The Following Diagram Shows the Demand and Marginal Revenue Curves

question 23

Multiple Choice

The following diagram shows the demand and marginal revenue curves facing a foreign monopoly supplier of a good to the home country, as well as the firm's horizontal marginal cost curve when there is no tariff by the home country (MC) and the marginal cost curve when a specific tariff is imposed by the home country (MC + T) . (Assume that average cost (AC) equals marginal cost.) In this situation, the price to home country consumers after the tariff has been imposed is __________.

• A) $10
• B) $14
• C) $25
• D) 27

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Definitions:

Circular Flow

A model that illustrates the movement of goods, services, and money among households, businesses, government, and the foreign sector in an economy.

Leakages

In economics, it refers to the withdrawal of potential spending from the economy's circular flow, primarily through savings, taxes, and imports.

Household Production

The creation of goods and services by individuals or families within a home environment, not for formal market exchange.

Gross Domestic Product (GDP)

The complete market or financial worth of every finished good and service made within a nation's frontiers in a certain timeframe.