Proponents of strategic trade policy contend that:
a. government should tax domestic firms to generate greater revenues.
b. government should encourage imports to prevent monopoly in the domestic market.
c. government should provide subsidies to domestic firms with decreasing costs.
d. government should discourage domestic firms with decreasing costs from continuing production.
e. government should tax domestic import competing firms.
c
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If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply is
A) elastic. B) inelastic. C) unit elastic. D) perfectly elastic. E) perfectly inelastic.
If the tariff on computers is not changed, but the government then adds hitherto nonexistent tariffs on imported semi-conductor components, then the effective rate of protection in the computer industry will
A) increase. B) decrease. C) remain the same. D) depend on whether computers are PCs or "Supercomputers." E) no longer apply.