Suppose that a quota is imposed on imports of minivans. Show graphically what the effect is in terms of price and quantity of imports. Be sure that your graph is completely and correctly labeled. What determines how much of the quota is paid by the buyers of the minivans?
What will be an ideal response?
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See Figure 34-13. The quota raises the price from P1to P2, and lowers the quantity imported from Q1to Q2. The primary determinant of what portion of the quota is paid by the buyers is elasticity of demand. The more elastic demand, the lower the portion paid by buyers. The less elastic demand, the higher the portion paid by buyers.
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The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?
What will be an ideal response?
"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded is referred to as
a. equilibrium b. the law of demand. c. the relationship between demand and income. d. the definition of a normal good.
"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point on the long-run average cost curve." True or false?
Indicate whether the statement is true or false
Which of the following statements is true for a monopolist?
a. a monopolist will charge the highest price for which he can sell units of his product. b. unregulated monopolists can gain by producing their chosen output at a low cost. c. if a firm has a monopoly, it will always be able to earn economic profit. d. none of the above statements are true.