling goods at less than their normal price, especially in the export market. embargo A ban on trade with another country. quota A restriction on the import of something to a specific quantity. tariff A system of government-imposed duties levied on imported or exported goods; a list of such duties, or the duties themselves. tariff-rate quota Allows a specified quantity of imported goods to be entered at a reduced rate of duty during the quota period, with quantities entered in excess of the quota limit subject to a higher duty rate. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade

10. Effects of a Tariff When a tariff is levied on imported goods, the domestic price of the good rises. This benefits domestic producers by increasing producer surplus, but domestic consumers see a small consumer surplus. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Tariff." Public domain http://en.wikipedia.org/wiki/File:Tariff.JPG View on Boundless.comPublic domainhttp://en.wikipedia.org/wiki/File:Tariff.JPGView on Boundless.com International Trade

11. Sugar: Tariff-Rate Barriers In the US, the import of sugar is regulated by tariff-rate barriers. In 2012, the US allowed over 150,000 tons of raw cane sugar to be imported from Brazil at a reduced tariff rate. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia. "Raw cane sugar light." CC BY-SA http://commons.wikimedia.org/wiki/File:Raw_cane_sugar_light.JPG View on Boundless.comCC BY-SAhttp://commons.wikimedia.org/wiki/File:Raw_cane_sugar_light.JPGView on Boundless.com International Trade

12. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade What group benefits from the introduction of a tariff? A) Domestic consumers B) Domestic producers C) Foreign exporters D) Foreign importers

13. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ International Trade What group benefits from the introduction of a tariff? A) Domestic consumers B) Domestic producers C) Foreign exporters D) Foreign importers

14. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade Assume the domestic price of a good is lower than the world price. What will happen if the country institutes a tariff? A) The price of the good will increase and the quantity consumed will decrease B) The price of the good will decrease and the quantity consumed will increase C) The price of the good will increase and the quantity consumed will increase D) The price of the good and the quantity consumed will stay the same

15. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ International Trade Assume the domestic price of a good is lower than the world price. What will happen if the country institutes a tariff? A) The price of the good will increase and the quantity consumed will decrease B) The price of the good will decrease and the quantity consumed will increase C) The price of the good will increase and the quantity consumed will increase D) The price of the good and the quantity consumed will stay the same

16. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade Supporters of quotas argue that they are beneficial because _____________. A) by limiting cheap imports, quotas give new, inexperienced industries time to become competitive B) All of these answers C) by bolstering domestic demand, quotas protect jobs in the exporting countries D) quotas address market failures such as information asymmetry and moral hazard

17. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ International Trade Supporters of quotas argue that they are beneficial because _____________. A) by limiting cheap imports, quotas give new, inexperienced industries time to become competitive B) All of these answers C) by bolstering domestic demand, quotas protect jobs in the exporting countries D) quotas address market failures such as information asymmetry and moral hazard

18. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade A quota that permits a specific quantity of imported merchandise to enter the country at a reduced rate of duty (tax) is a ___________. A) absolute quota B) relative quota C) soft quota D) tariff-rate quota

19. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ International Trade A quota that permits a specific quantity of imported merchandise to enter the country at a reduced rate of duty (tax) is a ___________. A) absolute quota B) relative quota C) soft quota D) tariff-rate quota

20. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade In generally, the effect of a quota on the domestic economy is a(n) ____________. A) increase in producer surplus, decrease in consumer surplus, and decrease in total surplus B) increase in producer surplus, decrease in consumer surplus, and increase in total surplus C) decrease in producer surplus, increase in consumer surplus, and decrease in total surplus D) decrease in producer surplus, increase in consumer surplus, and increase in total surplus

21. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ International Trade In generally, the effect of a quota on the domestic economy is a(n) ____________. A) increase in producer surplus, decrease in consumer surplus, and decrease in total surplus B) increase in producer surplus, decrease in consumer surplus, and increase in total surplus C) decrease in producer surplus, increase in consumer surplus, and decrease in total surplus D) decrease in producer surplus, increase in consumer surplus, and increase in total surplus

22. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade A domestic market is flooded with cheap, imported candy that is priced below the exporting country's own market price. As a result, the domestic market adds extra taxes to the imported candy. This represents which of the following trade barriers? A) Countervailing duties B) Anti-dumping duties C) Export subsidies D) Tariff-rate quotas

23. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ International Trade A domestic market is flooded with cheap, imported candy that is priced below the exporting country's own market price. As a result, the domestic market adds extra taxes to the imported candy. This represents which of the following trade barriers? A) Countervailing duties B) Anti-dumping duties C) Export subsidies D) Tariff-rate quotas

24. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade In order to be sold in the domestic market, all foreign-produced computers must contain microprocessor chips that were produced domestically. This represents which of the following trade barriers? A) Embargo B) Government procurement program C) Local content requirement D) Identity standards

25. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ International Trade In order to be sold in the domestic market, all foreign-produced computers must contain microprocessor chips that were produced domestically. This represents which of the following trade barriers? A) Embargo B) Government procurement program C) Local content requirement D) Identity standards

26. Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade A certain breed of bananas is not allowed to be imported in a country due to the high probability the bananas will harbor an invasive species of spider. This represents which of the following types of trade barriers? A) Phytosanitary measures B) Bureaucratic delays C) Labeling standards D) Anti-dumping duties

27. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ International Trade A certain breed of bananas is not allowed to be imported in a country due to the high probability the bananas will harbor an invasive species of spider. This represents which of the following types of trade barriers? A) Phytosanitary measures B) Bureaucratic delays C) Labeling standards D) Anti-dumping duties

28. Attribution Wikipedia. "Tariff." CC BY-SA 3.0 http://en.wikipedia.org/wiki/TariffCC BY-SA 3.0http://en.wikipedia.org/wiki/Tariff Wikispaces. "McHenry's AP Wiki - International Trade." CC BY-SA http://mchenry.wikispaces.com/International+TradeCC BY-SAhttp://mchenry.wikispaces.com/International+Trade Wiktionary. "tariff." CC BY-SA 3.0 http://en.wiktionary.org/wiki/tariffCC BY-SA 3.0http://en.wiktionary.org/wiki/tariff Wikispaces. "resourcesforhistoryteachers - E.7.3 Define trade barriers, such as quotas and tariffs." CC BY-SA http://resourcesforhistoryteachers.wikispaces.com/E.7.3+Define+trade+barriers,+such+as+quotas+and+tariffsCC BY-SA http://resourcesforhistoryteachers.wikispaces.com/E.7.3+Define+trade+barriers,+such+as+quotas+and+tariffs Wikipedia. "Tariff-rate quota." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Tariff-rate_quotaCC BY-SA 3.0http://en.wikipedia.org/wiki/Tariff-rate_quota Wikipedia. "Import quota." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Import_quotaCC BY-SA 3.0http://en.wikipedia.org/wiki/Import_quota Wikipedia. "Non-tariff barriers to trade." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Non-tariff_barriers_to_trade#QuotasCC BY-SA 3.0http://en.wikipedia.org/wiki/Non-tariff_barriers_to_trade#Quotas Wiktionary. "quota." CC BY-SA 3.0 http://en.wiktionary.org/wiki/quotaCC BY-SA 3.0http://en.wiktionary.org/wiki/quota Wikipedia. "tariff-rate quota." CC BY-SA 3.0 http://en.wikipedia.org/wiki/tariff-rate%20quotaCC BY-SA 3.0http://en.wikipedia.org/wiki/tariff-rate%20quota Wikipedia. "absolute quota." CC BY-SA 3.0 http://en.wikipedia.org/wiki/absolute%20quotaCC BY-SA 3.0http://en.wikipedia.org/wiki/absolute%20quota Wikipedia. "Countervailing duty." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Countervailing_dutyCC BY-SA 3.0http://en.wikipedia.org/wiki/Countervailing_duty Wikipedia. "Government procurement." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Government_procurementCC BY-SA 3.0http://en.wikipedia.org/wiki/Government_procurement Wikipedia. "Dumping (pricing policy)." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Dumping_(pricing_policy)CC BY-SA 3.0http://en.wikipedia.org/wiki/Dumping_(pricing_policy) Wikipedia. "Non-tariff barriers to trade." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Non-tariff_barriers_to_trade#QuotasCC BY-SA 3.0http://en.wikipedia.org/wiki/Non-tariff_barriers_to_trade#Quotas Wiktionary. "Dumping." CC BY-SA 3.0 http://en.wiktionary.org/wiki/DumpingCC BY-SA 3.0http://en.wiktionary.org/wiki/Dumping Wiktionary. "embargo." CC BY-SA 3.0 http://en.wiktionary.org/wiki/embargoCC BY-SA 3.0http://en.wiktionary.org/wiki/embargo Wiktionary. "countervailing duty." CC BY-SA 3.0 http://en.wiktionary.org/wiki/countervailing+dutyCC BY-SA 3.0http://en.wiktionary.org/wiki/countervailing+duty Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade

29. Wikipedia. "Technical barriers to trade." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Technical_barriers_to_tradeCC BY-SA 3.0http://en.wikipedia.org/wiki/Technical_barriers_to_trade Free to share, print, make copies and changes. Get yours at www.boundless.com International Trade