International Economics Answer the following questions. a) The optimum tariff is

Question

International Economics

Answer the following questions. a) The optimum tariff is zero for all countries." True/False/Uncertain, explain (10 points) Canada primarily exports goods such as wheat, timber, minerals, and fertilizers; while importing goods such as auto parts, clothing, fruits, and electronics. Analyze and explain the impact on Canada's terms of trade of the following events: b) South Korea develops the ability to produce auto part that it can sell in Canada and the U.S. (5points) A wheat crop failure Russia and, at the same time, a cold weather destroyed many citrus trees in Florida. (5 points) c)

Explanation / Answer

Ans

False. This is true in case of small countries only. Optimum tariff for large countries may be positive .

B Terms of trade of Canada will improve since greater no. Of suppliers means less price for auto parts.

C Terms of trade will improve since less supply means it can exports agricultural products at higher price

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