Question

1. If the US imposes a tarrif on imports of cars then we would expect _____.

		the price of cars to move higher but still remain below the equilibrium price if all imports were banned.
		the price of cars to remain unchanged but the supply curve to shift to the right increasing consumption.
		the price of cars to fall toward the equilibrium price that would exist if there was no international trade.
		the price of cars to rise to a point where quantity supplied exceeded quantity demanded.

2. Which of the following arguments are not among those that economists consider sometimes relevant in considering trade restrictions?

		Restrictions on trade may be important to support domestic industries that are vital to national defense.
		Restrictions on trade may be important to support new companies that are not yet able to compete with well-developed international suppliers.
		Restriction on imports and prices may be needed to prevent international suppliers from charging artificially low prices to drive domestic producers out of business and the raise their prices to take advantage of consumers.
		Tariffs and quotas may be needed by some foreign countries have an absolute advantage and therefor it is not possible to gain from trading with them.

Answer 1

First option is correct. Without trade the market price would be highest. With trade the market price would be lowest. With tariff the market price lies in between the two prices

Last option is correct. This is not a kind of argument that is proposed in case of restricting trade. Tariffs and quotas are required for preventing domestic producers or sometimes helping them in order to reach their profits. But this is not focused on harnessing the absolute advantage.