Use the Following to Answer Questions

question 34

Multiple Choice

Use the following to answer questions:
Figure: Foreign Trade Market
-Which, if any, of the following conditions for efficient market functioning do tariffs and quotas violate?
I. demanders with the highest willingness to pay purchase the supply of goods
II. producers with the lowest costs produce and sell the supply of goods
III. the sum of consumer and producer surplus is maximized

• A) I only
• B) II and III only
• C) I, II, and III
• D) III only

---

Definitions:

Exchange Rate

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another currency.

Current Account Deficit

A situation where a country's total imports of goods, services, and transfers exceed its total exports, indicating that it is spending more on foreign trade than it is earning.

Doubled

Increased by 100%, or made twice as large in amount or number.

Tripled

Increased or expanded to three times the original size or amount.