4. For a small country that has a hard time raising revenue from other sources the optimal policy is while if it has ample other sources of revenue the optimal policy is
a. a positive tariff; a zero tariff
b.a zero tariff; a positive tariff
c. an import subsidy; a zero tariff
d. a production subsidy; a positive tariff.
5. A tariff levied by a "large country"
a. raises its welfare no matter what the other country does.
b. raises its welfare in the absence of retaliation.
c. reduces the welfare of both countries when retaliation is taken into account. d. b and c above.
6. In a large exporting country, an export subsidy will
a. help producers and raise the overall economic welfare of the exporting country.
b. hurt consumers but raise the overall economic welfare of the exporting country. c. hurt consumers and lower the overall economic welfare of the exporting country.
d. help consumers but lower economic welfare of the exporting country.
e. help consumers and have no effect on the economic welfare of the exporting country.
7. If the product is imported under free trade, then a transition from autarky to free trade will domestic price, producer surplus, consumer surplus, and
overall domestic national welfare.
a. decrease; decrease; increase; increase
b. increase; increase; increase; increase
c. decrease; decrease; decrease; decrease
d. increase; increase; decrease; decrease
e. increase; increase; decrease; increase