What Happens When Two Countries Apply Tariffs Against Each

question 19

Multiple Choice

What happens when two countries apply tariffs against each
Other in an attempt to capture their terms­of­trade gain?

• A)Both countries lose because the terms­of­trade gain for one country is canceled by the tariff in the other country.
• B)Both countries gain because the terms­of­trade gain for one country is canceled by the tariff in the other country.
• C)Neither country gains nor loses because the terms­of­trade gain for one country is canceled by the tariff in the other country.
• D)The country initially applying the tariff gains because it captures the terms­of­trade gain; the other country neither gains
• Nor loses.

---

Definitions:

Period Costs

Period costs are those expenses not directly tied to the production process and include marketing, administration, and other overhead costs.

Beginning Work in Process Inventory

Beginning work in process inventory refers to the valuation of materials, labor, and overhead costs that have been partially completed but are not yet finished goods at the start of an accounting period.

Ending Work in Process Inventory

The value of goods in production but not yet completed by the end of an accounting period.

Cost of Goods Manufactured

The total cost incurred by a company to produce goods, including raw material, labor, and overhead costs, in a specific period.