An American Tourist Purchases a Leather Jacket While in Italy

question 44

Multiple Choice

An American tourist purchases a leather jacket while in Italy. Which of the following statements is true?

• A) The leather purchase would be considered an import for the U.S. BOP.
• B) This transaction would be properly accounted for in the Current Account of the U.S. BOP.
• C) The leather purchase is considered an import of a good, and thus, considered part of the balance of trade as well.
• D) All of these statements are true.

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Definitions:

Relatively Elastic

A characteristic of a good or service with a demand that is sensitive to changes in price, meaning that small changes in price lead to larger changes in quantity demanded.

Marginal Revenue

The surplus earnings obtained from the sale of one extra unit of a product or service.

Total Revenue

The overall income generated by a business from its sales activities, calculated by multiplying the price of goods by the quantity sold.

Nondiscriminating Monopolist

A monopolist who charges all consumers the same price for a product, unlike a price-discriminating monopolist who charges different prices.