Given the Following Information for (Small) Country a Concerning a Good

question 29

Multiple Choice

Given the following information for (small) country A concerning a good X:
$\begin{array} { l r } \text { free trade price in A } & \$ 20 \text { per unit } \\\text { tariff rate } & 20 \text { percent } \\\text { price in A, with tariff } & \$ 24 \text { per unit } \\\text { consumption in A, free trade } & 1,000 \text { units } \\\text { consumption in A, with tariff } & 900 \text { units } \\\text { production in A, free trade } & 600 \text { units } \\\text { production in A, with tariff } & 800 \text { units }\end{array}$

• A) The government revenue generated by the tariff is $800.
• B) The decrease in consumer surplus because of the tariff is $4,000.
• C) The increase in producer surplus because of the tariff is $3,200.
• D) The net welfare loss for A from the tariff is $600.

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Definitions:

Expected Return

The expected return is the anticipated profit or loss from an investment over a specified period, based on historical or projected rates.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points, often used in finance to quantify the risk of an investment.

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 indicates higher than market volatility.

Market Risk Premium

The extra return over the risk-free rate that investors require to compensate them for the risk of investing in the stock market.