Suppose a country's government is deciding whether or not to impose an import quota to protect the domestic automobile industry. Will the domestic steel-producing firms be in favor of a quota designed to protect the local automobile producers? Why or why not?
What will be an ideal response?
POSSIBLE RESPONSE: Steel is a major input in the automotive industry. The automobile industry is a major consumer of steel, so the demand for steel is linked to the demand for automobiles. In particular, it can be expected that the protection provided to the local automotive producers from foreign competition will raise the local production of automobiles, which means there will be more demand for steel locally. This would probably benefit domestic steel-producing firms, so they will be in favor of such government policy.
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Collusion between two firms occurs when
A) announce that each will match its rival's market price. B) firms explicitly or implicitly agree to adopt a uniform business strategy. C) the firms independently pursue strategies that could hurt each other. D) firms act altruistically to bring about the economically efficient outcome.
Equilibrium for public goods is characterized by
A. MSB = MSB. B. SMRS = MRT. C. MRS 1 = MRS 2 = MRS 3 = … = MRS n = MRT. D. MC = MB. E. MRS - MRT = MSB.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A. B to A. B. A to C. C. C to D. D. B to D.
In the 1970s and 1980s, Walmart entered several markets outside of its home base of Arkansas. As a result, it brought lower prices on a variety of goods. The Bureau of Labor Statistics did not send its shoppers into these new stores until there was a new survey, leading to the CPI
A. understating inflation because they were missing "when people shop." B. overstating inflation because they were missing "where people shop." C. understating inflation because they were missing "where people shop." D. overstating inflation because they were missing "when people shop."