The Diagram Below Shows Supply and Demand Curves for Bicycles

question 43

Multiple Choice

The diagram below shows supply and demand curves for bicycles in the domestic Canadian market.Assume that all bicycles are identical.
FIGURE 34- 4
-If all countries try to expand their exports and restrict their imports through the use of export subsidies and import tariffs,the net effect will probably be

• A)a fall in the volume of trade and an increase in the standard of living in each country.
• B)no change in the volume of trade but an increase in the overall unemployment rates.
• C)no change in the volume of trade but less unemployment.
• D)a fall in the volume of trade and a decline in the average living standards in each country.
• E)an increase in the volume of trade but little change in unemployment levels.

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Definitions:

Maximize Profits

The process by which a firm adjusts its production and pricing strategies to earn the highest possible profit.

Economic Profits

Profits calculated by subtracting both the explicit and implicit costs of production from total revenues.

Monopolistically Competitive

Describes a market type where numerous sellers offer differentiated products, leading to competitive yet non-homogeneous markets.

Equilibrium

A condition where the supply and demand in the market are equal, leading to steady prices and amounts.