Suppose That at the Current World Price Bananas Are Imported

question 44

Multiple Choice

Suppose that at the current world price bananas are imported into Canada.Suppose also that domestic supply is perfectly inelastic and domestic demand has unit elasticity.If Canada were to place a tariff on imported bananas,the

• A)revenues of the foreign exporters of bananas would rise.
• B)quantity imported would be unaffected.
• C)quantity imported would rise.
• D)price of bananas in Canada would rise,but total domestic expenditures would fall.
• E)price of bananas in Canada would rise,but total domestic expenditures would be unaffected.

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Definitions:

Capital

Financial assets or the financial value of assets, such as cash and other tangible assets, used in operations to generate income or profit.

Labor

Work, especially physical, manual or hard work, performed by people in exchange for payment.

Production Costs

The total expense incurred in manufacturing goods or providing services, including raw materials, labor, and overhead expenses.

Chemicals

Substances used in or produced by chemical processes, often referring to compounds or materials in industrial, scientific, or consumer products.