Trade Policy Instruments: Tariffs Quiz
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Trade Policy Instruments: Tariffs Quiz

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Questions and Answers

How many types of tariffs are there?

  • 12
  • 10
  • 16 (correct)
  • 20

    • What category is NOT a type of non-tariff measure?

  • Technical measures
  • Export licenses (correct)
  • Non-technical measures
  • Import quotas

    • How many types of non-tariff measures are identified?

  • 4
  • 2 (correct)
  • 13
  • 5

    • Which of the following is NOT a category under exports related measures?

    <p>Technical requirements</p> Signup and view all the answers

    How many types of exports related measures are there?

    <p>4</p> Signup and view all the answers

    What is another name for tariffs?

    <p>Custom duties</p> Signup and view all the answers

    What effect do tariffs have on domestic market prices?

    <p>They raise them</p> Signup and view all the answers

    In the given example, what is the final cost of the imported car after the tariff is applied?

    <p>$1,100,000</p> Signup and view all the answers

    Which of the following is true about tariffs?

    <p>They can affect international trade dynamics</p> Signup and view all the answers

    What percentage is the import tax (tariff) applied to the car in the example?

    <p>10%</p> Signup and view all the answers

    What do tariffs combine as policy instruments?

    <p>Quotas and Tariffs</p> Signup and view all the answers

    What are imports entering under a specific quota usually charged?

    <p>Lower tariffs</p> Signup and view all the answers

    What is the implication of Most Favored Nation (MFN) tariffs among WTO members?

    <p>They are the highest tariffs that can be imposed.</p> Signup and view all the answers

    When imports exceed the specific quota, what usually happens to the tariff rate?

    <p>It increases to a higher level.</p> Signup and view all the answers

    In the given example, who are likely the clients indicated in the diagram?

    <p>Importing businesses</p> Signup and view all the answers

    What characterizes a mixed tariff?

    <p>It is expressed either on the basis of quantity or on the basis of value.</p> Signup and view all the answers

    Which example illustrates a compound tariff?

    <p>Tariff on cheese is 5% ad valorem and ₹100 per kg.</p> Signup and view all the answers

    What is the main computation basis for technical or other tariffs?

    <p>The specific content of imported goods.</p> Signup and view all the answers

    Which of the following would not be classified as a mixed tariff?

    <p>Tariff charged based on weight only.</p> Signup and view all the answers

    What is an example of an ad-valorem tariff?

    <p>5% tariff on the value of imported vehicles.</p> Signup and view all the answers

    What is the purpose of duty in relation to imported commodities?

    <p>To match imported prices with domestic support prices.</p> Signup and view all the answers

    Which of the following describes a preferential tariff?

    <p>A tariff that is lower for certain countries under preferential trade agreements.</p> Signup and view all the answers

    What is the correct value of the Minimum Support Price as stated?

    <p>100</p> Signup and view all the answers

    Which of the following terms refers to the legal limit on tariffs?

    <p>Bound Tariff</p> Signup and view all the answers

    Which statement is true regarding escalated tariffs?

    <p>They are nominal, indicating low rates on imports.</p> Signup and view all the answers

    What is a bound tariff primarily intended to do?

    <p>Impose a legal commitment not to raise tariffs above a certain level</p> Signup and view all the answers

    What does the applied tariff represent?

    <p>The tariff that is actually charged on imported materials and goods</p> Signup and view all the answers

    In the context of escalated tariffs, how do the nominal rates on manufactured goods inputs compare to those on intermediate inputs?

    <p>Nominal rates on manufactured goods inputs are higher</p> Signup and view all the answers

    If an applied tariff is set at 15%, what can we infer about the bound tariff in this scenario?

    <p>It must be at least 20%</p> Signup and view all the answers

    What does the label 'R.M.' likely refer to in the diagram about tariffs?

    <p>Raw Materials</p> Signup and view all the answers

    What is a prohibitive tariff?

    <p>A tariff set so high that it limits imports entirely.</p> Signup and view all the answers

    What is the purpose of import subsidies?

    <p>To provide financial support to importers based on the volume of imports.</p> Signup and view all the answers

    How do countries typically respond to trade distortions?

    <p>By imposing tariffs or other protective measures.</p> Signup and view all the answers

    What is the Trigger-Price Mechanism related to?

    <p>A price mechanism responding to trade distortions.</p> Signup and view all the answers

    What does 'import value' primarily measure?

    <p>The total value of goods imported.</p> Signup and view all the answers

    What is the primary purpose of an anti-dumping duty?

    <p>To protect domestic industries from unfairly low-priced foreign imports</p> Signup and view all the answers

    Which of the following best describes countervailing duty?

    <p>Tariffs aimed at neutralizing the effects of export subsidies</p> Signup and view all the answers

    In the 2017 example, what was the price reduction percentage illustrating dumping from China?

    <p>60%</p> Signup and view all the answers

    In the ASEAN example, what was the effective gold/jewelry tax rate applied to a price of 100?

    <p>70%</p> Signup and view all the answers

    What is a common goal of both anti-dumping and countervailing duties?

