Suppose That Canada Places Higher Tariffs on Imports of Ice

question 149

Multiple Choice

Suppose that Canada places higher tariffs on imports of ice cream. What would be the most likely result?

• A) The tariffs would reduce imports into Canada, which would cause Canadian net exports to rise.
• B) The tariffs would reduce imports into Canada, which would cause the net supply of dollars in the foreign exchange market to rise.
• C) The tariffs would reduce imports of ice cream into Canada, but would reduce Canadian exports of other goods by an equal amount.
• D) The tariffs would reduce imports of ice cream into Canada, but would increase Canadian exports of other goods by an equal amount.

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Definitions:

Positive Economic Profits

Profits that exceed the opportunity costs of a production enterprise, indicating a more favorable outcome than alternative investments.

Economic Losses

Occur when a company's total costs exceed its total revenues, indicating a negative outcome from business operations.

Representative Firm

A representative firm is a hypothetical entity in economic models used to represent the typical characteristics of firms within a particular industry or market.

Breaking Even

Breaking even refers to a financial situation where total costs and total revenues are equal, resulting in no net loss or gain for the business.