The Fact That Trade Policy Often Imposes Harm on Large

question 46

Multiple Choice

The fact that trade policy often imposes harm on large numbers of people, and benefits only a few may be explained by

• A) the lack of political involvement of the public.
• B) the power of advertisement.
• C) the problem of collective action.
• D) the basic impossibility of the democratic system to reach a fair solution.
• E) a cycle of political corruption.

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Definitions:

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded.

Illegal Activities

actions that are forbidden by law and subject to criminal penalties.

Missed Opportunities

Potential benefits or gains that are forfeited when a choice is made over alternative options.

Quota Rents

Revenue earned by the holder of import quotas, calculated by the difference between the domestic price and the world price of the imported goods.