When a Nation That Belongs to WTO Imposes a Tariff

question 54

Multiple Choice

When a nation that belongs to WTO imposes a tariff or quota on imported products, it is supposed to do so within the guidelines established by GATT. If it does not do so within GATT's guidelines:

• A) the offending nation may suffer military retaliation by the other GATT members.
• B) the offending nation may be subject to a proceeding pursuant to the WTO's Dispute Settlement Understanding.
• C) the offending nation may end up in the World Court being sued for breach of its GATT contract.
• D) none of the above.

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Definitions:

Marginal Revenue Function

A calculation that shows how much extra revenue a firm will receive from selling one more unit of a product or service.

Demand

Describes the amount of a product or service that buyers are ready and can afford to buy at different prices over a specific time frame.

Book

A written or printed work consisting of pages glued or sewn together along one side and bound in covers.

Profit-Maximizing

The process or strategy employed by a firm to adjust its production and prices to achieve the highest possible profit.