Figure (a) represents the domestic demand and supply of televisions. Suppose free trade is allowed and the current world price of televisions is P1 as shown in Figure (b). Now suppose the domestic government imposes a tariff increasing the domestic price to P2 in Figure (b). This tariff will cause
a. imports to fall from Q2 minus Q1 to Q4 minus Q3.
b. domestic producers to increase their production from Q1 to Q3.
c. domestic consumers to reduce their consumption from Q2 to Q4.
d. All of the above.
d. All of the above.
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A tax on buyers will cause the equilibrium price paid by the consumer to ________ and the equilibrium quantity to ________.
A. increase, decrease B. decrease, decrease C. decrease, increase D. increase, increase
Both the long-run and short-run aggregate supply curves will shift when
A) the endowments of the factors of production change. B) the government increases defense spending. C) an event occurs which is expected to last only a short period of time. D) they are both upward sloping.
How does an increase in the price level affect the aggregate planned expenditure curve and the aggregate demand curve?
What will be an ideal response?
The demand for a good is less price elastic
A) if closer substitutes are available. B) if the good is a luxury rather than a necessity. C) if the share of the good in the average consumer's budget is smaller. D) in the long run than in the short run.