Economics of Tariffs and Trade

A tariff is a tax levied when a good is ______.

A ______ tariff is levied as a fixed charge for each unit of imported goods.

An ______ tariff is levied as a fraction of the value of imported goods.

An import demand curve is the difference between the quantity that Home consumers demand minus the quantity that Home ______ supply.

As price increases, the quantity of imports demanded ______.

An export supply curve is the difference between the quantity that Foreign producers supply minus the quantity that Foreign ______ demand.

As the price of the good rises, Foreign producers supply ______ while Foreign consumers demand less.

The Home import demand curve intercepts the price axis at ______.

In equilibrium, import demand = export ______

A tariff acts like a transportation cost, making sellers unwilling to ship goods unless the Home price exceeds the Foreign price by the amount of the ______

A tariff raises the price in Home while lowering the price in the ______

Because the price in the Home market rises from PW under free trade to PT with the ______

The quantity of Home imports demanded equals the quantity of Foreign exports supplied when PT − PT* = ______

When a country is 'small,' it has no effect on the foreign (world) price because its demand is an insignificant part of world ______

The volume traded thus ______ due to the effects of a tariff.

Home producers supply more and Home consumers demand ______ when prices rise due to a tariff.

The price in the home market rises by the full amount of the ______.

When a country is small, a tariff it imposes cannot lower the foreign ______ of the good it imports.

The price of the import rises from Pw to ______ + t.

The effective rate of protection measures how much protection a ______ provides.

For example, the value added of the production process is $8,000 − ______ = $2,000.

The effective rate of protection for home auto assembly firms is the change in ______ added.

A tariff raises the price of a good in the importing country, so it hurts ______ and benefits producers.

Consumer surplus measures the amount that consumers gain from purchases by computing the difference in the price actually paid from the maximum price they would be willing to pay for each ______ consumed.

Tariffs can lead trading partners to retaliate with their own ______, thus hurting exporters.

The government gains at the expense of consumers and ______.

If the terms of trade gain exceed the efficiency loss, then national ______ will increase under a tariff.

Tariffs can induce producers to engage in ______ activities to avoid paying tariffs.

A tariff increases the home price and the quantity supplied but reduces the quantity demanded and the quantity ______.

Consumer surplus is the difference between the actual price and what consumers would have been willing to ______.

Consumer surplus is equal to the area under the demand curve and above the ______.

Producer surplus measures the amount that producers gain from sales by computing the difference in the price received from the minimum price at which they would be willing to ______.

When price increases, the quantity supplied increases as well as the ______.

A tariff raises the price in the importing country, leading to a decrease in ______ surplus.

The government collects tariff revenue equal to the tariff rate times the quantity of ______ with the tariff.

The triangles b and d represent the ______ loss due to the tariff.

The rectangle e represents the terms of ______ gain from a tariff.