When the government imposes an excise tax on foreign imports:
A. domestic consumers are harmed and domestic firms benefit.
B. domestic firms benefit.
C. domestic consumers are harmed.
D. domestic firms are harmed.
Answer: A
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if, for a given policy option, PVNB equals $1,200, and PVC equals $800, then
a. the policy option is not feasible because the value of PVB is $400 b. the ratio, PVB/PVC, equals 1.5 c. the policy option is feasible because (PVB – PVC) is greater than unity d. there is insufficient information to determine if the policy option is feasible
If purchasing power parity tells us that if the exchange rate is a pound for a dollar, then price of a haircut in London should cost the same as a haircut in New York
Indicate whether the statement is true or false
The concept that Mr. Jones is going to enjoy the benefits of police protection even though he no longer pays taxes is called
A) the free-rider problem. B) the negative externality principle. C) the principle of rival consumption. D) the principle of anti-trust.
If the market price of an option just before its expiration is $33 while its strike price is $29, arbitrage will determine a price for it that:
a. leaves an investor indifferent between buying the stock outright or buying an option and then exercising it. b. encourages the investor to buy the stock outright and sell it when the option expires. c. encourages the investor to buy an option and exercise it only after its expiration. d. encourages the investor to buy the stock outright and rewrite an option later.