Refer to the graph shown for a small country that is a price taker internationally.
Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. Starting from a free trade equilibrium, an import quota of 2,500 would cause domestic consumption to:
A. decrease from 7,400 to 6,100.
B. increase from 6,100 to 7,400.
C. increase from 2,400 to 3,600.
D. decrease from 4,800 to 3,600.
Answer: A
You might also like to view...
The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The marginal cost per hat of producing 30 hats per hour (instead of 25 ) is
A) $240.00 per hat. B) $250.00 per hat. C) $8.33 per hat. D) $2.00 per hat.
Studies suggest that brand loyalty is based primarily on real differences among competing products, suggesting that persuasive advertising is an ineffective means to maintain or increase market share
Indicate whether the statement is true or false
If at the current level of product-specific service, consumers' value at $60 and the cost of retailers to provide the services is $60, which of the following is true?
A) the profit-maximizing level of profit-maximizing services is less than the current level B) the profit-maximizing level of profit-maximizing services is greater than the current level C) the profit-maximizing level of profit-maximizing services is exactly double the current level D) the profit-maximizing amount of product-specific services is being offered.
When the budget deficit is the main cause of the trade deficit, governments should take steps to
a. reduce their budget deficits to prevent making their economy vulnerable to a rapid outflow of international financial capital that could bring a deep recession. b. increase their budget deficits to prevent making their economy vulnerable to a rapid outflow of international financial capital that could bring a deep recession. c. reduce their budget deficits to prevent making their economy vulnerable to a rapid inflow of international financial capital that could bring a deep recession. d. increase their budget deficits to prevent making their economy vulnerable to a rapid inflow of international financial capital that could bring a deep recession.