Denmark Is an Importer of Computer Chips,taking the World Price

question 36

Multiple Choice

Denmark is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Denmark imposes a $5 tariff on chips.As a result,

• A)Danish consumers of chips and Danish producers of chips both gain.
• B)Danish consumers of chips gain and Danish producers of chips lose.
• C)Danish consumers of chips lose and Danish producers of chips gain.
• D)Danish consumers of chips and Danish producers of chips both lose.

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Definitions:

Present Value

The worth at present of a sum of money expected in the future or of ongoing cash payments, when discounted at a specific rate of return.

Capital Cost Allowance (CCA)

A form of tax depreciation that allows a business to deduct the cost of a depreciable property, such as buildings or equipment, over a number of years.

Fixed Assets

Long-term tangible pieces of property or equipment that a firm owns and uses in its operations to generate income.

Required Rate Of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to commit their money.