Other Things Equal, Economists Would Prefer

question 148

Multiple Choice

Other things equal, economists would prefer

• A) free trade to tariffs and tariffs to import quotas.
• B) free trade to import quotas and import quotas to tariffs.
• C) import quotas to tariffs and tariffs to voluntary export restrictions.
• D) import quotas to free trade and free trade to tariffs.

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Definitions:

Average Variable Cost

A firm’s total variable cost divided by output (the quantity of product produced).

Economies of Scale

The cost advantages that enterprises obtain due to the size, output, or scale of their operation, with costs per unit of output generally decreasing with increasing scale.

Long-Run Average Cost

The per unit cost of production when all factors of production are variable, typically representing the most efficient level of production over time.

Average Fixed Cost

It measures the fixed expenses per unit of production, highlighting efficiency gains as production scales up, typically declining as output expands.