Suppose that domestic personal computer firms complain to Congress that cheap exports are driving them out of business. Congress, worried about job losses, decides to restrict trade, and is considering either a tariff or a quota on imported personal
computers. a . Explain which Congress will choose if it wants to restrict trade, yet please importers. b. Explain which Congress will choose if it wants to use the restriction as a source of revenue. c. How do tariffs and quotas differ?
a . A quota will be chosen because the difference between the domestic price and the world price of the
imported good doesn't change.
b. A tariff will be chosen because a tariff is a tax, which the government receives as revenue.
c. Tariffs raise the price of imports, making the domestic good more attractive to domestic consumers.
Quotas limit the quantity of imports, forcing domestic consumers to buy more of the domestic good
than they otherwise would.
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Economists may disagree about how to solve an economic problem because they
A. may not be able to use the same models. B. always make the same value judgments. C. are unable to assemble all of the necessary facts about the economy. D. All of these responses are correct.
As an individual increases his consumption of onion rings, it is likely that: a. his marginal utility and total utility both increase
b. his marginal utility and total utility both decrease. c. his marginal utility increases and his total utility decreases. d. his marginal utility decreases and his total utility increases.
Which of the following taxes is most likely to be regressive?
A. General sales taxes B. Personal income taxes C. Corporate income taxes D. Estate taxes
What do critics of social regulation need to remember about government?
What will be an ideal response?