Refer to the Information Provided in Figure 12

question 130

Multiple Choice

Refer to the information provided in Figure 12.4 below to answer the question(s) that follow. Figure 12.4
There are two sectors in the economy, X and Y, and both are in long-run, zero-profit equilibrium at the intersections of S^{0 and D0.}
-Refer to Figure 12.4. Assume consumer preference changes toward X and away from Y. Ceteris paribus, the equilibrium quantity of X will ________ and the equilibrium quantity of Y will ________.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

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Definitions:

NAFTA

The North American Free Trade Agreement, a treaty between the United States, Canada, and Mexico that eliminated most tariffs on trade between them.

GDP

Gross Domestic Product, a measure of the economic performance of a country, calculated as the total value of all goods and services produced over a specific time period.

Protectionism

An economic policy of restricting imports from other countries through methods such as tariffs and quotas to protect domestic industries.

Frederic Bastiat

A French economist and writer known for his advocacy of free markets and his critique of protectionism.