When a country allows trade and becomes an importer of goods, producers gain more than consumers lose
a. True
b. False
Indicate whether the statement is true or false
False
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Suppose one knows two facts: first, the market for prescription drugs experiences chronic shortages and second, the government sets the price for prescription drugs. One can conclude that the government has:
A. encouraged buyers to hoard prescription drugs. B. set the price too high. C. set the price above the equilibrium price. D. set the price below the equilibrium price.
Free trade is ________, because it ________ the size of the pie available to the economy.
A. efficient; decreases B. inefficient; decreases C. inefficient; increases D. efficient; increases
An external cost in the production of a good creates a difference between the
i. costs borne by the producer and the costs borne by society in general. ii. efficient quantity of output and the equilibrium quantity of output. iii. marginal social cost and the marginal private cost. A) i only B) iii only C) ii and iii D) i, ii, and iii E) i and iii
Refer to Figure 5-6. What is the economically efficient output level?
A) Q1 + Q2 B) Q2 C) Q2 - Q1 D) Q1