Suppose Canada Has a 20% Tariff on the Import of Carpets,and

question 110

Multiple Choice

Suppose Canada has a 20% tariff on the import of carpets,and Canada currently imports this product from India at a with- tariff price of $22.The with- tariff price of identical carpets from the United States is $24.Now suppose a free- trade agreement with the U.S.eliminates the tariff and so the no- tariff price from the U.S.is $20.Canada now purchases carpets from the U.S.This is an example of

• A)specialization.
• B)trade creation.
• C)dumping.
• D)trade diversion.
• E)a countervailing duty.

Grasp the impact of cost structures and production functions on firm and industry supply in competitive markets.

Apply mathematical models to determine the optimal level of production and pricing strategies for firms under various circumstances.

Evaluate the role of fixed, variable, and marginal costs in short-run and long-run production decisions.

Understand the relationship between market structures and the elasticity of supply and demand.

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