A key difference between import quotas and voluntary export restrictions (VERs) is that
A. the former requires cooperation from a foreign government or foreign producers, whereas the domestic government may unilaterally enact the latter.
B. one raises the price of the imported product involved, whereas the other does not.
C. the domestic government may unilaterally enact the former, whereas the latter requires cooperation from a foreign government or foreign producers.
D. one is a tax, whereas the other is a quantity limit.
Answer: C
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Refer to Figure 15-11. What is the size of the deadweight loss prior to Verizon entering the market and what happens to this deadweight loss after Verizon does enter the market?
A) The deadweight loss of area C+D is converted to consumer surplus B) The total deadweight loss is the area D+F; D is converted to consumer surplus and F to producer surplus. C) The deadweight loss of area D is converted to consumer surplus. D) The deadweight loss of area D is converted to producer surplus.
Which of the following is true about the demand curve facing the dominant firm?
A) It equals market demand minus fringe firms' supply curve. B) It is identical to market demand. C) It equals market demand minus demand facing the fringe firms. D) It is horizontal.