Tariffs and quotas: increase consumer surplus and reduce producer surplus in the

ID: 1219396 • Letter: T

Question

Tariffs and quotas: increase consumer surplus and reduce producer surplus in the importing country. reduce consumer surplus and increase producer surplus in the importing country. reduce both consumer surplus and producer surplus in the exporting country. are imposed when there are differences in the opportunity cost of production across countries. Some countries export products at prices below the cost of production or the price charged in the domestic market. This practice is called: cream skimming. dumping. import substitution monopoly pricing. A country's balance of payments summarizes all economic transactions during a given period between the residents of that country and the residents of other countries. True False The current account reflects: 1 the purchase of securities from foreigners 2 trade in services only. 3 trade in only tangible products. 4 trade in goods as well as services. The U.S. dollar will appreciate if: 1 the supply of foreign exchange increases in the

Explanation / Answer

1. Tariffs and Quotas reduce consumer surplus and increase producer surplus in the importing country. Because as a result of a tariffs and quotas importing country's consumer has to pay higher price for their product and on the hand producers received higher price for their production.

2. Some countries export products at prices below the cost of production or the price charged in the domestic market.This practice is called (2) dumping. This is used by the countries who wants to increase there share in the foreign market.

3. A country'sbalance of payments summerizes all economic transactions during a given period between the residents of that country and residents of other contries.This statement is True.

4. The current account reflects purchase of securities from foreigners.Because current account consists of earnings on foreign investments minus payments made to foreign investors and balance of trade.

5. The U.S dollar will appriciate if : (4) the U.S demand for foreign exchange increases. Because U.S dollar will appriciate if its demand is hgh.

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Tariffs and quotas: increase consumer surplus and reduce producer surplus in the

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