U.S. firms can produce and sell electric fans for $25. The United States can also import electric fans from China at $40 each and from Canada at $45 each. Electric fans made in the United States, China, and Canada are identical. Currently, the United States imposes a 30% tariff on imported electric fans. Now suppose that the United States forms a free-trade area (NAFTA) with Canada and Mexico. From which country will the United States import fans?
a. China
b. Canada
c. It will import fans from neither China nor Canada.
d. It will import fans from both China and Canada.
Ans: b. Canada
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How does a government-regulated price floor set above the equilibrium price affect the quantity of the good demanded and supplied in the market?
What will be an ideal response?
If the price of milk shakes was $3.00 each, your consumer surplus would be
Demand and Utility Table for Milk Shakes
A. $10.50.
B. $6.00.
C. $3.50.
D. $1.50.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point E necessarily represents
A. only motorcycles being produced. B. overallocation of resources. C. an impossible production point. D. technological advancement.
In Figure 22.2, which area represents consumer surplus to the smoker? 
A. 0ACQ* B. 0P*CQ* C. 0BCQ* D. AP*C