Why have China and India received so much international attention and investment? What will be an ...

[ 1 ]  The potential future market size in China and India is huge, even if only a small percentage of people make it into the middle class.

[ 2 ]  See Figure 6.3 in the text. Consumer surplus decreases, producer surplus and government revenue increase, and total surplus falls, since there are deadweight losses. Consumers lose, producers and the government win, and the country as a whole loses (since there are deadweight losses).

[ 3 ]  TRUE

[ 4 ]  For a small country, imposition of a tariff unambiguously reduces total benefits to the country. For a large country, the effect is less clear. Since a large country can have an impact on the world price, the reduction in domestic demand due to the tariff may be sufficiently large to cause the world price to fall or to encourage foreign producers to reduce their prices to avoid losing market share. In this case, while domestic producers still gain and domestic consumers still lose, the overall benefits to the country may or may not fall. If the fall in the world price is sufficient, foreign producers are essentially paying for much of the tariff in the form of lower prices, and this gain may exceed the deadweight losses.

[ 5 ]  TRUE

[ 6 ]  Tariffs reduce domestic consumption and increase domestic production. This means that some consumers that value this good more than its cost are not able to purchase it, which reduces consumer surplus without benefitting anyone. Likewise, domestic producers increase their production, but their costs are higher than world costs. Thus that additional cost of production does not benefit the producers; it is simply a waste of resources.

Great answer!