Refer to the Information Provided in Figure 4

question 82

Multiple Choice

Refer to the information provided in Figure 4.5 below to answer the questions that follow. Figure 4.5
-Refer to Figure 4.5. Assume that initially there is free trade. If the United States then imposes a $10.00 tax per CD-Rom drive on imported CD-Rom drives,

• A) the quantity of CD-Rom drives demanded will be reduced by 3 million.
• B) the quantity of CD-Rom drives supplied by U.S. firms will increase by 3 million.
• C) the price of CD-Rom drives in the United States will increase to $25.
• D) all of the above

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Definitions:

Cancellation Option

A contract clause that allows a party to terminate the agreement under certain conditions before its natural end.

Lease Payment

Periodic payments made by a lessee to a lessor for the use of an asset.

Net Advantage to Leasing

A financial concept that compares leasing to purchasing, calculating the costs saved or incurred over the lease term.

Equipment Cost

The total expenditure incurred to purchase, install, and make operational a piece of equipment.