When a country establishes trade restrictions, domestic producers of goods that compete with imported goods
a. always lose in the short run
b. always gain in the long run
c. may lose in the long run if protection stifles innovation and leaves the industry vulnerable
d. may gain in the short run because wages will fall in that industry
e. usually lobby against such restrictions
C
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The graph shows the market for textbooks. If the government introduces a tax of $20 a textbook, then the price paid by buyers
A) increases by $20. B) increases to $80 a textbook. C) decreases to $60 a textbook. D) is $70 a textbook. E) does not change because the demand for textbooks is perfectly elastic.
When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent
a. What is the cross elasticity of demand between these two goods? b. How are these goods related? c. If the price of bananas rises, how will that affect the demand curve for peanut butter?