Chap015

Chap015 - Chapter 15 - Arguments for Interventionist Trade...

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Chapter 15 - Arguments for Interventionist Trade Policies Chapter 15 Arguments for Interventionist Trade Policies Multiple Choice Questions FIGURE 1 1. Figure 1 shows the demand and marginal revenue curves facing a foreign monopoly supplier of a good to the home country, as well as the firm's horizontal marginal cost curve when there is no tariff by the home country (MC) and the marginal cost curve when a specific tariff is imposed by the home country (MC + T). (Assume that average cost (AC) equals marginal cost.) In this situation, the price to home country consumers after the tariff has been imposed is __________. a. $10 b. $14 c. $25 D . 27 15-1
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Chapter 15 - Arguments for Interventionist Trade Policies 2. Figure 1 shows the demand and marginal revenue curves facing a foreign monopoly supplier of a good to the home country, as well as the firm's horizontal marginal cost curve when there is no tariff by the home country (MC) and the marginal cost curve when a specific tariff is imposed by the home country (MC + T). (Assume that average cost (AC) equals marginal cost.) In this situation the loss of consumer surplus for home consumers because of the imposition of the tariff is __________. a. $4 B . $56 c. $121 d. $224 3. Figure 1 shows the demand and marginal revenue curves facing a foreign monopoly supplier of a good to the home country, as well as the firm's horizontal marginal cost curve when there is no tariff by the home country (MC) and the marginal cost curve when a specific tariff is imposed by the home country (MC + T). (Assume that average cost (AC) equals marginal cost.) In this situation the amount of former foreign monopoly profit that has been transferred as revenue to the home country's government because of the imposition of the tariff is __________. a. $52 B . $104 c. $120 d. $390 FIGURE 2 15-2
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Chapter 15 - Arguments for Interventionist Trade Policies 4. Figure 2 shows a "reaction function" graph for two firms selling in an export market, where HH is the home firm's reaction function and FF is the foreign firm's reaction function. If the firms are at point A and if both firms are seeking to maximize profit, the foreign firm wants to __________ its sales in this market, and the home firm __________its sales in this market. a. Decrease; also wants to decrease
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Chap015 - Chapter 15 - Arguments for Interventionist Trade...

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