Which of the following statements about economists' assessment of protectionism is true?
A) The costs and benefits of trade barriers are essentially equal.
B) The benefits of trade restrictions exceed their cost.
C) The costs of trade barriers exceed their benefits and generally result in inefficiency.
D) It is not possible to estimate the costs of protection.
Ans: C) The costs of trade barriers exceed their benefits and generally result in inefficiency.
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In the United States the assignment of tasks and distribution of benefits
A) is determined by business firms. B) is determined democratically. C) is negotiated among potential buyers and potential sellers. D) leaves all parties free to do as they prefer. E) rests upon the principle of consumer sovereignty.
What is the lemons problem? How do firms try to address this problem?
What will be an ideal response?