In 2007, European Union (EU) Negotiators Have Offered to Cut

question 81

Multiple Choice

In 2007, European Union (EU) negotiators have offered to cut tariffs for Latin American bananas to avoid "banana wars". What are the effects of a cut in tariffs?

• A) The quantity of bananas imported into the EU will increase.
• B) The price of bananas for consumers will increase.
• C) The quantity of bananas produced in the EU (such as in France and Spain) will increase.
• D) Europe will start to export bananas.

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Definitions:

Efficiency

The optimal use and allocation of resources to produce the maximum amount of goods and services with minimal waste.

Equity

The concept of fairness in economics, typically referring to ownership interest in a company or property, or the idea of justice in distribution of wealth or resources.

Command Economy

An economic system where the government controls the major aspects of production, distribution, and exchange of goods and services.

Central Planning

An economic system where all major production, investment, and distribution decisions are made by a central authority, typically the government.