Compared to the No-Trade Situation, If the United States Imports

question 27

Multiple Choice

Compared to the no-trade situation, if the United States imports video games,

• A) the price of video games will decline in the domestic market.
• B) domestic video game producers will be able to charge higher prices.
• C) domestic video game producers will expand both output and employment.
• D) U.S. consumers will be harmed.

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Definitions:

Production Function

A mathematical model that describes the relationship between the quantities of productive inputs used and the amount of output produced.

Competitive Industry

A market scenario where multiple firms produce similar products, leading to high levels of competition.

Short-Run Industry Supply

The total quantity of goods that firms in a particular industry are willing and able to sell at different prices in a short period, with some factors held constant.

Total Cost Function

The total cost function is a mathematical representation that shows how total costs of production vary with changes in output level.