The Diagram Below Shows Supply and Demand Curves for Bicycles

question 75

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
-Refer to Figure 34- 4. Suppose there is free trade in bicycles and the world price is $200. If Canada then imposes a 50- percent import tariff on bicycles, domestic consumption will

• A)increase by 30 000.
• B)increase by 20 000.
• C)decrease by 10 000.
• D)increase by 10 000.
• E)decrease by 20 000.

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Definitions:

Identical Products

Products that are exactly the same in every feature, often used in economic models of perfect competition.

Collusively

Acting in coordination with others, often in secret, to limit competition and manipulate market outcomes, such as setting prices.

Product Demand

The desire and willingness of consumers to purchase a particular good or service at a given price.

Oligopoly

A market structure characterized by a few firms dominating the industry, leading to limited competition and potentially higher prices for consumers.