Suppose the U

question 206

Multiple Choice

Suppose the U.S.government imposes a binding quota on the number of Japanese-made cars allowed into the United States.Assuming that Japanese-made cars and U.S.-made cars are substitutes in consumption,we would expect the price of Japanese cars to _____ and the price of U.S.-made cars to _____.

• A)increase;increase
• B)increase;decrease
• C)decrease;increase
• D)decrease;decrease

---

Definitions:

Selling Price

The amount of money for which a product or service is sold to the buyer.

Unit Cost

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Discount Period

The time frame within which a payment can be made at a reduced rate before the full invoice amount becomes due.

Payment Terms

The conditions under which a seller will complete a sale, often specifying the period allowed to a buyer to pay off the amount due.