What are the effects of a tariff on a good?
What will be an ideal response?
A tariff taxes the imports of a good, which tends to reduce the quantity of imports and raise price. Due to the higher price, the domestic quantity supplied of the good increases and the domestic quantity demanded decreases. The increase in quantity supplied will be less than the decrease in quantity supplied by imports because of the reduction in quantity demanded. Consumers are worse off while domestic suppliers of this good are better off.
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If all used cars in a market with symmetric information about quality are sold at the same price, then
A) sellers of good quality cars are subsidizing sellers of lemons. B) buyers of good quality cars are subsidizing buyers of lemons. C) sellers of lemons are subsidizing sellers of good quality cars. D) sellers of good quality cars are subsidizing buyers of lemons.
Exhibit 7-1 Production of pizza data Workers Pizzas 0 0 1 4 2 10 3 15 4 18 5 19 Exhibit 7-1 shows the change in the production of pizzas as more workers are hired. The marginal product of the labor input begins to fall with the employment of the
A. first worker. B. second worker. C. third worker. D. fourth worker.
If the marginal propensity to save is 0.3, the marginal propensity to import is 0.1, and the government increases expenditures by $10 billion, ignoring foreign-income repercussions, how much will gross domestic product (GDP) rise?
A. $10 billion. B. $15 billion. C. $20 billion. D. $25 billion.
When a household spends over 70% of its monthly income on a good, demand will be
A) elastic. B) unit-elastic. C) inelastic. D) elastic, unit-elastic or inelastic depending upon supply.