Suppose that a foreign monopolist supplies the entire domestic market (there is no domestic production). The home country then applies a 5% tariff on imports from the foreign monopolist. How will the tariff affect the price in the home market?
a. It will increase by more than 5%.
b. It will increase by 5%.
c. It will increase by less than 5%.
d. It will not change.
Ans: c. It will increase by less than 5%.
You might also like to view...
When the Fed chooses to target interest rates, it loses the ability to target monetary aggregates
Indicate whether the statement is true or false
Refer to the diagram. Which of the following is a positive statement?
A. A point inside the production possibilities curve is superior to a point on the curve because
the former requires less work effort.
B. Because any society should stress economic growth as its major goal, point D is superior
to point C.
C. Point B is preferable to point C because the ultimate goal of economic activity is to
maximize consumption.
D. Given its resources and technology, this society is incapable of simultaneously producing 3
units of tractors and 15 units of bread.