Which of the following statements is true?
A) Eliminating its tariffs and quotas unilaterally would not benefit the United States because this would remove the leverage it would have to persuade other countries to eliminate their trade restrictions.
B) Economic efficiency would be increased if the United States eliminated all of its trade restrictions, but only if all other countries eliminated their trade restrictions too.
C) The U. S. economy would gain from the elimination of its tariffs but not from the elimination of its quotas.
D) The U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.
D
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If the price of grapefruit rises, the substitution effect due to the price change will cause
A) a decrease in the demand for grapefruit. B) a decrease in the demand for oranges, a substitute for grapefruit. C) a decrease in the quantity of grapefruit demanded. D) a decrease in the quantity of grapefruit supplied.
In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce
A. the product at a lower domestic opportunity cost than the other nation. B. more of the product than the other nation. C. the product with fewer inputs than the other nation. D. the product at lower average cost than the other nation.