Honduras is an importer of goose-down pillows. The world price of these pillows is $50 . Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras
a. remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases.
b. increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases.
c. increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases.
d. increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.
b
You might also like to view...
Expansionary fiscal policy will most likely result in
A) a decrease in the money supply B) an increase in the marginal propensity to consume C) an increase in the nominal interest rates D) a decrease in the level of output E) a decrease in the price level
A duopoly is a form of
A) perfect competition. B) monopolistic competition. C) oligopoly. D) monopoly.