Refer to the information provided in Figure 20.4 below to answer the question(s) that follow.
Figure 20.4Refer to Figure 20.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. If the tariff is raised so that it now equals $10, tariff revenue in this country will be
A. $0.
B. $1,000.
C. $2,000.
D. $3,000.
Answer: A
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Consider a market that is in equilibrium. If it experiences an increase in demand, what will happen? The demand curve will shift to the:
A. right, and the equilibrium price and quantity will rise. B. right, and the equilibrium price will increase and the equilibrium quantity will decrease. C. right, and the equilibrium price and quantity will fall. D. left, and the equilibrium price and quantity will fall.
When firms have an incentive to exit a competitive market, their exit will
a. lower the market price. b. necessarily raise the costs for the firms that remain in the market. c. raise the profits of the firms that remain in the market. d. shift the demand for the product to the left.
Other things the same, as the price level rises, the real value of money
a. and the exchange rate rise. b. and the exchange rate fall. c. rises and the exchange rate falls. d. falls and the exchange rate rises.
General Motors purchased Fischer Auto Body to produce bodies to place on a chassis. This transaction is best described as:
A. contract or vertical integration. B. spot exchange. C. vertical integration. D. contract.