In international trade, an infant industry is one:
A. that protects firms that produce products for infants.
B. with a large number of very small firms.
C. in which the firms are experiencing very small profits.
D. in the early stages of its development.
Answer: D
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The accompanying diagram shows the U.S. market for automobiles. P0 is the world price of automobiles, Q0 is the quantity of American automobiles produced, and Q1 - Q0 is the quantity of automobiles imported. Consumers are indifferent between American and imported automobiles, but each imported automobile creates $100 of pollution costs.
(i) Calculate consumers' surplus, producers' surplus, the pollution damages, and social gain when no attempt is made to internalize the externality.
(ii) Suppose the government imposes a $100 tariff on imported automobiles. Calculate consumers' surplus, producers' surplus, tariff revenue, the pollution damages, and social gain in this situation. Did the tariff increase social gain? Did the tariff result in an efficient outcome? Explain.
How does monopoly arise?
What will be an ideal response?
Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be
a. Larger, and the burden on sellers will be smaller
b. Smaller, and the burden on sellers will be larger
c. The same, and the burden on sellers will be the same
d. The relative burdens in the two cases cannot be determined without further information
Among the assets of commercial banks are demand deposits.
Answer the following statement true (T) or false (F)