Hooterville's Chamber of Commerce has been successful in its campaign to attract manufacturing firms ("Locate here, we give a hoot!") and the community has experienced an increased average wage rate. Why?
a. The new firms like residents of Hooterville.
b. Labor costs more in other communities.
c. Hooterville has a nice train station.
d. The supply of labor has changed.
e. The demand for labor has changed.
E
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Suppose country X currently does not produce widgets. Instead, it imports widgets from country Z. Then country X establishes a preferential trading agreement with country Y. Following the formation of the PTA, it imports widgets from country Y. What has occurred?
a. There is trade diversion and a welfare loss for country X. b. There is trade creation and a welfare loss for country Y. c. There is trade diversion and a welfare gain for country X. d. There is trade creation and a welfare gain for country Y.
Tax influence of the elasticity of supply
What will be an ideal response?