International economics

Table of Contents

1. Topic pack - International economics - introduction
2. Section 3.1 International trade (notes)
3. Section 3.1 International trade (questions)
4. Section 3.1 International trade - simulations and activities
   1. DragIT - Comparative advantage theory
   2. DragIT - Tariffs (1)
   3. DragIT - Tariffs (2)
   4. DragIT - Tariffs (3)
5. Section 3.2 Exchange rates (notes)
6. Section 3.2 Exchange rates - questions
7. Section 3.2 Exchange rates - simulations and activities
8. Section 3.3 Balance of payments - notes
9. Section 3.3 Balance of payments - questions
10. Section 3.4 Economic integration - notes
11. Section 3.4 Economic integration - questions
12. Section 3.5 Terms of trade - notes
13. Section 3.5 Terms of trade - questions
14. Print View

DragIT - Tariffs (1)

To see the impact of a tariff on the level of imports, domestic production, government tax revenue and welfare losses, drag the tariff line in the following diagram up and down.

1

Tariff - tax revenue If the government impose a higher tariff what will be the impact on government tax revenue from tariffs? a) Higher b) Lower c) Stay the same d) Cannot be determined without further information Yes, that's correct. We cannot tell what will happen to tax revenue when tariffs are increased without knowing the elasticities of demand and supply of the good. Though higher tariffs will mean a higher tax per unit, the tariff will reduce imports and so more tax per unit will be collected on fewer units. Whether this leads to an increase or decrease depends on the price elasticities.No, that's not right. We cannot tell what will happen to tax revenue when tariffs are increased without knowing the elasticities of demand and supply of the good. Though higher tariffs will mean a higher tax per unit, the tariff will reduce imports and so more tax per unit will be collected on fewer units. Whether this leads to an increase or decrease depends on the price elasticities.Your answer has been saved.

2

Welfare loss A higher tariff will lead to a greater welfare loss. a) True b) False Yes, that's correct. The statement is true. A higher tariff will always mean a greater welfare loss.No, that's not right. The statement is true. A higher tariff will always mean a greater welfare loss.Your answer has been saved.