If Canadian Government Were to Impose a Quota on Wristwatches

question 101

Multiple Choice

If Canadian government were to impose a quota on wristwatches imported from Switzerland, the:

• A)Canada would reduce its export of watches.
• B)prices of watches in Switzerland would rise.
• C)price of watches in Canada would remain the same, but the quantity will fall.
• D)total quantity of watches (domestically produced and imported) purchased would decline.

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Definitions:

Pollution Rights

Permits or allowances that authorize the holder to emit a certain amount of a pollutant, used in regulatory approaches to manage environmental impacts.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of the good that suppliers are willing and able to sell.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Externality Problem

A situation where the actions of individuals or firms result in costs or benefits to others that are not reflected in the market prices.