Which Policy for Restricting Trade Would Be Most Attractive to a Country

question 235

Multiple Choice

Which policy for restricting trade would be most attractive to a country that is imposing a trade restriction in an effort to raise as much government revenue as possible to cover government expenses?

• A) a quota that reduces imports by 100,000 units for a product with $100 price tag
• B) a quota that reduces imports by 50,000 units for a product with a $150 price tag
• C) a 10% ad valorem tariff on a product with a $100 price tag that reduces imports from 300,000 to 200,000 units
• D) a $8 specific tariff on a product with a $100 price tag that reduces imports from 350,000 to 220,000 units

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Definitions:

Balance Sheet

A financial statement that presents a company’s financial position at a specific point in time, detailing assets, liabilities, and shareholders' equity.

Statement Of Cash Flows

A financial report that provides a summary of a company's cash inflows and outflows over a specific period.

Net Income

The total profit of a company after all revenues and gains are added together and all expenses and losses are subtracted.

Net Cash

The sum of all cash and cash equivalents that a company holds, subtracting liabilities that need to be paid immediately.