    <p>To ensure fair pricing practices in international trade</p> Signup and view all the answers

    What is a special tariff in the context of bicycle pricing?

    <p>A fixed amount of money for each bicycle sold</p> Signup and view all the answers

    What does ad valorem refer to in pricing and taxation?

    <p>A tax based on the value of the commodity</p> Signup and view all the answers

    What is likely the reason for underestimation in pricing?

    <p>To reduce the tax liability</p> Signup and view all the answers

    What defines an additional cost in the bicycle sales process?

    <p>The cost incurred for fixing bicycles</p> Signup and view all the answers

    What is one direct effect of tariffs on imported goods?

    <p>Imported goods become expensive.</p> Signup and view all the answers

    What represents fixed costs in the context described?

    <p>Costs that remain constant regardless of production levels</p> Signup and view all the answers

    How is the interaction between buyers and sellers potentially influenced by tax savings?

    <p>Sellers may adjust prices based on buyer taxation benefits</p> Signup and view all the answers

    How can tariffs potentially impact domestic producers?

    <p>They may encourage production of domestically produced goods.</p> Signup and view all the answers

    In the diagram, which element likely represents the seller's cost related to taxation?

    <p>Tax: 10000</p> Signup and view all the answers

    What is one possible benefit for the government from imposing tariffs?

    <p>Increase in government revenue.</p> Signup and view all the answers

    What was the total cost after tax for importing 100 goods with a tax of 20?

    <p>₹120</p> Signup and view all the answers

    Which of the following statements is true about variable costs?

    <p>They increase as more bicycles are produced</p> Signup and view all the answers

    How might non-tariff measures (NTMs) influence trade?

    <p>They may affect import/export regulations and trade.</p> Signup and view all the answers

    Study Notes

    Trade Policy Instruments: Tariffs

    • Tariff: A tax imposed on imported or exported goods, also known as custom duties.
    • Specific Tariff: A fixed amount of money per unit of a good (e.g., ₹1000 per bicycle).
    • Additional Cost: An additional cost per unit, such as a fee for repairs (e.g., ₹1000 for fixing).
    • Ad Valorem Tariff: A percentage-based tax on the value of a good (e.g., 20% on the value of a bicycle).
    • Underestimation: Deliberate undervaluation of prices to potentially reduce taxation, often around 20%.
    • Mixed Tariff: A tariff expressed either as a specific amount or a value percentage, whichever is higher (e.g., a 5% ad valorem tariff or ₹100 per kg of cheese, whichever is higher).
    • Compound Tariff: A combination of both ad valorem and specific tariffs (e.g., a 5% ad valorem tariff and ₹100 per kg of cheese).
    • Technical Tariff: A tariff calculated based on the specific content of imported goods (e.g., ₹3000 on solar panels and ₹50 per battery installed).
    • Bound Tariff: A legal commitment by a WTO member to not raise tariffs above a specific level.
    • Applied Tariff: The actual tariff charged on imports, which can be lower than the bound tariff.
    • Escalated Tariff: Nominal tariff rates on manufactured goods are higher than nominal tariff rates on raw materials.
    • Tariff Rate Quota (TRQ): Imports under specific quota limits have lower tariffs, while imports exceeding the limit have higher tariffs.
    • Most Favored Nation (MFN) Tariff: The highest tariff that WTO members charge each other.
    • Preferential Tariff: Tariffs lower than the MFN rate for goods imported from countries with whom the importing country has a preferential trade agreement.
    • Minimum Support Price (MSP): Domestically set price floor for agricultural products.

    Trade Policy Instruments: Non-Tariff Measures

    • Technical Non-Tariff Measures: Regulations and standards related to product quality, safety, and technical specifications.
    • Non-Technical Non-Tariff Measures: Administrative procedures, import licensing, and other measures that restrict trade without directly affecting price.

    Trade Distortions and Responses

    • Prohibitive Tariff: A tariff set so high that it effectively prevents imports.
    • Import Subsidy: A payment made to importers to offset the cost of imported goods.
    • Trigger-Price Mechanism: A mechanism for responding to imports that includes a price mechanism that triggers countermeasures when import prices fall below a certain level.
    • Anti-Dumping Duty: A protectionist tariff imposed on imported goods that are believed to be priced below fair market value.
    • Countervailing Duty: A tariff imposed to offset artificially low prices charged by exporters who benefit from export subsidies.

    Impact of Tariffs

    • Trade Obstacles: Tariffs create barriers to international trade.
    • Price Increase: Tariffs make imported goods more expensive for consumers.
    • Domestic Production Incentive: Tariffs encourage the production and consumption of domestically produced goods.
    • Producer Profits: Higher prices for imported goods can lead to higher profits for domestic producers.
    • Government Revenue: Tariffs can increase government revenue.

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    Description

    Test your understanding of various tariff types and their implications with this quiz on trade policy instruments. Explore concepts like specific tariffs, ad valorem tariffs, and more. Perfect for students looking to deepen their knowledge in economics.

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