Suppose the United States Decides to Impose a $1,000 Tax

question 35

Multiple Choice

Suppose the United States decides to impose a $1,000 tax on every Japanese minivan sold in the United States. This is an example of:

• A) a tariff.
• B) free trade.
• C) comparative advantage.
• D) the diversity of industry argument.
• E) a quota.

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Definitions:

Industry Supply

The total quantity of a particular good or service that is available for purchase in a market by all producers.

Market Price

The current price at which an asset or service can be bought or sold, determined by the supply and demand forces in the market.

Perfect Competition

A market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, leading to optimal prices.

Identical Product

Goods that are exactly the same in terms of quality, size, and features, making them perfect substitutes for each other.