Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:
a. cause foreign producers to be better off, because the price they charge is now higher by $1 per box.
b. cause domestic producers to be worse off by $5 per box.
c. make domestic consumers worse off as they would be paying $1 more than the domestic price.
d. make domestic consumers pay $1 more than the free trade price, but still $1 less than the domestic price.
e. cause domestic producers to be worse off by $10 per box.
d
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The inefficiency of a sales tax on a good is ultimately the result of the
A) low tax revenue earned by the government relative to the cost of collection. B) wedge between what buyers pay for the good and what sellers receive for the good. C) buyers being unable to avoid paying the tax. D) sellers being unable to avoid paying the tax. E) increase in the consumer surplus that is more than offset by the decrease in the producer surplus.
Which of the following can always be used to determine the outcome when there are multiple Nash equilibria?
A) the Pareto Criterion B) cheap talk C) Both A and B D) None of the above.