Steel producers in the United States observe that foreign sales of U.S. steel has drastically declined due to stringent trade policies adopted by the foreign governments and unfair treatment of U.S. steel exports in foreign countries. The lobbying efforts of such loss making U.S. steel manufacturers induces the domestic government to restrict the entry of imported steel and help stimulate the
sales of domestically produced steel. Which of the following is most similar to the example mentioned above?
a. A tariff imposed by the government to stimulate domestic production of a high-technology good with positive spillover effects
b. A tariff imposed by the government on the import of cotton textiles because it is an infant industry in the domestic country
c. An import tariff applied against a foreign monopoly supplying the domestic market
d. Taxes imposed by the government on an import competing industry that generates a negative production externality
e. Reciprocal tariffs introduced by the government of Mexico on tobacco imports from Brazil in retaliation to unfair treatment of Mexican tobacco exports to the latter
e
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The demand for apple pies is perfectly elastic. If the government taxes apple pies at $1 a pie, then
A) the seller pays the entire tax. B) the buyer pays the entire tax. C) the seller and the buyer split the tax evenly. D) the seller and the buyer split the tax but the seller pays more. E) who pays the tax depends on whether the government imposes the tax on pie buyers or on pie sellers.
A nation with cheap, efficient communications is likely to be
a. richer, ceteris paribus, because transaction costs will be lower and trade greater. b. richer only if production of goods is cheaper, too, since trade itself cannot create value. c. poorer since it spends so much on communication instead of true productivity. d. spending too much on communications, which adds nothing to the value of output.