International Trade Barrier - Tariffs

WHY ARE TARIFFS USED?

• TO PROTECT DOMESTIC JOBS AND INDUSTRIES

• TO RAISE REVENUE FOR GOVERNMENT

• TO PROTECT STRATEGIC INDUSTRIES

• ALL OF THE ABOVE

What is the effect of a tariff on Producer Surplus?

• Increases

• Decreases

• Unchanged

• Disappears

What is the effect of a tariff on Consumer Surplus?

• Increase

• Decrease

• None

• Disappears

WHAT ARE THE NEGATIVE IMPACT OF TARIFFS

• LOWER PRICES

• MORE CHOICE

• LACK OF DOMESTIC INNOVATION

• GREATER CHOICE

WHY WOULD A TARIFF EFFECT INNOVATION?

• DOMESTIC FIRMS OVER CONDFIDENCE

• LACK OF COMPETITION

• BOTH

What is a tariff?

• A tax on exported goods

• An increase in the price of a good so the store owner makes money

• A tax on imported goods

• the cost of a good

Why were tariffs created?

• To convince Great Britian to stop impressing U.S. sailors

• To improve trade between the United States and Great Britian.

• To encourage people in the United States to purchase American made goods.

• To help the cotton trade in the southern states.

Who has the power to create tariffs?

• State governments

• Federal government

• Store owners

• Factory owners

A tax of 20 cents per unit of imported cheese would be an example of a (an):

• Compound tariff

• Effective tariff

• Ad valorem tariff

• Specific tariff

A tax of 15 percent per imported item would be an example of a (an):

• Ad valorem tariff

• Specific tariff

• Effective tariff

• Compound tariff