Explain the impact on the domestic economy of an import quota on oranges.
What will be an ideal response?
Answers will vary but should indicate that consumers lose and domestic producers and foreign producers with an import license gain from an import quota. An import quota on oranges causes domestic prices to rise above the world price, which lowers the quantity of oranges demanded and increases the quantity supplied by domestic producers. This lowers the number of imports below what it would have been without the quota. With higher prices, domestic producers and licensed foreign producers sell their products for more than they would have without the import quota. Consumers are left to pay higher prices and lose a portion of consumer surplus.
You might also like to view...
The issuance of new stocks or bonds are examples of
A) indirect finance. B) direct finance. C) financial intermediation. D) All of the above.
Total utility is determined by:
a. multiplying the quantity purchased of a good by the price of the good. b. finding the additional utility gained from consuming one more unit of a product. c. summing the marginal utilities for each successive units of a product consumed. d. summing the number of units of a good consumed. e. dividing the marginal utility derived from consuming a good by its price.
If the marginal cost for Big Ed's Used Car Emporium to advertise one additional day each week on a local TV station is $1,500, then Big Ed's should advertize that additional day
A) as long as the weekly marginal cost does not rise. B) only if the marginal benefit the company receives each week is greater than $1,500 plus an acceptable profit margin. C) as long as the marginal benefit the company receives each week is just equal to or greater than $1,500. D) until the marginal benefit the company receives reaches zero.
Graphically, economic growth is represented as
A) a movement along the production possibilities curve. B) a movement from a point inside the production possibilities curve to a point on the curve itself. C) an inward shift of the production possibilities curve. D) an outward shift of the production possibilities curve.