Quotas and tariffs both serve the purpose of
A) increasing foreign trade.
B) restricting foreign trade.
C) causing domestic producers to lose revenues.
D) lowering prices on imported goods.
B
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Ingrid has been waiting for the show "Mamma Mia!" to come to town. When it finally does come, tickets cost $60. Ingrid's reservation price is $75. But when Ingrid tries to buy a ticket, they are sold out. Suppose Steven was able to purchase a ticket at the box office for $60. Steven's reservation price for the ticket is $65. If Steven attends "Mamma Mia!" and Ingrid does not, then this situation is:
A. efficient because Steven arrived at the ticket counter before the show was sold out. B. inefficient because Ingrid would have enjoyed the show too. C. efficient because Steven paid less for the ticket than his reservation price. D. inefficient because Steven and Ingrid could have made a mutually beneficial trade.
When a good is both rivalrous and nonexcludable the:
A. good is likely an artificially scarce good. B. good is likely a private good. C. free rider problem may arise. D. tragedy of the commons may arise.
The Board of Governors of the Federal Reserve System can increase commercial bank reserves by:
a. Increasing the reserve ratio b. Buying government securities in the open market c. Decreasing the prime interest rate d. Increasing the discount rate
Which of the following phenomena shows that risk aversion is the characteristic of many people?
A. Gambling B. Investing in one stock rather than a portfolio C. Auto insurance D. Looting