Why do the governments of some developing countries use tariffs ...

[nevelica]

Why do the governments of some developing countries use tariffs to raise revenue?
 
  What will be an ideal response?

Question 2

Suppose that the government increases a tax paid by employers for hiring workers (for example, Social Security). What are the likely effects on real wages, output and employment? What are the likely magnitudes of these effects?
 
  What will be an ideal response?

[Pswine]

Answer to Question 1

Governments in some developing countries use tariffs to raise revenue, since they do not have well-functioning tax systems and can more easily tax imports that flow through a few urban ports than they can tax domestic economic activity that is widely geographically dispersed.

Answer to Question 2

The tax increases will shift labor demand to the left, so real wages and employment will each go down. As employment goes down, so will output. The likely magnitudes of these effects is less clear. If labor supply is near vertical, the effects on wages will be large, but the effects on employment and output will be small. If labor supply is near horizontal, the effects on wages will be small, but the effects on employment and output will be large.