Import Substitution Policies Make Use of

question 18

Multiple Choice

Import substitution policies make use of

• A) tariffs that discourage goods from entering a country.
• B) quotas applied to goods that are shipped abroad.
• C) production subsidies granted to industries with comparative advantage.
• D) tax breaks granted to industries with comparative advantage.
• E) production facilities provided by industrialized countries.

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Definitions:

Deadweight Loss

describes a loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is distorted by external factors like taxes or subsidies.

Demand Curve

represents the relationship between the price of a good and the quantity of that good consumers are willing to purchase.

Monopoly Power

Monopoly Power describes the ability of a company or entity to control the price and supply of a product or service, due to the lack of significant competition.

Lump-Sum Payment

A single payment made at a particular time, as opposed to multiple payments over time.