S6 Economics Ch24 trade barriers 
Sample paper, practice paper and DSE 
 
Q1)  If a small open economy reduces the tariff on an imported good, 
[2012 PP Paper 1 Q38] 
A. Both domestic production and consumption of the good will increase. 
B. Both tariff revenue and import volume will decrease. 
C. The consumer surplus will increase while the producer surplus will decrease. 
D. The world price of the good will fall while the total social surplus will increase. 
Q1)C 
 
 
2012DSE NO QUESTION 
2013DSE NO QUESTION 

Q2) The following diagram shows the imposition of an import tariff on a good in small open economy.
[2014 DSE Paper 1 Q45]

After the imposition of the tariff, which of the following statements about the good in this economy is
INCORRECT?
A. The volume of imports is (Q3 –Q2) units.
B. The domestic consumption is Q3 units.
C. The increase in producer surplus of the domestic producers is area a.
D. The total amount of tariff is the sum of area b, c and d.
Q2) D

Q3) The supply curve of a certain good is upward-sloping in a small open economy. What is the main difference
between imposing an effective import quota and a tariff on the good? [2015 DSE Paper 1 Q45]
A. Imposing an effective import quota will lower the volume of import while imposing a tariff will not.
B. Imposing an effective import quota will result in a rise in consumer surplus of the good while imposing a
tariff may not.
C. Imposing a tariff will raise the world price of the good while imposing an effective import quota will not.
D. Imposing a tariff will result in an increase in the government revenue while imposing an effective import
quota may not.
Ans: D

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Q4) Refer to the following supply-demand diagram about Good X in a small country. [2016 DSE Paper 1 Q42]

The country has imposed an import quota on Good X and the price and quantity transacted are P0 and Q0
respectively. If the demand for Good X in the country increases,
(1) The import volume will increase.
(2) The price of Good X in the country will increase
(3) The quantity sold of Good X in the country will increase
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)
Ans: C

Q5) A small open economy increases the import quota for Good X. Which of the following diagrams best illustrates
the effect of this change? [2017 DSE Paper 1 Q42]

Ans:C

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Q6) [2018 DSE Paper 1 Q41]
The following diagram shows an imposition of import tariff on a good of a small open economy.
Price 
  S
 

 
 
 
  10  S1 
     
t
  7    S0 

  D
  Quantity
0  20  25  60 70

Referring to the above diagram, which of the following statements are correct after the imposition of import tariff (t)?
(1) The total amount of tariff received by the government is $105.
(2) The revenue of domestic producers will increase by $110.
(3) The volume of imports drops by 15 units.
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

Ans: D

Q7) [2019 DSE Paper 1 Q43]

The following is the supply-demand diagram of Good X in a small open economy.

 
$ 
  S

 
PW 
  Import quota

 
D
  Q
0 Q1  Q2

Initially the economy imports Good X at the world price (Pw) and the government imposes an import quota of (Q2 –
Q1) units. Suppose the world price of Good X drops. Which of the following statements is correct?
A. The domestic price of Good X will remain at PW.
B. The domestic price of Good X will fall.
C. The domestic supply curve will shift to the right.
D. The quantity of domestically produced Good X will increase

Ans: A

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