government imposes a tariff on the imports of W

1 1.14’•
< Back Assignment details Business in the Globalised Economy (2210)
In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then
A. Both owners of K and owners of A will benefit. B. Owners of A will benefit. C. Owners of K will benefit. D. Neither owners of K nor owners of A will benefit.
(1 mark)
Explain your answer in up to 200 words and using a diagram
(4 marks)
QUESTION A.5
A country imposing a tariff can benefit in terms of social welfare if
A. The terms-of-trade benefit exceeds the sum of production and consumption distortion loss.
B. The tariff revenue exceeds the sum of production and consumption distortion loss.
C. The consumer surplus loss is less than the producer surplus gain.
D. The terms-of-trade benefit exceeds the consumer surplus loss.
(1 mark)
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