Suppose the Swiss Government Subsidized Its Watch-Making Industry,enabling Swiss Producers

question 60

Multiple Choice

Suppose the Swiss government subsidized its watch-making industry,enabling Swiss producers to undersell foreign watch producers.The law of comparative advantage indicates that watch-importing nations would best take advantage of the Swiss subsidization policy by

• A)setting a tariff high enough to just offset the subsidy granted to the Swiss watch-making industry.
• B)setting a declining quota on the import of Swiss watches such that the nation's domestic watch-making industry would continue to grow at the same rate as the rest of the economy.
• C)setting a tariff such that the prices of Swiss and domestic watches to the consumer are equal.
• D)gladly accepting the subsidy of the Swiss government,making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry.

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Definitions:

Persuasion

Engaging in activities aimed at altering a person's opinions, emotions, or conduct through persuasive discourse, rationalization, or attraction.

Attribution

Attribution is the process of inferring the causes behind behaviors and events, leading to an understanding of why things happen.

Causality Analysis

The examination of cause-and-effect relationships between variables.

Stereotype

A fixed, over generalized belief about a particular group or class of people.