The antebellum period was characterized by many changes in tariff rates. What best describes the effect of removing a tariff on foreign cotton textiles?
a. The total supply curve of textiles would shift back.
b. The price of both foreign-made and domestic-made textiles would decrease.
c. The price of foreign-made textiles would decrease and the price of domestic-made textiles would increase.
d. The total (foreign and domestically produced. quantity of textiles purchased in the US would decrease.
e. The real income of textile consumers would decrease.
b. The price of both foreign-made and domestic-made textiles would decrease. (Note: This is the exact opposite of the problem in the Economic Insight).
You might also like to view...
A tariff can ________ raise a country's welfare
A) never B) sometimes C) always
In the long run, perfectly competitive firms earn zero economic profit; this means that each firm is
a. always trying to move into a more profitable market. b. content to stay in its market. c. always facing new entrants to its market. d. earning negative accounting profit.