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
ba 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