Comparing a Tariff Levied on an Import Where the Home

question 56

Multiple Choice

Comparing a tariff levied on an import where the home firm is a
Monopoly to a situation where the home firms are competitive, we
Find:

• A)the exact same result-both firms charge world price + tariff and both firms produce Q where MC = MR = world price + tariff.
• B)that the monopoly firm will be able to charge a higher price and limit its quantity.
• C)that the competitive firm will not be able to survive the impact of the tariff.
• D)that quantity is not the issue; the monopoly firm will pay its workers less and earn higher profits.

---

Definitions:

False Consensus Effect

The cognitive bias whereby people tend to overestimate how much others agree with their own beliefs, attitudes, or behaviors.

Stimulus Overload Effect

A phenomenon where individuals experience stress or cognitive overload due to an excessive amount of stimuli to process.

Dispositional

Pertaining to one's inherent qualities of mind and character, often used in psychology to describe an individual's tendencies or personality traits.

Uncontrollable

Refers to events or processes that cannot be easily managed or influenced by individuals.