Suppose that a foreign monopolist supplies the entire domestic market (there is no domestic production). The home country then applies a 5% tariff on imports from the foreign monopolist. How will the tariff affect the price in the home market?
a. It will increase by more than 5%.
b. It will increase by 5%.
c. It will increase by less than 5%.
d. It will not change.
Ans: c. It will increase by less than 5%.
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Suppose the economy is initially operating at point A in the above figure. Which of the following statements is TRUE?
A) An unexpected reduction in aggregate demand will cause the economy to move from point A to point B in the short run. B) An unexpected reduction in aggregate demand will cause the economy to move from point A to point C in the short run. C) An unexpected reduction in aggregate demand will cause the economy to move from point A to point B in the long run. D) none of the above
The method of allocation that most stores use during Thanksgiving sales is:
a. a combination of market price and lottery b. first-come, first-served c. a combination of contest and command d. a combination of market price and first-come, first-served
If the prices of computer tablets rise, we would expect the number of tablet covers purchased to
A) increase. B) decrease. C) be equal to ten. D) be equal to one.
For a cartel to be successful in increasing economic profits for its members:
A. individual firms must be encouraged to adjust output so as to maximize their own profits at the cartel price. B. entry of new firms must be blocked. C. price must be set equal to marginal cost. D. price must be set equal to average total cost.