If an Import- Competing Firm Is the Only Domestic Producer

question 9

Multiple Choice

If an import- competing firm is the only domestic producer of a good,then a transition from autarky to free trade will domestic price,producer surplus,consumer surplus,and _ overall domestic national welfare.

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

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Definitions:

Average Total Cost

The sum of all production expenses divided by the amount of goods produced.

Fixed Costs

Costs that do not vary with the level of production or services provided.

Marginal Cost Curve

A graphical representation that shows how the marginal cost of producing additional units changes with the level of output.

Average Total Cost

The total cost of production (fixed and variable costs) divided by the total output or quantity produced.