Question

Question 1 (5 points) ✓ Saved A S100 specific tariff provides home producers more protection from foreign competition when: The home market buys cheaper products rather than expensive products It is applied to a commodity with many grade variations The home demand for a good is elastic with respect to price changes It is levied on manufactured goods rather than primary products Question 2 (5 points) Saved If the world price of steel is S600 per ton, a specific tariff of S120 per ton is equivalent to an ad valorem tariff of 25 percent Truega False

Answer 1

1. A $100 specific tariff provides home producers more protection from foreign competition when the home market buys cheaper products rather than expensive products. Because as the tariff is imposed , then consumers buy more of domestic products and less of foreign products which gives more protection to home producers .Hence, option(A) is correct.

2. FALSE because If the world price of steel is $600 per ton , a specific tariff of $120 per ton is not equivalent to an ad valorem tariff of 25 percent. Because ad valorem tariff depends on the amount of imported item .