Tariffs

What is a Tariff?

• A tax on imported and exported goods

• A price marked on goods

• Profit made from manufactured goods

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

Import means

• buying goods from another country
• selling goods to another country
• only making one kind of product

Export means

• buying goods from another country
• selling goods to another country
• only making one kind of product