If a Good Is Imported into (Large) Country H from Country

question 44

Multiple Choice

If a good is imported into (large) country H from country F, then the imposition of a tariff in country H

• A) raises the price of the good in both countries (the "Law of One Price").
• B) raises the price in country H and cannot affect its price in country F.
• C) lowers the price of the good in both countries.
• D) lowers the price of the good in H and could raise it in F.
• E) raises the price of the good in H and lowers it in F.

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Definitions:

MR = MC Rule

An economic principle stating that profit maximization occurs when a firm's marginal revenue equals its marginal cost.

Short Run

In economics, a timeframe during which the quantity of at least one production factor cannot be increased.

Long Run

A period in which all factors of production and costs are variable, allowing for full adjustment to changes in market conditions.

Average Total Cost Curve

A graphic representation showing the cost per unit of output produced, combining both fixed and variable costs.