Which of the Following Would Be the Most Likely Long-Run

question 29

Multiple Choice

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

• A) a decrease in both U.S. imports and exports
• B) an increase in both U.S. imports and exports
• C) a decrease in U.S. imports and an increase in U.S. exports
• D) an increase in U.S. imports and a decrease in U.S. exports

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Definitions:

Explicit Costs

Refers to direct monetary expenses businesses incur in their operations, such as wages, rent, and materials.

Normal Profit

Normal profit is the minimum amount of profit needed for a company to remain competitive in the market, covering all its opportunity costs.

Normal Profits

The level of profit that business owners consider satisfactory or "normal", essentially covering both explicit and implicit costs, including a normal rate of return on investment.

Accounting Profits

The total revenue of a business minus the explicit costs; it's the profit figure calculated according to generally accepted accounting principles.